As millions of people in the United States struggle with student debt, many questions may arise. One of the common ones for those seeking debt management is the consequences of not paying their student loans. Low interest rates on this kind of debt can make repayment easy to put off for some people, though the amount and terms on a student loan can influence the impact of unpaid loans on Connecticut residents.
Consumer debt, such as credit cards, often carry higher interest rates than student loans. Some people in Connecticut opt to pay these and neglect their debt from school, which can cause them to default on the student loans. Understanding how to avoid or manage a loan default is important for anyone dealing with debt management.
If the monthly amount on a student loan remains unpaid for a predetermined period, typically for 180 days or more, the person responsible for the debt is seen as defaulting on the loan. If a co-signer files for bankruptcy or dies, a student loan can also default. This can lower a credit score dramatically, leading to difficulties in everything from obtaining real estate to employment.
Facing debt management head-on rather than ignoring student loans is a good idea for people struggling with debt. It is a good idea to have information about bank regulations, Connecticut law and federal standards before speaking with a bank or lender about your situation. It is also a good idea to discuss debt management options with a lawyer, especially dramatic ones such as filing for bankruptcy protection.
Source: refinery29.com, “What Happens When You Default On Your Student Loan Debt“, Judith Ohikuare, March 1, 2018