Defaulted Loans Invite Dreadful Outcomes
In our lives, we often come across certain perilous situations where we are denied financial assistance and instead threatened to face legal actions. One of the dire circumstances where a similar scenario is portrayed is that of failure to repay student loans in time.
However, it’s true that many students borrow loans out of financial inability and therefore their purpose seems absolutely fine. But life often adds potholes and consequently some fail to fulfill obligations of the loan lenders.
This converts a student loan to that of a defaulted one. Defaulted loans, in turn, bring hazardous consequences, and until one gets rid of them, it’s quite difficult to survive.
When student loans exceed the specified time period of the contract, they automatically get converted into defaulted loans. A loan can also be declared defaulted if the agent does not receive payment for 270 successive days. In case, they receive irregular payments, the period is extended to 330 days.
The period between the delayed payments and the declaration of the loan being default is called the delinquency period. Now, if the borrower fails to repay even within this delinquency period, the loan will be recognized default.
Once your credit report gets a stain, various aspects of your life can be heavily affected. You might never be able to make way to your employer’s good books nor be eligible to take any further loans from banks.
Moreover, you could kill your chances of buying a car or a property in the future. So, it’s better to talk to an agent once you come to know that you have been subject to defaulted loans.
Defaulted Student Loan Assistance is always Crucial
If you are informed that your student loan has defaulted, you must start taking necessary actions to transform your defaulted status to a normal one. There are several student loan defaulters who keep delaying their repayments and gradually get entangled into legal complications.
The consequences can be extremely harmful that can shatter one’s professional career as well as domestic peace. So, if you are one of the student loan defaulters, you should take immediate steps to get things to fall in the right place.
Steps to follow for every student loan defaulter:
Talk to your lender
Your loan lender is the actual person who can only help you come out of dire straits. Since he might have past experiences of handling loan defaulters, he will certainly help and suggest the best ways of getting rid of defaulting consequences.
Opt for the right scheme
Depending on the nature of the loan, a student loan defaulter has to opt for an appropriate scheme. There are several defaulted student loan programs like defaulted student loan consolidation, loan rehabilitation and loan deferment programs that are designed to improve the credit score of defaulters and hence get them rid of their defaulted status.
Don’t delay in bettering credit scores
The more you take time to improve your credit scores, the more you create chances to land up in legal complications. For this, you must take defaulted student loan help and get your queries sorted in quick time.
How can Student Loan Defaulters get into Complications?
Do you know how dangerous can the word ‘defaulted’ be? Yes, it’s applicable to all those who fail to repay their respective student loans in time. The lender initially provides a certain time period in which the applicant is asked to make the full payment.
In this situation, if the applicant fails to make the payment within the agreed time period, he/she will be declared defaulted. Suppose, if you are the one declared defaulted by your credit bureau, you might have to face a good deal of unpleasant consequences.
For every defaulted student loan holder, the following complications can take place at any point of time:
- The credit score will go down drastically. This will obstruct the defaulter from getting any financial assistance in the future.
- No credit card facilities will be given. In fact, the balance will be withdrawn from the account.
- All tax returns will be intercepted and will be utilized in getting your payments repaid.
- Applications of loans whether it’s student, auto or home will not be accepted.
So, the best solution in this respect is to talk to your lender and enroll in any of the programs designed to release individuals from getting defaulted. Loan deferment, student loan consolidation, and loan rehabilitation programs are the most effective ones for student loan defaulters.
Is it Possible to get rid of Defaulted Student Loans?
In today’s world, it’s not easy to repay a loan amount then and there, especially after completing graduation. When you plan for higher studies, you often take a lump sum amount so that you can pay off your course fees without falling prey to financial hassles. However, it’s equally mandatory for a loan borrower to repay the amount in time so that he doesn’t fall prey to defaulted consequences.
Once a student is informed about his defaulted status, he must immediately call up his lender and ensure whether he has actually defaulted. If you are the defaulter, you must check the loan status so that your lender can suggest a number of programs for you to enroll in.
In case of multiple loans, a defaulted student loan consolidation program is the best option to choose from. Here you can be able to merge all the loans into one and make a single payment instead of making separate payments at the end of every month. This, in fact, helps you extend your repayment period.
Apart from the loan consolidation program, there are loan deferment and loan rehabilitation programs that loan defaulters can always opt for. For all these programs, you can talk to your lender who will help you make all these arrangements with perfection. Remember, you should be honest with your lender if you are expecting full-fledged assistance from him.
Read also: Money-Managing Methods For College Students
Is There Any Possibility To Avoid Getting Defaulted?
You have made plans to move abroad for pursuing higher studies. So it’s obvious that you are now busy accumulating cash for your desired course. Unfortunately, a very fine day, your loan lender calls you to inform that your student loan account has been declared defaulted and therefore you are no more applicable to seek any sort of financial help. So, you have turned panicky and restless to get an ultimate solution that can save you from falling into legal complications.
Don’t worry, and rather be happy since here are some smart suggestions that can help you wipe off your defaulted status. Let’s take a look:
Get hold of your lender – Without further delay, get in touch with your lender and ask him to produce all those documents which say that you have acquired a defaulted status. Don’t make the blunder to charge him since he will be the one who can only help you come out of dire straits.
Check your loan status – Find out the nature and type of your loan that has been defaulted. Depending on the type of loan, your loan lender will help you know your ideal defaulted loan program to choose from.
Consolidate your loans – In case of multiple loans, defaulted student loan consolidation program is the best option that can be beneficial in several ways. With this, you are not required to make regular monthly payments and the duration of the repayment also extends.
So, any of the above-mentioned procedures can help you get rid of your defaulted status and brighten your credit scores.
Read also: The Financial Road to Graduate School
Say Good-Bye to Defaulted Student Loan Problems
Student loan comes as a boon for those who find it difficult to bear the tidy educational expenses due to the tight family income. In recent times, education fees have rocketed to such a height that a single loan can hardly cover the needs of those who belong to the backward economic classes.
So, borrowing multiple loans is what has become a trend to meet the cost of education. But the real problem springs up during the repayment period and aggravates if the scheduled installments are not paid off in time.
I have suffered a lot due to defaulted student loans and so consider myself as the right person to guide you in this regard.
By the time I graduated, depression was looming large on the economic scenario and I failed to secure a plumy job on the campus interview. I was unemployed and have a burdensome figure of $15,000 as debt.
Being bugged and bitten by the debt collectors was a horrible idea and I wanted to avert the intimidating and imminent troubles by hook or by crook. I was in earnest quest of a solution and fortunately came to know about student loan consolidation.
My inability to meet the payments was about to invite several problems but I escaped safe riding on loan consolidation facility.
Benefits of Consolidating Loans:
- You need to deal with only a single lender instead of making payments to many. It will definitely reduce a chunk of your worries.
- You will get to avail of a lower interest rate and it will make a significant reduction in your periodic installment figure.
- The loan consolidation companies generally come up with an offer of an extended payment period. As the payable amount is to be met during a longer stretch of time, so you will feel a lesser burden of the installment.
- Student loan interest enjoys the facility of tax deduction, thereby inviting more students to go with the loan consolidation options.
- Some lenders are kind enough to offer interest rate discounts for those who do not fail to meet payment on time. A good possibility of further reduction in interest rate is another attractive feature of student loan consolidation.
- If you are struggling a lot to get a job (it strongly reminds me of the troubles I passed through), many consolidation companies allow you to go for loan deferment, providing ample time to earn a stable income. You are not required to make any payment during the deferment period. The interest rate will be charged but pegged at a lower level for your con
Student Consolidation Program is Considered Best for Defaulters
You cannot expect to pursue education without monetary help. For this, you contact any of your local banks or money lenders to take a lump sum so that you can meet your educational expenses.
However, it becomes mandatory on your behalf to repay the entire amount in time or otherwise, you become a defaulter. Now, defaulted student loan consequences can keep worsening with time if proper measures are not adopted then and there. The more one delays, the more the possibilities of getting into legal complications.
There are several students who get compelled to take multiple loans at a time. However, they fail to repay them timely for encountering odd circumstances.
Well, there is a splendid way to get out this complication in case if you are reported a defaulter. Student loan consolidation is the one and only program that has been designed for defaulters willing to repay multiple loans.
With a student loan consolidation scheme, one will get the opportunity to club all the loans together into one and make a single payment.
This defaulted program will extend the repayment period since the defaulter will have to repay multiple loans at a time. For this, you need to get in touch with your lender who can help you opt for the program effortlessly.
Take Consideration of Federal Student Loan Consolidation
Federal student loan consolidation is simple to understand. While calculating the new interest rate, the authority takes a weighted average of all the rates on the current loans borrowed by an individual.
The defaulters need not consult a lender in order to find out the revised rate figure as they can easily calculate it by themselves. Multiply each loan by the interest rate and add all the products.
Next, add the weight numbers and divide the aggregate loan amount by the weighted total. Then multiply the result with 100.
You may also take the help of online calculators to figure out the exact payment size. Both the parents and students are eligible for a loan consolidation program and must attach serious concern to this option.