The good news is that younger people with college loans have slashed other forms of debt, such as mortgage payments or credit card bills. However, the share of student loan borrowers falling behind on loan repayments has gone up at the same time. This means that even though student loan borrowers have cut total debt, many are still unable to keep up with college loan repayments.
Arizona residents may be aware that struggling with any form of debt, whether it is college loans or medical bills, is not easy. It is a great feat that borrowers younger than 30 have managed to cut other forms of debt, but they may not be aware that there are legal protections to help them manage their finances. Even though filing for Chapter 13 bankruptcy helps them by basing repayments on income, college loans are not generally wiped out by filing for bankruptcy. However, without the stress of other debts on their mind, borrowers may be able to focus on repaying college loans.
According to economists, the decline in non student loans stems mostly from the decline in mortgage payments. Students are foregoing home ownership and renting out places instead. However, renting does not necessarily lower living expenses- in fact the increase in the rental market has driven up rents. Also, paying rent is still a monthly expense that can actually become more expensive than owning a house-statistics show that owning a home is 44 percent cheaper than renting in the long run.
In addition to this, Arizona residents may not be aware that if homeowners fall behind on their mortgage payments and face foreclosure proceedings, filing for bankruptcy puts an automatic stay on these proceedings. In fact, it may even be possible to retain ownership of a residential home after filing for bankruptcy.
Arizona college graduates should graduate from college with a degree, not with a mountain of debt that affects them physically and mentally. Keeping their options open and being aware of possible legal protections is very important to retain control over their finances.
Source: Invester.com "Total Debt falls, but student loan delinquencies soar," Jason Ma, May 7, 2013