Government Loans And Why You Never Default

Government Loans And Why You Never Default



Government Loans And Why you​ Never Default!
There are many types of​ government loans out there – loans to​ go to​ school,​ to​ start a​ small business,​ and even to​ buy a​ house .​
It is​ considered a​ social service for the​ government to​ provide funding and financing to​ certain people in​ the​ community .​
World War II started the​ onslaught of​ social service programs to​ aid the​ people of​ the​ country .​
As time as​ gone on,​ these programs have been expanded considerably,​ much to​ the​ delight of​ the​ people they are helping .​
However,​ before anyone takes out government loans,​ it​ is​ important to​ understand exactly what they are getting into and what will happen if​ they default.
It is​ important to​ note the​ difference in​ government loans as​ opposed to​ conventional loans .​
For the​ most part,​ conventional creditors are limited as​ to​ what they can do to​ you​ if​ you​ default on​ a​ loan .​
This varies from state to​ state,​ but in​ Texas,​ a​ creditor must sue you​ to​ get any relief and,​ even then,​ most of​ your personal property is​ protected as​ well as​ your wages and retirement accounts .​
While some other states allow creditors to​ garnish your wages,​ this is​ fairly uncommon.
This is​ very much not the​ case when it​ comes to​ government loans .​
In fact,​ if​ you​ default on​ a​ government loan,​ there is​ little they can not do to​ you,​ short of​ throwing you​ in​ jail .​
They can and will garnish wages,​ seize income tax returns,​ and levy property,​ because,​ as​ the​ government,​ they have the​ right to​ do so.
It is​ also interesting to​ compare the​ two and their differences in​ a​ bankruptcy scenario .​
While the​ bankruptcy code is​ anything but simple,​ in​ layman’s terms,​ most debts receive no protection under the​ bankruptcy code and can be wiped out or​ discharged under the​ right circumstances .​
However,​ this is​ not the​ case with most government obligations .​
For example,​ student loans are explicitly not dischargeable in​ bankruptcy,​ nor are tax obligations .​
For this reason,​ if​ you​ were to​ default on​ a​ student loan,​ you​ could seek relief in​ the​ bankruptcy court,​ but ultimately would receive none .​
You would be forced to​ pay the​ loan back or​ risk a​ great deal of​ grief for not doing so.
Government loans are not something to​ be toyed with .​
An increasing number of​ students are attending college on​ student loans issued by the​ government .​
However,​ special thought should be given to​ decisions regarding borrowing in​ the​ form of​ government loans.




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