Loans.org Explores the Public’s Growing Acceptance of Defaulting on Loans
Los Angeles, CA (PRWEB) July 10, 2013 -- Debt is a necessary requirement in our consumer culture, but a trend of refusing to repay debts is having a negative impact on both the economy and individual borrowers alike. Loans.org tracked down financial experts, industry insiders, and actual borrowers to find out why the public began to accept defaulting on loans as a viable option for dealing with debt.
“It used to be a real negative to walk away from your debt,” said Todd Tresidder, financial coach and founder of Financialmentor.com. But he said that the housing crisis marked a “shift in consciousness” in the American consumer regarding debt obligations.
One of the most necessary and highly contested forms of consumer debt is student loans.
Student loan debt now outweighs credit card debt. Besides mortgage debt, student debt is the second highest form of debt for American consumers. As reported by loans.org, the average graduate’s student loan debt will be over $35,200 this year.
But debts, no matter how high, are meant to be repaid.
Arabella Flynn, a consulting researcher, said that student loans are often a last priority for repayment because some borrowers feel “defrauded.”
“Higher education is like medical care, in that it’s something you rather need to have if you intend to live a reasonable life in our modern society, but the cost is far out of proportion to what most people can ever pay back,” she said.
Since borrowers cannot return their education and refute the cost, defaulting is the remaining option. And aside from a credit score hit, the penalties for doing so are fairly minimal.
“It’s not possible to repossess knowledge,” Flynn said.
One significant outlet for high outstanding debts is bankruptcy. Although it cannot solve all debt problems, such as those from student loans, it is still an option for many.
But all borrowers are not created equal. For some, they do not view bankruptcy as an alternative, even as their last resort.
Yelena Gurevich, a managing attorney with Consumer Action Law Group, refuses to force anyone to file bankruptcy, but said that it is sometimes the best option for an indebted consumer. The main hurdle she must overcome with her clients is reducing the negative connotations of bankruptcy.
“All they see is the stigma behind it,” she said.
For the full discussion, please read the article at http://loans.org/student/articles/consumer-culture-debt-default.
Additional articles, interviews, news and frequently asked questions about the financing industry are available at http://loans.org/.
About loans.org:
loans.org is a leading lending authority website that covers financial news, produces informative articles, and answers frequently asked questions. In addition to providing lending-related information, loans.org also hosts a variety of free online application forms for prospective borrowers to use when applying for loans.
For more information, please contact:
Rebekah Coleman
Rebekah(at)loans(dot)org
(909) 784-2465
Source: loans.org
Rebekah Coleman, Loans.org, http://loans.org/, (909) 784-2465, [email protected]
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