As you know that every American is in some way or another in some sort of debt. There are number of debts on many people and some people try to skip some of their debt like the personal loans and other unsecured loans. However, there are the loans which one should never try to escape and one amongst them is the student loans. If you get default in student loan then you will have to face many problems which will make your life hell. And if in case a collector gets after you to recover the repayment of unsecured personal loan then you will face severe problem.
The Basics of a Loan Default
There are many ways by which you can pay off your student loan but generally the basic reason of getting default is non- payment of loan. A borrower has to pay the principal as well as the interest amount each month. A fixed amount is taken out according to the tenure of your loan and if in case you fail to pay any of your monthly installments then it will be considered as student loan default.
When a borrower gets default then he get a grace period of 30 days from lenders to settle down the missed payment. But there are some lenders who charge penalty of not paying the loan amount. This penalty is added on the total loan amount which increases your burden as you have to pay off the entire amount. That is why it is said that a person should not get student loan default. If non -payment of student loan reaches 90 days and beyond then you should be prepared to bear the consequences as debt collector will be after you.
How Default Can Cause Chaos in Our Lives
You must have seen in Hollywood movies that how debt collectors ruins debtors life which seems so harsh in movie that we think it is all script but the actual thing is that everything happens the same way in real life too. Debt collectors can really create huge trouble if you don’t pay off your debt amount properly. If you don’t pay the loan amount then you have to face legal consequences which are a night mare in a borrower’s life.
Lenders don’t personally come after you if in case you get default. They simply hire the debt collection agency whose duty is to recover the debt amount from the borrower. For this they can go to any extent because they get some percentage of the recovered debt. So to earn more they get after borrowers life in order to take out maximum debt amount from the debtors. So these collectors use all sort of ways to recover the debt amount.
All you can do to avoid such things is that make sure you pay off the loan amount on time. If in case there are any sort of problems by which you are facing difficulties in paying off your debt amount then you should contact your lender and tell them everything. You should cite the reasons why it is being difficult for you to clear off the debt amount and then both lenders and borrowers will come up with a mutual solution which is beneficial for both. All you have to do is give proof of your financial difficulties then your lender might increase the tenure of loan so that the monthly installment for the repayment of loan get lower which can be easily manageable by you.
If you are getting defaulted then it is better that you can go for consolidation of loan which can save you from facing worst problems. By consolidation all your loan will be summed up and paid by other lenders in full and then you have to pay the lender monthly with new loan tenure. The benefit which a borrower can avail for consolidation of loan is that the interest rate charged on loan consolidation is lower than your previous loan.