Should I take out a student loan to pay off old credit card debt?
I have $12,000 in credit card debt from 5 years ago. I am currently in school full time and simply cant pay anything on it. The collection agency wants me to get a student loan and settle at the origional debt of $6,000. He is sending me in writting now that the debt will show paid in full on my credit report. Is it wise for me to do this or would I be a fool?
Tony
Comments
Comment from steve.c_50
Time October 29, 2009 at 7:01 am
Don’t you dare. If worse comes to worst, you can file bankruptcy on the credit cards. Student loans are not bankruptable for life. Collection agencies lie,cheat, steal, and are generally scum. They would rape one of their children to get a commission check from a collection, and they are bullsh!tting you now.
If the debt is very old, you can settle it for 35-50%. Otherwise let them talk to a dial tone or sue. Either is better than taking a student loan.
Comment from Grace S
Time October 30, 2009 at 7:35 am
dont do it .. you would be a fool. dont let them scare you….
Comment from M C
Time October 30, 2009 at 8:16 am
Loaded question.. alot of factors here.. Interest rate on student loan is probably lower and you probably can postpone paying that loan until you’re out of school, it’s also a good deal that the credit card company is forgiving $6000 in interest, and you can deduct interest on a student loan on your tax return once you start paying it off.. so, in that scense it’s a good deal. however, if in the future you need to borrow money for school itself you now may have maxed out your availability of borrowing for school… but as long as your credit rating isn’t screwed you can always go back to borrowing on the credit card.. Aaaahhhhh isn’t America great!!
Comment from yamking7
Time October 31, 2009 at 11:43 pm
Karen,
I may be wrong so don’t do this without checking this out, but Student Loans are called ‘Secured debts’ while credit cards are called ‘unsecured’ debts.
I think it would be a BIG MISTAKE to do what you are asking.
You see, the credit card debt is easier to make ‘go away’ than the student loan debt.
Credit card debt can be erased under chapter 7 bankruptcy if you had to, but student loan debt can only be dealt with under a chapter 13 bankruptcy which just freezes the debt for a certain amount of years to give you relief. Chapter 7 ELIMINATES the debt permanently.
When they call, tell them you will send what you can ($20 per month or so) Eventually they will offer to settle for much less than the 12 K.
If you’re really nervous about it and have a family member that can loan you $4,000, offer it to the credit card folks to eliminate the debt and see what they say.
They won’t take you to court because they know you are in school and have no money to ‘garnish’.
Just wait.
Comment from slabberdasken
Time November 3, 2009 at 12:02 pm
You would be a fool to take out a student loan to pay off a credit card debt. First of all there is a Statute of Limitation (SOL) on credit card debt. You may not have a legal obligation to pay it. For your states SOL, check the link below
Credit card debts are always open accounts.
There is no SOL on student loans. They can collect on them forever. Therefore, it would be extremely foolish to take out a student loan to pay on a credit card debt that you may or may not have a legal obligation to pay back anymore.
Comment from justme
Time November 5, 2009 at 7:25 pm
No, don’t do it!!!
In the future if you default on the student loan ( cannot pay the student loan) then the IRS can take any refunds owed to you….However your creditors cannot take refund. And further, if you live in a state that does not garnish wages then creditors cannot take that either.
Secondly, there is a difference between a “settled” debt and “satisfied” So, I would clarify that with the agency – Sounds like he is sweet talking you to get that $12,000 debt off his books.
For old credit card debt you should seek assistance through a debt management agency in your area. They can help set up a payment arrangement with your creditors.
Don’t do the student loan thing!
Comment from shant
Time November 8, 2009 at 8:27 am
Get valuable tips on debt from . It’s a very useful website.
Comment from Brianne G
Time November 10, 2009 at 7:55 pm
i’m not sure, but i think this site has the answer to this particular question. they’ve got lots of stuff about this anyway.
Comment from farrell h
Time November 13, 2009 at 6:49 pm
ook at essential things to keep in mind so as a student doesn’t get bogged down by the credit card debt.
Build a habit of shopping around for things more so for student credit cards:
When you enter a college there are numerous credit card companies waiting to offer you a credit card. Look at each one of them, it might look as time consuming initially but it will save a for you over the college years. A student credit card with lowest APR and other fees will be suitable. Look for rewards that bring additional savings to you. Remember money saved is money earned.
Budget your expenses:
Making a budget is what everyone should learn in early life. The sooner this habit is imbibed, more rewarding the financial future becomes. Budget out your expenses, and eliminate the wastes. Being frugal is not good but being wise helps.
Stick to your budget:
There are temptations to spend more and there will always be. Getting lured into these temptations is a sure shot way to run into credit card debt. Remember every purchase that you make with a credit card is a loan and has to be repaid at the end of the month with interest. Read More from:
Comment from Will
Time October 26, 2009 at 6:26 am
if it is an interest free student loan
then its very wise
credit card interst is hugge