Bankruptcy Law, Credit, Timothy Kingcade Posts

The WRONG ways to eliminate Student Loan Debt

This month thousands of graduates will be tossing their caps in the air with the excitement and hope of a prosperous future. But upon entering the “real world,” many of these graduates will soon be faced with a monthly burden: student loan debt. For many graduates, the first dose of reality begins with the first job; a job they estimated would pay more when they were taking out their student loans.

Do not make these mistakes when it comes to paying off your student loan debt.

1. Not paying. Many borrowers have tried this tactic, which seems simple enough. The student loan lenders are hoping you will make this mistake. With penalties and interest accruing, this is simply making a bad situation worse. In addition, this approach will hurt you when you try to get a mortgage or even lease an apartment, as these student loan payments tend to be some of the first credit accounts new graduates have in their name.

2. Making payments with credit cards and then declaring bankruptcy. This approach will end up costing you big time. The rates on credit cards are much higher than those on student loans. Not to mention, the bankruptcy court will see right through this scheme and it is unlikely the debt will be discharged.

3. Using home equity to pay off student loans. For borrowers who have returned to school later in life and are homeowners, they may think that using the equity in their home will help them consolidate their student loans and lower their monthly payments. The drawback here is that most student loans have comparable interest rates to what banks are charging homeowners right now. You are not paying off debt, just trading it in for some new debt, which is tied to your home. You can also be putting your house on the line. Missing a student loan payment can result in a late fee, but missing several mortgage payments can put you at risk of foreclosure.

If you’re having trouble meeting your obligations on federal student loan debt there are options out there ranging from Income-Based Repayment and Pay as You Earn plans to Income-Contingent Repayment. There are ways to legitimately satisfy student loan debt.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at

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