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> It can be a lot of fun but it’s very easy to do worse than die - to end up a slave for the rest of your life to one of the predators. The US has relatively g

> It can be a lot of fun but it’s very easy to do worse than die - to end up a slave for the rest of your life to one of the predators. The US has relatively generous bankruptcy laws. Many people go through bankruptcy and rebuild their credit over several years. It’s not true that you’re a “slave for the rest of your life”. Student loans (which are much lower interest rate and nothing like these loans) can’t be discharged in bankruptcy but even those are open to modification or discharge in the event of hardship. > I’m seeing posts here making it sound like 36% APR is acceptable. These are exactly the type of loans dischargeable in bankruptcy. The people requesting these loans had almost certainly been denied lower interest rate loans because they were likely to go bankrupt. The alternative isn’t that these people get lower interest rates. The alternative is that they don’t get approved for any loans at all. Frankly I think that’s the best option for most of them, but that’s not really my choice to make. It’s theirs. > It’s incredible how folks, particularly in the US, have become this morally uncalibrated. The US gives people a lot of freedom to make their own choices. Still, we do have a lot of protections, but even those are delegated to individual states. In fact, many states do have laws that limit interest rates to as low as 4-5% (bank installment loans). That doesn't mean people in those states are all entitled to cheap loans, but it does mean that anyone with poor credit can't willingly enter into high-APR loans even if they need a short float until their next payday.

ahallock 5y ago
My friend has gone through bankruptcy twice. It was a breeze both times. Paid a court fee and had to go through a simple online course. I wish there weren't such a stigma because companies do this all the time.
- codeddesign 5y ago
  Are you referring to company bankruptcy or personal? Company is easy, personal is extreme.
  - ahallock 5y ago
    Personal. What's extreme? My friend (or me if you think I'm doing that joke) is rebuilding their credit now. They discharged a bunch of medical and credit card debt.
    - toomuchtodo 5y ago
      Absolutely. You’ll be issued credit right away (at higher rates), since you can’t go BK again for a number of years [1] and you’re eligible for an FHA mortgage 1-2 years after filing BK. It’s not great, but it’s not a financial death sentence either. It’s arguably one of the reasons for financial dynamism in the US, where failure is less risky (compared to other OECD countries without such debt forgiveness mechanisms). [1] https://upsolve.org/learn/how-often-can-you-file-bankruptcy/ https://upsolve.org/learn/how-often-can-you-file-bankruptcy/ (Control-F “Time Limits”)
- heavyset_go 5y ago
  Depends on if you can afford bankruptcy. I have a friend from high school who went through bankruptcy for medical debt. All it took was their landlord not renewing their lease for them to be homeless afterwards, because no one else would rent to them with a recent bankruptcy on their credit report. They don't make enough money for that bankruptcy to not have ruined their life.
  - the_only_law 5y ago
    Yeah this is my concern with every having to file bankruptcy. I can live without credit, loans, etc. I cannot live without a place to live.
  - ahallock 5y ago
    That's a good point. You definitely need family or a significant other to provide a safety net while you rebuild.
ljm 5y ago
> The US has relatively generous bankruptcy laws. Many people go through bankruptcy and rebuild their credit over several years. Are you happy to say this with a straight face?
- PragmaticPulp 5y ago
  Yes, of course! Honestly, what would you prefer? That people are forced to repay loans they can't afford? Or that nobody is allowed to take out a loan unless they have enough capital in the bank to repay the loan anyway (e.g. loans are only for rich people)?
  - ljm 5y ago
    You probably shouldn't be given credit if you can't afford to repay it or it seems like you'd struggle to repay it.
    - dataflow 5y ago
      This logic works when people can live decent lives without loans. It breaks down when that ceases to be the case.
      - ashtonkem 5y ago
        If you can’t live a “decent” life without loans, loans will almost certainly make the situation worse.
      - pishpash 5y ago
        Then that's the problem. Unsustainable loans distort the clearing prices for goods and services. College tuition is a great example.
        dataflow 5y ago
        Sure, that's the problem. The question is how do you solve it. Ideally you implement a different solution before removing the existing workaround.
codeddesign 5y ago
While not a slave, for many bankruptcy will ruin any chance of the ownership of assets for 7-10 years. While not slavery, bankruptcy will put you into the peasant category. Tobacco advertising is essentially banned, since it has long term affects. Credit should be no different. If used wisely it can be a good thing, but at the same time it’s marketed to the easiest and most vulnerable. Credit advertising itself should be banned with tax incentives given to companies that require everyone to go through a financial course. In my personal opinion a free financial course should be required before you first get your SSN and then no higher than a $500 credit limit for 6 months after.
- PragmaticPulp 5y ago
  > While not a slave, for many bankruptcy will ruin any chance of the ownership of assets for 7-10 years. People declaring bankruptcy aren't in a position to have good credit scores or acquire more assets anyway. If you can't service your debts, you're not going to be securing more loans and buying more assets. Bankruptcy is a chance to reset the debt to $0 and start over. The bankruptcy even drops off your credit score entirely after several years, making it a complete reset. Bankruptcy is better in every way than forcing people to service those debts forever.
  - ajross 5y ago
    > People declaring bankruptcy aren't in a position to have good credit scores or acquire more assets anyway. That's... kinda ridiculous. My twitter feed[1] is absolutely filled with flush 20-somethings who clearly aren't seven years into their careers showing off their NFTs and cars and condos and whatnot. People right out of college with zero assets are getting loans. People right out of bankruptcy can't. So it's not the same. [1] Seeded, it seems, from my following of a few Tesla-related accounts. There's... a somewhat distressing level of overlap.
  - cyberlurker 5y ago
    I have no debt, but I hold this opinion: Student loan debt should be able to be discharged in bankruptcy. If an institution gives someone a $200k education and that person can’t pay the debt back with their career, it was overpriced and should have never been give a loan. I’ve seen people flee the country and live in Australia or Germany so as just to escape their student loans. Bad on them for making the poor financial choice but good for them sticking it to the industry that gives out these loans.
bko 5y ago
> Many people go through bankruptcy and rebuild their credit over several years. Chapter 13 bankruptcy is deleted from your credit report seven years from the filing date. Chapter 7 bankruptcy is deleted 10 years from the filing date. This means no one can even tell you were bankrupt after 7-10 years, which is pretty incredible feature for borrowers.
- ajross 5y ago
  > This means no one can even tell you were bankrupt Except the banks who loaned you money! There aren't that many banks, and credit reports aren't their only source of intelligence. I'm always amazed at the number of people who recommend bankruptcy as, like, an investment or risk management tactic. It's a huge mess, and seven years is a long time.
  - bko 5y ago
    > Except the banks who loaned you money! There aren't that many banks, and credit reports aren't their only source of intelligence. I don't think they have that info. It's not like you go take a walk down to your local bank and talk to a loan officer that grew up with you. It's a faceless nameless corporation that does very standard checks. They often don't even hold the debt. Trust me, they want to give you a loan and don't have their shit together enough to get unofficial credit history that they're not legally allowed to use.
    - tedyoung 5y ago
      American Express never forgets. 20+ years after declaring bankruptcy and I'm still not able to get an AmEx card, because they have their own records. (I have an 820+ FICO score.)
      - nobody9999 5y ago
        >American Express never forgets. 20+ years after declaring bankruptcy and I'm still not able to get an AmEx card, because they have their own records. (I have an 820+ FICO score.) I can confirm this. I'm 30+ years out from getting a couple thousand written off by Amex and 20+ years out from bankruptcy (a single "debtor" who was the plaintiff in a lawsuit against me, and during which no loans or credit cards were defaulted on) and American Express still won't do business with me, even after being their employee (and having to pay back every penny that was written off before they'd issue me a corporate card) for several years. I'd also note that American Express does not report payment histories on their charge products to the credit bureaus. But they do have a very long memory. Edit: I'd note that I still had a 700+ credit score within the 10 year window after bankruptcy, and my score is in the mid 800s.
alex_young 5y ago
> Student loans (which are much lower interest rate and nothing like these loans) Private student loans currently can be as high as 12.99% fixed: https://www.bankrate.com/loans/student-loans/current-interest-rates/ https://www.bankrate.com/loans/student-loans/current-interes...
- PragmaticPulp 5y ago
  In which case, the person should refinance immediately and lower that rate significantly.
  - alex_young 5y ago
    Just out of curiosity, do you known anyone with significant private student loan debt? I do, and from my experience their debts are not only extremely burdensome, but impossible to renegotiate.
    - ARandomerDude 5y ago
      When I went through it about 10 years ago, I took out an unsecured personal loan for 2.5% and used the cash to "pay off" my student loans. Then I just had a $500/mo payment until I was done with it. I was making about $35K per year but was careful to have excellent credit. It can be done.
    - PragmaticPulp 5y ago
      I've helped several people through it, yes. Renegotiating isn't the same as refinancing. You can see the refinance rates lower down on the page you linked above. The rates are significantly lower. Refinancing student loan debt is an extremely common scenario. It's not an impossible edge case. It would be difficult to do if the person had worked themselves into a situation where they have unreasonably high debt burdens (e.g. $200K+) but no career to speak of, so it's not a magic bullet.
      - jointpdf 5y ago
ouid 5y ago
>Student loans (which are much lower interest rate and nothing like these loans) Yo, student loan rates are like 7%. It's not a payday loan, but it is still essentially unfinanceable.
- PragmaticPulp 5y ago
  Federal loans are actually sitting under 4% and private rates range all the way down to about 3% Source: https://www.bankrate.com/loans/student-loans/current-interest-rates/ https://www.bankrate.com/loans/student-loans/current-interes... Of course it's always possible to go find higher rates depending on the situation, but the averages are closer to 3-4% than 7%.
  - matthewdgreen 5y ago
    There is an upper limit on the amount you can take in these loans and it’s depressingly low, well below the tuition of many private (and some public) colleges. To finance the rest you’re looking at much higher rates.
- dragonwriter 5y ago
  > Yo, student loan rates are like 7%. Yo, only parent and graduate loans are close to that, of federal loans (private loans are another issue, and also probably involve an unaccredited institution that doesn't qualify for federal loans): https://studentaid.gov/understand-aid/types/loans/interest-rates https://studentaid.gov/understand-aid/types/loans/interest-r...
  - criley2 5y ago
    Yo, just because a new student getting loans right now can get 4% doesn't mean that 7% wasn't absolutely the norm for many people over the past decades. Anyone in their 30s has 6 or 7% or more on their loans, before ZIRP took over. And since raising rates is the way they're going to stop inflation, like it or not, that 4% is going to end real soon and kids will be back to 5-7% in the next few years.
istjohn 5y ago
> Student loans (which are much lower interest rate and nothing like these loans) can’t be discharged in bankruptcy but even those are open to modification or discharge in the event of hardship. Student loans are not so easily discharged. Yes, in theory they can be written off in cases of "undue hardship." But in practice, good luck finding an attorney willing to take your case.
- EmpirePhoenix 5y ago
  Get a lot of credit cards, pay of loan that cannot bankrupt, then go bankrupt with all those credits
  - deleted 5y ago
    [deleted]
  - vineyardmike 5y ago
    So obviously bad advice, but the reason is that to declare bankruptcy you have to convince a judge to do it. You might have trouble with that using this terrible plan.
    - jimnotgym 5y ago
      I was offering debt advice to a young person recently in the UK. They had gone to a UK debt management company that seeks to compound your debt by asking your creditors to accept an Individual Voluntary Agreement where you agree to pay back a certain amount per month for a fixed period and then get it written off. In practice it affects your credit rating like bankruptcy. They were advised by that company to do exactly what the person above said, max their credit cards first. Cash advance if possible. Not the first time I have heard this
- bredren 5y ago
  They are also may not be payday-loan high interest, but the interest is not necessarily low either. Federal Plus loans were 8.5% until that program was shut down in 2010. [0][1] Graduate Direct Subsidized and Subsidized Federal loan rates were 7.9% from 2006-2013 and have not dropped below 6.3% since. [1] [0] https://en.wikipedia.org/wiki/Federal_Family_Education_Loan_Program#End_of_new_loans https://en.wikipedia.org/wiki/Federal_Family_Education_Loan_... [1] https://www.finder.com/federal-student-loan-interest-rates-by-year https://www.finder.com/federal-student-loan-interest-rates-b...
callmeal 5y ago
>The US has relatively generous bankruptcy laws. Many people go through bankruptcy and rebuild their credit over several years. Not for student loans. https://bostonstudentloanlawyer.com/the-death-and-bankruptcy-clause-in-private-student-loan-contracts/ https://bostonstudentloanlawyer.com/the-death-and-bankruptcy... Like federal student loans, private student loans typically cannot be discharged in bankruptcy (although it is not impossible). ... Many (although not all) private student loans have this tiny little clause, often hidden away in the obscure depths of the promissory note (the loan contract that you signed, but probably didn’t read, when you first got the loan). The clause basically says the following (and I’m paraphrasing here): If the co-signer or the borrower dies or declares bankruptcy, the entire balance of the loan will be come due immediately.
lhorie 5y ago
One could argue that US' cultural focus on its flavor of freedom is partly at fault for why GP characterizes it as Jurassic Park. In the movie, the characters had ample freedom to go wherever they wanted (even jumping over electric fences), but at the same time, that same freedom made it easy for them to run into predators. The ease with which a loose predator could find a person in the movie can be likened to the ease of getting into financial trouble in the US. Student debt is notoriously unforgiving, both in terms of raw dollar amount and bankruptcy rules, and the way the US healthcare is structured means there's an unusually high rate of medical bankruptcies compared to other rich countries. The US also leads the charts in average credit card debt. The US also doesn't have as strong social nets for unemployment and parental leave among other things (and for better or worse, there's an undeniable strong relationship between the american notion of freedom and the comparative lack of government-run social net programs). To continue with the dinosaur park analogy, you could then look at a country like Canada as an alternative zoological park, where you must sacrifice a bit of freedom by staying within designated lanes, but in return you don't run into situations where medical debt beasts can bite your head off in the first place.
- nine_k 5y ago
  The founding fathers gave a very fair warning: "The price of liberty is eternal vigilance". That is, a constant expectation of a threat from the environment, even if it's benign most of the time. So the park's elements are here by design.
  - cowpig 5y ago
    1. That is a spurious quotation[1] 2. Your interpretation of its meaning is, frankly, bizarre [1] https://www.monticello.org/site/research-and-collections/eternal-vigilance-price-liberty-spurious-quotation https://www.monticello.org/site/research-and-collections/ete...
    - zepto 5y ago
      The idea that financial predators are by design, is indeed bizarre. However the idea that they are one of the kinds of threat that a democracy needs to be vigilant against doesn’t seem bizarre in the least.
reaperducer 5y ago
The US has relatively generous bankruptcy laws Or we could just fix the system so that people don't need to use bankruptcy in the first place. The only people who benefit from the "there's always bankruptcy" attitude is lawyers.
colordrops 5y ago
Am I the only one that thinks it's backwards that student loans can't be discharged? It should be one of the only kinds of loans you can discharge. Why would you as a nation want to saddle your youngest most ambitious and most valuable people?
- 300bps 5y ago
  Because if you allow bankruptcy to discharge them that would make the interest rate 3-4x what it is today and people couldn’t afford it.
  - rdtwo 5y ago
    This is a good thing not a bad one. Colleges would have to trim down prices significantly
- alisonkisk 5y ago
  It sounds like you are saying that education should be funded by the state. Which is a fine idea, much better than playing crazy financing games that turn education into (US) healthcare /insurance. But also, the ambitious and valuable people are the ones who can pay back their loans.
- landemva 5y ago
  If you look at the ramp in college costs, prices started climbing immediately after Clinton signed this into law. It was a gift to the bankers who get to make loans on a higher priced product and the loans are difficult to not repay because they typically get parents to co-sign.
  - sjg007 5y ago
    I think you mean Bush. It was GW who did this.
    - mdorazio 5y ago
      Nope. 1998 - it was Clinton [1]. [1] https://thehill.com/blogs/congress-blog/economy-budget/283625-how-the-clinton-administration-made-it-harder-on-student https://thehill.com/blogs/congress-blog/economy-budget/28362...
parkingrift 5y ago
> Student loans (which are much lower interest rate and nothing like these loans) can’t be discharged in bankruptcy but even those are open to modification or discharge in the event of hardship. This is a common misconception. Student loans are commonly discharged in bankruptcy. Enough people believe this that they don’t even try. The only additional rule for student loans is “undue hardship” which is not difficult to prove or argue for in bankruptcy. https://www.npr.org/2020/01/22/797330613/myth-busted-turns-out-bankruptcy-can-wipe-out-student-loan-debt-after-all https://www.npr.org/2020/01/22/797330613/myth-busted-turns-o...
deleted 5y ago
[deleted]
actually_a_dog 5y ago
You mean the very same bankruptcy laws that more or less prevent you from borrowing money for years to come, should you decide to use them?
justapassenger 5y ago
> The US has relatively generous bankruptcy laws. Many people go through bankruptcy and rebuild their credit over several years. It’s like saying that you don’t need seatbelts in the car, because you have good medical insurance. USA obsession with credit is the root cause of the issue, and relatively generous bankruptcy laws are a smoke gun to keep the show going and make people comfortable with a system rigged against them. Credit makes a lot of money for a lot of companies, and risk of customers bankruptcy is just a cost of business for them, designed carefully to ensure they still end up making money.
EdwardDiego 5y ago
On US laws, is it only some states where you can walk away from a foreclosed home, taking a loss on the asset, but not being forced to repay the mortgage remaining after the bank sells the house? Because I've always thought that was a very generous law indeed.
jimnotgym 5y ago
> Student loans (which are much lower interest rate and nothing like these loans) can’t be discharged in bankruptcy I am in the UK This astounded me. Bankruptcy in the UK would wipe out student loans. However it is fair to say that bankruptcy also carries a stigma in the UK. It also restricts you from certain professions
dnautics 5y ago
> The US has relatively generous bankruptcy laws We absolutely need to destigmatize bankruptcy, too. And also do things like make medical and student debt dischargeable. Debt is and always should be a risk -- for the lender, who is literally getting free money out of the contract.

ahallock 5y ago

My friend has gone through bankruptcy twice. It was a breeze both times. Paid a court fee and had to go through a simple online course. I wish there weren't such a stigma because companies do this all the time.

codeddesign 5y ago
Are you referring to company bankruptcy or personal? Company is easy, personal is extreme.
- ahallock 5y ago
  Personal. What's extreme? My friend (or me if you think I'm doing that joke) is rebuilding their credit now. They discharged a bunch of medical and credit card debt.
  - toomuchtodo 5y ago
    Absolutely. You’ll be issued credit right away (at higher rates), since you can’t go BK again for a number of years [1] and you’re eligible for an FHA mortgage 1-2 years after filing BK. It’s not great, but it’s not a financial death sentence either. It’s arguably one of the reasons for financial dynamism in the US, where failure is less risky (compared to other OECD countries without such debt forgiveness mechanisms). [1] https://upsolve.org/learn/how-often-can-you-file-bankruptcy/ https://upsolve.org/learn/how-often-can-you-file-bankruptcy/ (Control-F “Time Limits”)
heavyset_go 5y ago
Depends on if you can afford bankruptcy. I have a friend from high school who went through bankruptcy for medical debt. All it took was their landlord not renewing their lease for them to be homeless afterwards, because no one else would rent to them with a recent bankruptcy on their credit report. They don't make enough money for that bankruptcy to not have ruined their life.
- the_only_law 5y ago
  Yeah this is my concern with every having to file bankruptcy. I can live without credit, loans, etc. I cannot live without a place to live.
- ahallock 5y ago
  That's a good point. You definitely need family or a significant other to provide a safety net while you rebuild.

ljm 5y ago

> The US has relatively generous bankruptcy laws. Many people go through bankruptcy and rebuild their credit over several years. Are you happy to say this with a straight face?

PragmaticPulp 5y ago
Yes, of course! Honestly, what would you prefer? That people are forced to repay loans they can't afford? Or that nobody is allowed to take out a loan unless they have enough capital in the bank to repay the loan anyway (e.g. loans are only for rich people)?
- ljm 5y ago
  You probably shouldn't be given credit if you can't afford to repay it or it seems like you'd struggle to repay it.
  - dataflow 5y ago
    This logic works when people can live decent lives without loans. It breaks down when that ceases to be the case.
    - ashtonkem 5y ago
      If you can’t live a “decent” life without loans, loans will almost certainly make the situation worse.
    - pishpash 5y ago
      Then that's the problem. Unsustainable loans distort the clearing prices for goods and services. College tuition is a great example.
      - dataflow 5y ago
        Sure, that's the problem. The question is how do you solve it. Ideally you implement a different solution before removing the existing workaround.

codeddesign 5y ago

While not a slave, for many bankruptcy will ruin any chance of the ownership of assets for 7-10 years. While not slavery, bankruptcy will put you into the peasant category. Tobacco advertising is essentially banned, since it has long term affects. Credit should be no different. If used wisely it can be a good thing, but at the same time it’s marketed to the easiest and most vulnerable. Credit advertising itself should be banned with tax incentives given to companies that require everyone to go through a financial course. In my personal opinion a free financial course should be required before you first get your SSN and then no higher than a $500 credit limit for 6 months after.

PragmaticPulp 5y ago
> While not a slave, for many bankruptcy will ruin any chance of the ownership of assets for 7-10 years. People declaring bankruptcy aren't in a position to have good credit scores or acquire more assets anyway. If you can't service your debts, you're not going to be securing more loans and buying more assets. Bankruptcy is a chance to reset the debt to $0 and start over. The bankruptcy even drops off your credit score entirely after several years, making it a complete reset. Bankruptcy is better in every way than forcing people to service those debts forever.
- ajross 5y ago
  > People declaring bankruptcy aren't in a position to have good credit scores or acquire more assets anyway. That's... kinda ridiculous. My twitter feed[1] is absolutely filled with flush 20-somethings who clearly aren't seven years into their careers showing off their NFTs and cars and condos and whatnot. People right out of college with zero assets are getting loans. People right out of bankruptcy can't. So it's not the same. [1] Seeded, it seems, from my following of a few Tesla-related accounts. There's... a somewhat distressing level of overlap.
- cyberlurker 5y ago
  I have no debt, but I hold this opinion: Student loan debt should be able to be discharged in bankruptcy. If an institution gives someone a $200k education and that person can’t pay the debt back with their career, it was overpriced and should have never been give a loan. I’ve seen people flee the country and live in Australia or Germany so as just to escape their student loans. Bad on them for making the poor financial choice but good for them sticking it to the industry that gives out these loans.

bko 5y ago

> Many people go through bankruptcy and rebuild their credit over several years. Chapter 13 bankruptcy is deleted from your credit report seven years from the filing date. Chapter 7 bankruptcy is deleted 10 years from the filing date. This means no one can even tell you were bankrupt after 7-10 years, which is pretty incredible feature for borrowers.

ajross 5y ago
> This means no one can even tell you were bankrupt Except the banks who loaned you money! There aren't that many banks, and credit reports aren't their only source of intelligence. I'm always amazed at the number of people who recommend bankruptcy as, like, an investment or risk management tactic. It's a huge mess, and seven years is a long time.
- bko 5y ago
  > Except the banks who loaned you money! There aren't that many banks, and credit reports aren't their only source of intelligence. I don't think they have that info. It's not like you go take a walk down to your local bank and talk to a loan officer that grew up with you. It's a faceless nameless corporation that does very standard checks. They often don't even hold the debt. Trust me, they want to give you a loan and don't have their shit together enough to get unofficial credit history that they're not legally allowed to use.
  - tedyoung 5y ago
    American Express never forgets. 20+ years after declaring bankruptcy and I'm still not able to get an AmEx card, because they have their own records. (I have an 820+ FICO score.)
    - nobody9999 5y ago
      >American Express never forgets. 20+ years after declaring bankruptcy and I'm still not able to get an AmEx card, because they have their own records. (I have an 820+ FICO score.) I can confirm this. I'm 30+ years out from getting a couple thousand written off by Amex and 20+ years out from bankruptcy (a single "debtor" who was the plaintiff in a lawsuit against me, and during which no loans or credit cards were defaulted on) and American Express still won't do business with me, even after being their employee (and having to pay back every penny that was written off before they'd issue me a corporate card) for several years. I'd also note that American Express does not report payment histories on their charge products to the credit bureaus. But they do have a very long memory. Edit: I'd note that I still had a 700+ credit score within the 10 year window after bankruptcy, and my score is in the mid 800s.

alex_young 5y ago

> Student loans (which are much lower interest rate and nothing like these loans) Private student loans currently can be as high as 12.99% fixed: https://www.bankrate.com/loans/student-loans/current-interest-rates/ https://www.bankrate.com/loans/student-loans/current-interes...

PragmaticPulp 5y ago
In which case, the person should refinance immediately and lower that rate significantly.
- alex_young 5y ago
  Just out of curiosity, do you known anyone with significant private student loan debt? I do, and from my experience their debts are not only extremely burdensome, but impossible to renegotiate.
  - ARandomerDude 5y ago
    When I went through it about 10 years ago, I took out an unsecured personal loan for 2.5% and used the cash to "pay off" my student loans. Then I just had a $500/mo payment until I was done with it. I was making about $35K per year but was careful to have excellent credit. It can be done.
  - PragmaticPulp 5y ago
    I've helped several people through it, yes. Renegotiating isn't the same as refinancing. You can see the refinance rates lower down on the page you linked above. The rates are significantly lower. Refinancing student loan debt is an extremely common scenario. It's not an impossible edge case. It would be difficult to do if the person had worked themselves into a situation where they have unreasonably high debt burdens (e.g. $200K+) but no career to speak of, so it's not a magic bullet.
    - jointpdf 5y ago

ouid 5y ago

>Student loans (which are much lower interest rate and nothing like these loans) Yo, student loan rates are like 7%. It's not a payday loan, but it is still essentially unfinanceable.

PragmaticPulp 5y ago
Federal loans are actually sitting under 4% and private rates range all the way down to about 3% Source: https://www.bankrate.com/loans/student-loans/current-interest-rates/ https://www.bankrate.com/loans/student-loans/current-interes... Of course it's always possible to go find higher rates depending on the situation, but the averages are closer to 3-4% than 7%.
- matthewdgreen 5y ago
  There is an upper limit on the amount you can take in these loans and it’s depressingly low, well below the tuition of many private (and some public) colleges. To finance the rest you’re looking at much higher rates.
dragonwriter 5y ago
> Yo, student loan rates are like 7%. Yo, only parent and graduate loans are close to that, of federal loans (private loans are another issue, and also probably involve an unaccredited institution that doesn't qualify for federal loans): https://studentaid.gov/understand-aid/types/loans/interest-rates https://studentaid.gov/understand-aid/types/loans/interest-r...
- criley2 5y ago
  Yo, just because a new student getting loans right now can get 4% doesn't mean that 7% wasn't absolutely the norm for many people over the past decades. Anyone in their 30s has 6 or 7% or more on their loans, before ZIRP took over. And since raising rates is the way they're going to stop inflation, like it or not, that 4% is going to end real soon and kids will be back to 5-7% in the next few years.

istjohn 5y ago

> Student loans (which are much lower interest rate and nothing like these loans) can’t be discharged in bankruptcy but even those are open to modification or discharge in the event of hardship. Student loans are not so easily discharged. Yes, in theory they can be written off in cases of "undue hardship." But in practice, good luck finding an attorney willing to take your case.

EmpirePhoenix 5y ago
Get a lot of credit cards, pay of loan that cannot bankrupt, then go bankrupt with all those credits
- deleted 5y ago
  [deleted]
- vineyardmike 5y ago
  So obviously bad advice, but the reason is that to declare bankruptcy you have to convince a judge to do it. You might have trouble with that using this terrible plan.
  - jimnotgym 5y ago
    I was offering debt advice to a young person recently in the UK. They had gone to a UK debt management company that seeks to compound your debt by asking your creditors to accept an Individual Voluntary Agreement where you agree to pay back a certain amount per month for a fixed period and then get it written off. In practice it affects your credit rating like bankruptcy. They were advised by that company to do exactly what the person above said, max their credit cards first. Cash advance if possible. Not the first time I have heard this
bredren 5y ago
They are also may not be payday-loan high interest, but the interest is not necessarily low either. Federal Plus loans were 8.5% until that program was shut down in 2010. [0][1] Graduate Direct Subsidized and Subsidized Federal loan rates were 7.9% from 2006-2013 and have not dropped below 6.3% since. [1] [0] https://en.wikipedia.org/wiki/Federal_Family_Education_Loan_Program#End_of_new_loans https://en.wikipedia.org/wiki/Federal_Family_Education_Loan_... [1] https://www.finder.com/federal-student-loan-interest-rates-by-year https://www.finder.com/federal-student-loan-interest-rates-b...

callmeal 5y ago

>The US has relatively generous bankruptcy laws. Many people go through bankruptcy and rebuild their credit over several years. Not for student loans. https://bostonstudentloanlawyer.com/the-death-and-bankruptcy-clause-in-private-student-loan-contracts/ https://bostonstudentloanlawyer.com/the-death-and-bankruptcy... Like federal student loans, private student loans typically cannot be discharged in bankruptcy (although it is not impossible). ... Many (although not all) private student loans have this tiny little clause, often hidden away in the obscure depths of the promissory note (the loan contract that you signed, but probably didn’t read, when you first got the loan). The clause basically says the following (and I’m paraphrasing here): If the co-signer or the borrower dies or declares bankruptcy, the entire balance of the loan will be come due immediately.

lhorie 5y ago

One could argue that US' cultural focus on its flavor of freedom is partly at fault for why GP characterizes it as Jurassic Park. In the movie, the characters had ample freedom to go wherever they wanted (even jumping over electric fences), but at the same time, that same freedom made it easy for them to run into predators. The ease with which a loose predator could find a person in the movie can be likened to the ease of getting into financial trouble in the US. Student debt is notoriously unforgiving, both in terms of raw dollar amount and bankruptcy rules, and the way the US healthcare is structured means there's an unusually high rate of medical bankruptcies compared to other rich countries. The US also leads the charts in average credit card debt. The US also doesn't have as strong social nets for unemployment and parental leave among other things (and for better or worse, there's an undeniable strong relationship between the american notion of freedom and the comparative lack of government-run social net programs). To continue with the dinosaur park analogy, you could then look at a country like Canada as an alternative zoological park, where you must sacrifice a bit of freedom by staying within designated lanes, but in return you don't run into situations where medical debt beasts can bite your head off in the first place.

nine_k 5y ago
The founding fathers gave a very fair warning: "The price of liberty is eternal vigilance". That is, a constant expectation of a threat from the environment, even if it's benign most of the time. So the park's elements are here by design.
- cowpig 5y ago
  1. That is a spurious quotation[1] 2. Your interpretation of its meaning is, frankly, bizarre [1] https://www.monticello.org/site/research-and-collections/eternal-vigilance-price-liberty-spurious-quotation https://www.monticello.org/site/research-and-collections/ete...
  - zepto 5y ago
    The idea that financial predators are by design, is indeed bizarre. However the idea that they are one of the kinds of threat that a democracy needs to be vigilant against doesn’t seem bizarre in the least.

reaperducer 5y ago

The US has relatively generous bankruptcy laws Or we could just fix the system so that people don't need to use bankruptcy in the first place. The only people who benefit from the "there's always bankruptcy" attitude is lawyers.

colordrops 5y ago

Am I the only one that thinks it's backwards that student loans can't be discharged? It should be one of the only kinds of loans you can discharge. Why would you as a nation want to saddle your youngest most ambitious and most valuable people?

300bps 5y ago
Because if you allow bankruptcy to discharge them that would make the interest rate 3-4x what it is today and people couldn’t afford it.
- rdtwo 5y ago
  This is a good thing not a bad one. Colleges would have to trim down prices significantly
alisonkisk 5y ago
It sounds like you are saying that education should be funded by the state. Which is a fine idea, much better than playing crazy financing games that turn education into (US) healthcare /insurance. But also, the ambitious and valuable people are the ones who can pay back their loans.
landemva 5y ago
If you look at the ramp in college costs, prices started climbing immediately after Clinton signed this into law. It was a gift to the bankers who get to make loans on a higher priced product and the loans are difficult to not repay because they typically get parents to co-sign.
- sjg007 5y ago
  I think you mean Bush. It was GW who did this.
  - mdorazio 5y ago
    Nope. 1998 - it was Clinton [1]. [1] https://thehill.com/blogs/congress-blog/economy-budget/283625-how-the-clinton-administration-made-it-harder-on-student https://thehill.com/blogs/congress-blog/economy-budget/28362...

parkingrift 5y ago

> Student loans (which are much lower interest rate and nothing like these loans) can’t be discharged in bankruptcy but even those are open to modification or discharge in the event of hardship. This is a common misconception. Student loans are commonly discharged in bankruptcy. Enough people believe this that they don’t even try. The only additional rule for student loans is “undue hardship” which is not difficult to prove or argue for in bankruptcy. https://www.npr.org/2020/01/22/797330613/myth-busted-turns-out-bankruptcy-can-wipe-out-student-loan-debt-after-all https://www.npr.org/2020/01/22/797330613/myth-busted-turns-o...

deleted 5y ago

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actually_a_dog 5y ago

You mean the very same bankruptcy laws that more or less prevent you from borrowing money for years to come, should you decide to use them?

justapassenger 5y ago

> The US has relatively generous bankruptcy laws. Many people go through bankruptcy and rebuild their credit over several years. It’s like saying that you don’t need seatbelts in the car, because you have good medical insurance. USA obsession with credit is the root cause of the issue, and relatively generous bankruptcy laws are a smoke gun to keep the show going and make people comfortable with a system rigged against them. Credit makes a lot of money for a lot of companies, and risk of customers bankruptcy is just a cost of business for them, designed carefully to ensure they still end up making money.

EdwardDiego 5y ago

On US laws, is it only some states where you can walk away from a foreclosed home, taking a loss on the asset, but not being forced to repay the mortgage remaining after the bank sells the house? Because I've always thought that was a very generous law indeed.

jimnotgym 5y ago

> Student loans (which are much lower interest rate and nothing like these loans) can’t be discharged in bankruptcy I am in the UK This astounded me. Bankruptcy in the UK would wipe out student loans. However it is fair to say that bankruptcy also carries a stigma in the UK. It also restricts you from certain professions

dnautics 5y ago

> The US has relatively generous bankruptcy laws We absolutely need to destigmatize bankruptcy, too. And also do things like make medical and student debt dischargeable. Debt is and always should be a risk -- for the lender, who is literally getting free money out of the contract.