College graduations have recently concluded for the 2012-2013 academic year, and those who emerged with their brand new degrees are beginning to enter the workforce. In some cases, Michigan grads are finding their job searches to be more difficult than they anticipated. With the economy continuing a slow crawl toward recovery and a depressed job market, many new grads will turn to employment that has nothing to do with their recent training in order to begin paying back their student loan obligations. In the end, some may need Chapter 13 bankruptcy assistance in order to regain financial stability.
When income is not sufficient to cover the cost of living and address other forms of debt, many who borrowed to pay for their schooling begin to feel the crunch. Some will turn to debt relief companies in an effort to find a workable solution. A recently released report by the National Consumer Law Center (NCLC) warns consumers that many of these companies offer little-to-no debt relief service, but charge high fees that can lead to an even worse financial scenario.
The NCLC looked at 10 debt relief companies and analyzed the services offered. In some cases, they found that companies were charging to facilitate application to federal student loan programs that provide repayment options. These programs are already offered free of charge to anyone with outstanding student loan debt. In other instances, the companies claimed to provide a wide range of debt relief services, but upon further investigation really only offered loan consolidation service.
For those who are feeling overwhelmed by an untenable financial scenario, promises of easy debt relief options are enticing. However, as this report by the NCLC demonstrates, many of the companies who offer these services are little more than scams. For some in Michigan, Chapter 13 bankruptcy offers the best path to financial solvency, by restructuring existing debt to allow an individual the chance to repay their obligations over a longer period of time.
Source: CBS News, "Beware the student-debt-relief industry," Lynn O'Shaughnessy, June 20