I hope to never resort to bankruptcy, but yes I knew that student loans would be non-dischargeable. They told me that in college but I guess the effect of it never really sunk in.
I got into this debt, it's my responsibility to dig myself out. Not ask for a bailout. Unless there is no other way.
I already called ALL of my creditors back in 2008/2009 when I was in the hospital and then lost my job and begged for modifications. The best I got was an interest rate reduction on one credit card.....which is set to expire next month and go up to 19.99%. I'm already planning to call and request a lower rate. And I got a one year forbearance on my student loans for hardship. None of my other creditors would work with me when I was unemployed, so I highly doubt they would do anything for me now.
I've never missed a payment or been late on a payment, we've just struggled to make payments and during the unemployment period sometimes we used debt to pay debt. (racked up a line of credit just to pay all the other bills).
One thing to keep in mind with student loans is that they are a nondischargeable debt - meaning that they cannot be eliminated through bankruptcy. If you are concerned that your financial situation would decline to the point where you have to resort to bankruptcy, you could reduce or eliminate consumer debt (car loan, credit card, etc), but you would still be stuck with the student loans.
Life shrinks or expands in proportion to one's courage. Anais Nin
I understand what you are saying about paying the higher interest rates first, but I tried that and it stilled didn't work for me. The payment on one just got so high, I couldn't even afford to pay it, therefore I worked out a plan with the credit card company to pay a certain $ amt each month for a year. If I paid that, but still couldn't pay the rest we worked out another deal. That deal was to close the account, pay the same amount for 60 months with less than 1% interest, so it is like a car pymt.
I would work with your creditors. Yes you need to work on your school loans, especially if they are quite old. I would want to get rid of them asap. I think some people are afraid to do that and I am not saying your are, but you need to do it just to keep them informed of where you are at financially. Close your accounts if you have to to keep your from spending. But again, it is up to you to decide what will work for you.
I agree I am focusing on paying my highest intrest rate(credit card) then the ones most in danger of going to a collection agency(which just so happens is my student loans). I am getting my taxes soon and will pay off my credit card and then will turn that payment into my student loan payment. One student loan which is due straight to the college I will pay off with the rest of my tax return. I would rather pay off my truck but I want the good reports going to on my credit report since student loans only reflect negatively plus the college will not release my transcript until it is pd off. I can agree with the snowball effect to a point but I would rather not watch my higher interest accts get bigger and bigger while I work up to them.
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I think that you should just focus on the higher interest debt (I'm assuming credit cards?) first. Then I would do car loans, student loans, then lastly the mortgage. In my opinion anyway. I just can't seem to get behind the "paying the smallest balance" first because I want to reduce the interest I am gaining as well.
You should try to work a payment into your budget. I don't know anything about student loans and deferring them, so I can't help with that. Personally, what I am trying to do is pay the smallest bill first, regardless of interest rate, and keep paying the amount due on the other bills or whatever you can. This is called snowballing....once that first small is paid off, start paying off the next one, using what you paid on the first bill and including it in what you were paying on the 2nd bill..
$100 balance - $10 payment $200 balance - $20 payment $300 balance - $30 payment.....so on and so forth....
Once the $100 is paid off, then your 2nd bill pymt would be $30, once the 2nd bill is paid off, then your 3rd bill pymt would $60.
It is up to you how you want to pay bills, but I hope that helps.
I already made this decision but I'm wondering if it was the right one.
We have $58,000 in debt, but the major portion of that - $25,000 - is my student loans.
They are at the lowest interest rate of all of our debt, except for a $1,300 hospital bill at 0%.
I was able to get another 12 month deferral where I don't have to make payments on the student loans. Based on the fact that my income stinks.
Should we pay nothing on the student loans, and pay more towards the higher interest debt first and get that knocked out of the way as much as possible in the next year - and then with some of those payments gone, we can more easily afford to pay on the student loans?
Or should we make payments on the student loans, because after all, I graduated in 2002. That was 9 years ago. I've probably paid about $3,000 on them from the original. That's just sad. I keep deferring them and putting them in forbearance for millions of reasons, oh and I went back to school for a master's and they were on hold for a while and I racked up more debt.
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