Financial advice: What if you don't pay your loans?

[highkicknomore]

So my friend is in a big debt with school loans.

The loan is up to $100k with an interest of 15% (I'm thinking it's compounding but he still has to ask to make sure).

Minimum payment + $150 is all he can afford per month because of overhead. He knows how to budget (I guess not good enough if he got into this debt) so he's not out there spending lavishly.

I calculated it and it was absurd, he'd have to pay for more than 100 years to pay off the loan.

He has no problem paying it monthly but with the interest, it's a losing battle.

So what happens if he doesn't pay the loan? He lives in an apartment and his only asset is an old car.

*Flame suit on for suggesting to my friend to not pay it*

 

[weich]

Any federal loan payments owed will come directly out of his wages.

There is no reason he should have a 15% interest rate on that.

 

[uncommon]

Sell assets, refinance.

 

[MajinSaga**]

Prepare yourself...

 

[Real_Magi]

It will move to collections, at which point they'll annoy the hell out of him, then a company that focuses on collecting debt will buy the debt from the original company that loaned him the money. At that point the new company will attempt to get ahold of him, if they can't, it will progress to a person serving him papers and summoning him to court. If he goes to court they may wave a few fees, if he doesn't, they'll judge for the full amount. After the judgement has been made, your friend will have a certain amount of what he owes garnished from his wages.

All of this will probably take a couple of years to transpire. Although they skip a few steps since it's a federal loan, and possibly start garnishing substantially faster.

 

[highkicknomore]

Any federal loan payments owed will come directly out of his wages.

There is no reason he should have a 15% interest rate on that.

It's a private loan because the school wasn't certified or something.

 

[SevenSamurai]

Private Loan?

They will try and collect through persuasion and scare tactics

They they will wreck his credit for a long time.

Then they will try through the courts to get a judgment and then try and collect

and then will try and file a lean on any property.

and unfortunately many employers are pulling credit reports on prospects and will see this and it might affect his ability to get a job with the degree that he went into debt in the first place for.

sucks

 

[faustian]

Tell him to get on disability and have the debt discharged.

 

[J Storm**]

your friend. sure.

 

[weich]

It's a private loan because the school wasn't certified or something.

Your friend spent 100K on an education at a non accredited university?

 

[highkicknomore]

Private Loan?

They will try and collect through persuasion and scare tactics

They they will wreck his credit for a long time.

Then they will try through the courts to get a judgment and then try and collect

and then will try and file a lean on any property.

and unfortunately many employers are pulling credit reports on prospects and will see this and it might affect his ability to get a job with the degree that he went into debt in the first place for.

sucks

He really has no properties or assets that are worth more than $1k.

He's barely surviving financially as is on a low paying job.

That's true though about the credit report though. If he talks to the bank, will they deal with him or just tell him tough luck and pay with the current interest rate.

 

[phillys-finest]

"if you even think about it an old black man will hop out like dont do that!"

 

[highkicknomore]

your friend. sure.

Check out my previous threads/comments.

I don't make a shit ton but I know how to budget that I live a comfortable life without debt.

 

[Francis Rossi]

I fucked a nice debt off several years ago. Haven't heard anything in two years, so I'm suspecting it may have been given up on.

I wouldn't, however, recommend it as sensible. I happen to be out of work, so they'd get fuck all off me anyway.

 

[highkicknomore]

Your friend spent 100K on an education at a non accredited university?

Yeah, tell me about it.

 

[SevenSamurai]

I fucked a nice debt off several years ago. Haven't heard anything in two years, so I'm suspecting it may have been given up on.

I wouldn't, however, recommend it as sensible. I happen to be out of work, so they'd get fuck all off me anyway.

Someone will purchase that debt and come for you one day. Unfortunately

My buddy had a collections agency show up 6 years after he left the keys on the counter of a house he couldn't afford in the divorce..

 

[gotBooched]

So my friend is in a big debt with school loans.

The loan is up to $100k with an interest of 15% (I'm thinking it's compounding but he still has to ask to make sure).

Minimum payment + $150 is all he can afford per month because of overhead. He knows how to budget (I guess not good enough if he got into this debt) so he's not out there spending lavishly.

I calculated it and it was absurd, he'd have to pay for more than 100 years to pay off the loan.

He has no problem paying it monthly but with the interest, it's a losing battle.

So what happens if he doesn't pay the loan? He lives in an apartment and his only asset is an old car.

*Flame suit on for suggesting to my friend to not pay it*

and he will for the rest of his life if he just lets it go.

 

[Seano]

 

[lts5025]

100K is ridiculous. I'd declare bankruptcy.

 

[highkicknomore]

100K is ridiculous. I'd declare bankruptcy.

He looked into that too. Student loans (private or not) will stay regardless if he files for bankruptcy.