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Scenario #1
Suppose a recent college grad had 20k in government student loans. Said college grad has a few credit cards with a collective credit limit of 25k. Said college grad pays the student loans off normally with a credit card (not with the cash advance feature, just as a normal purchase). The college grad then defaults on the credit card and disappears into obscurity. When the credit cards sue for nonpayment, they don't have anywhere to serve the court papers to because he is staying off the radar.
In real life, one of my friends actually ran up all of his credit cards before skipping town and going to Canada.
Maybe I'm missing something, but is there any interesting difference between this scenario and a simpler scenario where the college grad just skips out on the student loans themselves and "disappears into obscurity" or leaves the country? The detail of using credit cards to pay off loans beforehand seems to unnecessarily complicate the situation.
In any case, I am not aware of any student loan providers that allow borrowers to use a credit card to make payments. As a practical matter, the only way I can think of to do what you are proposing would be put all of your monthly living expenses on your credit card, freeing up 100% of your paycheck to pay down your loans. However, it would take quite a long time to pay off your student debt this way. Your expenses probably aren't very high - I hope they aren't if you are in such dire straits that you're actually considering this plan - so it would probably take over 10 years to pay off your debt, plus another 7 to get your credit clean - quite a long road to take. If you go on an income-based repayment plan you lower your payments and whatever is left of the loan after 25 years is forgiven - seems like a better option overall.
Maybe I'm missing something, but is there any interesting difference between this scenario and a simpler scenario where the college grad just skips out on the student loans themselves and "disappears into obscurity" or leaves the country? The detail of using credit cards to pay off loans beforehand seems to unnecessarily complicate the situation.
In any case, I am not aware of any student loan providers that allow borrowers to use a credit card to make payments. As a practical matter, the only way I can think of to do what you are proposing would be put all of your monthly living expenses on your credit card, freeing up 100% of your paycheck to pay down your loans. However, it would take quite a long time to pay off your student debt this way. Your expenses probably aren't very high - I hope they aren't if you are in such dire straits that you're actually considering this plan - so it would probably take over 10 years to pay off your debt, plus another 7 to get your credit clean - quite a long road to take. If you go on an income-based repayment plan you lower your payments and whatever is left of the loan after 25 years is forgiven - seems like a better option overall.
Yes, after 10 years the plan would be for the college grad return if the credit cards could not locate him and didn't bother to post an ad in the newspaper about the upcoming court date. If he simply left the country without settling the matter in some way, then returning would not be an option. All of this is assuming the plan works. I'm posting on here to see if anyone can think of potential complications with this scenario.
For government student loans, they will let you use a credit card if you defaulted and have no other means of paying them.
Yes, after 10 years the plan would be for the college grad return if the credit cards could not locate him and didn't bother to post an ad in the newspaper about the upcoming court date. If he simply left the country without settling the matter in some way, then returning would not be an option. All of this is assuming the plan works. I'm posting on here to see if anyone can think of potential complications with this scenario.
For government student loans, they will let you use a credit card if you defaulted and have no other means of paying them.
From experience I have learned that creditors have various thresholds at which they sue. Once a credit card issuer is owed around $3,000 in defaulted debt there is a good probability they will sue. Undooubtedly, some creditors will sue for smaller balances and others won't sue until balances reach some unknown higher level.
The credit card folks waited six years until the accrued interest made the balance worth suing for while staying within the statute of limitations for enforceability.
I had already been in school part time for seven years, working multiple minimum wage jobs to pay for my classes. I didn't want to be a perpetual student and I also didn't want to borrow more money.
You're not helping your case with this post. First you say you discontinued your education because you perceived a shortage of good jobs for people with law degrees, now you say you were just tired of working your way through college and didn't want to borrow more money. Either way, it's pretty clear that you are where you are today largely because of your own choices.
Quote:
I had a friend who had just gootten out of law scxhool passed the bar exam and was working as a stockboy to (try to) repay his vast student loans. That was perhas the tipping factor for me.
He ended up going into local politics and advanced to an elected position making $100K.
So you acknowledge that if you had stuck it out things might have worked out much better for you. Good for you, that's the first step toward recovery.
From experience I have learned that creditors have various thresholds at which they sue. Once a credit card issuer is owed around $3,000 in defaulted debt there is a good probability they will sue. Undooubtedly, some creditors will sue for smaller balances and others won't sue until balances reach some unknown higher level.
The credit card folks waited six years until the accrued interest made the balance worth suing for while staying within the statute of limitations for enforceability.
Yes, I agree that they will start suing when it gets to around the 3k mark. But if they are unsuccessful at serving papers (like if the sheriff knocks on the door but nobody answers), then the case is usually dismissed, especially if they think you are dead ass broke and collection would be a fruitless matter.
There's better ways to pay off your student loans than
misuse of credit cards. Don't do it.
It can be considered fraud by the state and the interest
alone you would have to pay back on such a deal would
make it a stupid choice. A highly stupid choice.
Do any of you have any documented, real life examples to back up your statements? There isn't much value in a thread where people on both sides say "This might happen..." or "That might happen...".
Do any of you have any documented, real life examples to back up your statements? There isn't much value in a thread where people on both sides say "This might happen..." or "That might happen...".
You've already asked. I think someone would have said so if they did. There are only so many people on this forum at any given time and you're talking about something very few people actually do, so it doesn't surprise me no one can speak from firsthand experience.
Takes two to tango, eh? I was initially rejected by the job market during the Carter recession - very little demand in the Rust Belt for liberal arts graduates at that time. By the time the Reagan Recovery caused rents to necessarily skyrocket, I was rejected by employers for lack of career-related experience.
In the absence of career-related experience, the marketable shelf life of a college degree is five years and certainly is not indefinite as some people appear to believe.
Wait.....you graduated from college during Jimmy Carter's presidency? So you've been out of college roughly 35 years? And you've done.......nothing? Except minimum wage jobs?
No vocational training? No certifications?
Heck, I graduated from a liberal arts college (not a liberal arts DEGREE, though...mine was more specific than that!) in the mid-80s. I had no problems finding employment immediately upon graduation. I then stepped out of the paid world for roughly 10 years while I stayed home with my children, and when I re-entered right after 2000, I was able to find employment with little trouble.
You've already asked. I think someone would have said so if they did. There are only so many people on this forum at any given time and you're talking about something very few people actually do, so it doesn't surprise me no one can speak from firsthand experience.
It doesn't have to be someone on this forum who did it themselves, but even if they KNOW of someone who did or perhaps heard of a case in their area where it happened. When people ask questions about running up their credit cards to get a load of free stuff, you see plenty of scowling right wing nutjobs tell them that they will get sued in court and lose big time. But what those same right wing nutjobs don't tell the person thinking of running up their cards is that if the credit card companies can't serve you court papers and you don't have any hard property or income, then they will most likely just drop the matter and not bother serving the legal notice via publication. It's those types of hacks as I call them that can really open the door for someone.
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