The odds of winning a state lottery are low. The odds of winning Powerball, for instance, are one in 195 million. The odds are the same every time you play a new game. Someone wins every week, and you can’t win without buying a ticket, but if you are facing bankruptcy, I would not bet on winning the lottery. Nevertheless, statistics show people who play the lottery are the least able to afford it. The lottery offers hope for the bankrupt.
This personal bankruptcy story was posted on the internet in April of 2011, “I filed for Chapter 7 Bankruptcy and I thought that things were going to work out. I made a couple mistakes. I trusted the wrong people, and the people who had the answers were too far away to notice my choices. I took out a student loan, co-signed for a friend, and we no longer have contact with each other. I hope he started paying for his loan because I’m stuck with mine, even after filing for bankruptcy. Sometimes, I wish I could win the lottery and pay off my debts, and I would give what was left to others in need.”
I agree with the debtor in this personal bankruptcy illustration. It would be nice if he won the lottery, and I hope he does, but winning is unlikely. He should not depend on the lottery. He should learn from his mistakes and take care of business. He had all his unsecured debts discharged (except for his student loan and possibly a friend’s student loan he co-signed). Now is the time to pay off his student loans.
All student loans, whether private or government originated, are protected from bankruptcy proceedings. Private student loans were given preferential protection in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The automatic stay of bankruptcy can postpone due dates for student loans until the bankruptcy is discharged, but a discharge cannot erase the obligation.
Some private loans can compete with government loans with interest rates, but fees are often added that drive their loans much higher. Keep in mind that every 3% to 4% in fees is equivalent to about 1% in interest. The annual percentage rate (APR) can look smaller if the payout is longer, but the payments may be difficult to pay over time. Yes, the debtor in our illustration is stuck with his student loan even after filing for Chapter 7 Bankruptcy and receiving a discharge for his unsecured debts.
If obtaining a student loan is the only way you can develop the skills you need to provide a living for yourself, I am all for it. I put myself through college on student loans and paid them back. Both my children used student loans to get their degrees, and I paid the loans when they graduated. The rules have changed, and it is different now. Make sure you are capable of paying off your loans.
The lottery offers hope for the bankrupt, but winning is unlikely. Before filing for bankruptcy, make sure you understand bankruptcy laws. You may need to consider hiring a bankruptcy lawyer to help you.
If you need relief from the stress of debt and you live in or around the metropolitan areas of Milwaukee or Waukesha, Wisconsin, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.
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