Do You Know The Real Secrets Behind Debt?
For many Americans, debt is an inevitable part of life. You get a credit card, you pay it when you can. You buy a car and try your best to make a payment. You take out a loan for college and try to delay paying on it as long as possible. What most people do not understand is outstanding debt can affect much more than you ever expected and you need to find ways to make paying your debts and paying them properly a priority.
Did You Know That Most People Are On The Wrong Debt Payment Plan?
The Consumer Finance Protection Bureau, released statistics on borrower habits and the stats are surprising. Their figures show that the majority of people are making poor repayment plan decisions. So what does this mean? It means that all the hard work you are doing to pay off your loans isn’t helping as much as you think.
With student loans alone, borrowers are not even touching their principal balance. Pay-As-You-Earn repayment plan (PAYE) is by far the best federal repayment plan. For those who do not qualify, the next best repayment plan will almost always be Income-Based Repayment (IBR). Looking at the CFPB statistics, we see thatonly 6.3% of people who are repaying their loans are taking advantage of these great plans. Here is the really shocking number: for every one person who is on PAYE or IBR, there are SIX people who are in default on their federal loan.
If you are in a position to quickly repay your student loans and are not in need of any special repayment program, there are specific ways to target the repayment of your debt to reduce the interest costs on your loans.
Did You Know It Can Affect Your Taxes?
Tax season just ended, the one time the government gives back what they owe to the American people. The average working American can expect anywhere from $300 to up to $8,000 back from the Internal Revenue Service each year.
But for some people there is a catch to this possible windfall of money. If you’re a Federal Student Loan Borrower, and you haven’t been making your payments, the government could garnish your tax return or take it away all together. One of the collection tools available for defaulted federal student loans is called a Federal Income Tax Return Intercept.
If you are not making payments because your loans are in a deferment, forbearance or grace period, do yourself a favor and double check on your loan statuses.
Did You Know It Can Affect Your Driver’s License?
Student loan borrowers who default on their debt are now facing a much more life changing danger: the loss of their driver’s or occupation licenses, including those used by nurses, doctors, teachers and emergency personnel.
Bloomberg reports that 22 states currently have active laws giving the state the authority to revoke their licenses and privileges from consumers who are more than 270 days behind on paying their student loans.
Logically, it might make sense to punish borrowers who don’t keep up with their obligations to repay debts, but this punishment seems counter-intuitive when you think about it. You need a license to work, you need to work to make money and you need money to pay your debts. If you have no license you can’t work and the debt you have grows into something that seems insurmountable. It perpetuates an environment in which consumers already have few options to get out of debt.
How to Avoid the Pit Falls
ALWAYS CHECK THE STATUS OF YOUR LOANS AND DEBT
If you’re in default or collections, take action. Don’t let the fear of not wanting to know push you further into debt. Get your debt out of the red zone, get a payment plan and become informed about your debt. The stronger the credit score the more doors are open.
If you are not in default but are simply unaware of the options available to you or which debt to attack first, there are answers for these questions as well.
Our team has over 4 decades of combined student loan and debt management experience. Schedule a Free Information Session with our team athttps://www.degreesofsuccessinfo.com/contact/ and click on the appointment tab and receive expert guidance on how to best handle your personal debt situation.
For a faster response call our main office at 813-527-9406.