How To Prevent Being Arrested For Nonpayment Of Student Loans
If you have borrowed a significant amount of money through student loan programs and you are having trouble making payments, the recent news story about a man in Texas, Paul Aker, who was supposedly arrested for nonpayment of student loans may be quite startling to you.
What you should know about this story is that it is somewhat exaggerated.
Mr. Aker was not arrested for simply owing money. He was arrested because he not only failed to pay back a $1500 education loan from Chase bank, he also ignored a lawsuit and a summons to present information in court as to why he did not repay it. His failure to obey a court order was followed by a warrant for his arrest.
"Mr. Aker was not arrested for owning money. He was arrested for handling his situation in an irresponsible manner and breaking laws in the process."
To make matters worse, when officers appeared to serve the warrant, Mr. Aker resisted arrest and told them that he had a gun and would shoot them. Now he faces some serious charges and, instead of owing $1500 he owes nearly $6000 in debt, fees, fines, interest and miscellaneous charges.
If you owe money on student loans, use Mr. Aker’s story as an example of what not to do!
The key phrase in avoiding being arrested for owing money is "Man Up!" When dealing with student loan debt or any kind of debt, you are well advised to behave in a responsible, mature and sensible manner.
In this article, we will share some tips to help you do just that. Read on to learn more.
Know The Terms Of Your Loans
Not all loans are the same, and unscrupulous lenders may hide excessively high interest, fees, penalties and other very negative conditions in the fine print. Lenders stand to make a good profit from you even with the very best of loan terms.
Remember that you are the customer. Be sure that you know exactly what you are buying before you buy it.
Tedious as it may seem, you should always read all of the information that comes with any loan agreement before you sign on the dotted line. You should not just scan it! Give it a thorough reading and be sure you understand it before signing.
If you need help understanding it, take it to a trusted advisor or lawyer to be certain that you know what you're signing.
Be Proactive And Establish Open Communication!
Owing a great deal of money can be overwhelming and frightening, but if you owe it you owe it. Ignoring that fact or running away from it will not change the circumstances other than to make them worse.
If you are having trouble paying your student loans or any kind of loans, you are well advised to get in touch with your lenders and let them know your circumstances.
Many lenders will be more than willing to work with you, and they often have alternative plans in place from which you can choose.
Your first step in avoiding being arrested for your debts is to deal with them in an open, straightforward and honest manner. Acting in good faith will always pay off positively.
Watch Out For Debt Help And Debt Management Scams!
If you have multiple education loans and an overwhelming amount of debt, the idea of handing this problem over to an "expert" may seem very appealing. Be very careful, though. Many debt help and debt management plans are just scams.
"Unscrupulous programs charge you high fees and don't manage your debt any better than you could yourself. In fact they often fumble and blunder and cause you more problems."
Additionally, many of these so-called services have simply gone under in recent years and left their customers still holding the bag with even fewer funds to pay their debts.
You are generally far better off working directly with your creditors and perhaps obtaining a consolidation loan to attain better terms, lower your interest and simplify and lower your monthly payments.
Consolidation is a good way to reorganize your finances to make them more manageable. This smart step will ease your burden now and help you build a strong credit rating.
Seek Qualified Credit Counseling
Unlike debt help and debt management scams, credit counseling can be a genuine way to get your debt under control and your life back in order. If you find yourself struggling along living bill-to-bill, some solid advice and guidance in money management may be very helpful to you.
Reputable and genuine credit counseling services are usually nonprofit organizations. You can find their services offered at your local credit union, housing authority, university, military base or similar institution. You can usually partake of these free services online or over the phone.
keep in mind that you will be divulging quite a bit of sensitive information when you talk with a credit counselor, so look for service that has excellent ratings with the Better Business Bureau and positive reviews and feedback.
Don't provide any personal information until you have had a chance to thoroughly review the services you are considering.
A legitimate credit counseling service should provide you with complete information and disclosure free of charge and without requiring any disclosure from you. Be aware that there are some phony services.
Red flags to watch out for include demands for fees or donations or the requirement that you divulge sensitive information up-front.
Genuine credit counselors are specially trained and certified in money and debt management, consumer credit and budgeting. A good credit counselor will review your income and out-go with you and help you develop a workable budget.
Typically, your first session will last about an hour and your qualified credit counselor will gather all the necessary information to help you create a solid debt management plan.
In The Final Analysis
The bottom line is, avoiding being arrested for not paying your student loans is just a matter of common sense. In the United States, it is against the law to arrest people for owing money; however, the way you manage your debt can leave you open to arrest. That's why it is so important to handle your situation responsibly.
Be sure you understand the laws of your state and any and all agreements you have made. Keep your creditors informed and work with them in good faith to pay back money that you owe. Seek out genuine credit counseling services to help get your finances under control, and pursue loan consolidation if doing so will simplify your repayment process.
If you follow these tips and behave in a mature and sensible manner, you should not have any reason to fear arrest.
You should also know that, when you are managing your debts responsibly and there are no judgments against you, debt collectors are prohibited from harassing you or threatening you with jail time. If this happens, you have recourse. You can file a complaint with the Federal Trade Commission.