Asking a Loan Company for a Deferment
The best time to ask a loan company for a deferment, or a postponement of your payments, is before you desperately need the help. Most creditors require that you continue to make payments until a deferment has been approved. If you stop making payments altogether, your lender can report these missed payments to credit bureaus, which will hurt your credit rating. Defaulting on loan altogether may lead to wage garnishment if a creditor sues you for an unpaid debt. Ultimately, defaulting on loans may lead to bankruptcy.
Deferment and Forbearance Programs
If you have had a medical emergency or a disability that prevents you from earning an income, you may be struggling to keep up with your monthly bills. When it comes to choosing between paying for your mortgage, your car or your credit card bills, it is wise to cover the costs of your house and automobile first. Although you may be pressured by credit card companies to make a payment, the consequences of losing your home or your means of transportation are much more severe.
Before you contact your lenders, work out your budget to determine what you are able to pay so you avoid defaults and wage garnishing. Your creditors may ask you whether you can make reduced payments, and when you expect to be able to make full payments again. If possible, contact your credit card company while you are still able to make payments to discuss your situation with your creditors. They may allow you to defer your payments based on medical necessity or another personal crisis.
Your credit card company may offer a forbearance option, which allows you to postpone repayments for a certain period of time. Your mortgage and auto lender may have similar programs if you are unable to continue paying for your house and car. During the forbearance period on your loans, interest may continue to accrue. You may also be charged fees or penalties by some lenders. Although forbearance will extend the length of your loan, this delay may give you the time you need to recover your physical or financial health, so that you can resume payments.
Student Loan Deferment
Students graduating from college or earning graduate degrees may start their professional lives under a large burden of debt. For a period of time after you graduate, your loan payments may automatically be deferred so that you can get started in your career without worrying about making payments. After the standard grace period, if you aren't earning enough income to pay your loans, you may request a deferral or forbearance to postpone your payments.
Defaulting on student loans is taken very seriously. Lenders may report a delinquency to credit bureaus if your payment is only 30 days late. After a certain period of time, your wages may be garnished to collect the loan. Fortunately, lenders are usually very willing to work with you to lower your payments or arrange a deferment or forbearance. Alternatively, you lender may allow you to pay only the interest that you owe for a period of time.
To request a student loan deferment, contact your lender as soon as you're aware that you might be unable to keep up your financial commitment. Your lender will help you apply for a deferment. If you are unemployed or you've encountered a financial setback, qualifying for a deferment should not be difficult. Keep in mind that interest will continue to accrue on your loans while they are being deferred. If you are still unable to pay after the deferment, consider a consolidation loan to lower your interest rates and reduce your costs.
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State Guides to Credit Card Laws
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