Korean Job Discussion Forums

[thomas pars]

I've heard of this strategy by a few people living here. They've let their
student loans go into default. The loan gets bought for pennies on the
dollar by a collection agency. After a while the collection agency will take
whatever they can get for the loan. Often 50-70% of the value of the loan.
So for example a $22,000 loan gets bought for $7,500.

Apparently living overseas deters the creditors from pursuing it much.
I am sure they would probably bug your parents. And of course your credit would take a hit.
But if you've planned to make Korea your home, is this a viable solution?

I'm not interested in any moralistic lessons. So let's limit the
"you borrowed it you should repay it" replies.
Getting a 50-70% reduction on your student
loans for the sake of a bad credit report for a few years sounds like a good
trade no?

[climber159]

Posting something like this on this site is just begging for replies about your ethical shortcomings.

That aside, defaulting on your loans and evading collection agencies will surely impact your credit score for more than a few years.

Do your loans really only total $22,000? That's peanuts compared to many others. Pony up and pay 'em off.

[Wishmaster]

It's called "responsibility." Stop trying to think of ways to get out of it. You got the loan, pay it back. I paid my student loan debt off a few years ago. Oh, but I guess you were one of those guys that has like $50,000 in student loan debt all for a BA in History or some other Liberal Arts field . Still, bite the bullet and pay it off. I guess this is the reply quota for your "you borrowed it repay it" response.

[The Happy Warrior]

Its true. Student loans are unsecured loans. This means they are not tied to any collateral. Car loans or mortgages would use the car or house as collateral to the debt.

So when a court enters default judgment against you (you didn't show up to contest the debt), the creditor will sell the judgment to a collections agency. The creditor will sell it for a fraction of its value, probably much less than 50% if the debt is unsecured. So the collections agency gets its profit on the difference, and will be satisfied if it collects more than it bought it for, after costs.

Sometimes, a creditor will sell the debt to a collections agency before getting a court judgment. The collections agency would then pursue the default judgment itself, or perhaps try to get you to pay before going through that expense. Hopefully someone who has worked with a collections agency will come by and post to correct me, I'm unfamiliar with the common practices in this field.

Remember that in the US, collections agencies are highly regulated under the Fair Debt Collections Practices Act (FDCPA). Here's a layman's guide to formulate a strategy on how to deal with collections agencies.

Nevertheless, one cannot file bankruptcy and escape student loans, as one might with a predatory mortgage or onerous debts from a failed business venture.

Student loans have a variety of reduced payment plans which would be better for your credit. You may plan on settling in Korea now, but I doubt you affirmatively hope to burn your bridge back to the US. Conditions could certainly change in Korea, making your presence unwelcome.

My advice is to live especially lean for a few months, be timely with your payments, and contact a lawyer who specializes in debt defense. This is a huge decision that will impact your entire life going forward, so in times like these its best to talk to the experts to get a clear picture of your options. A lawyer may be able to help you settle out of court, and reduce the amount of the judgment, so that you can pay off a substantial portion of what you owe and keep your credit from suffering too badly. The lawyer should also be able to explain precisely how this decision would impact your credit.

[PatrickGHBusan]

Good luck with your "plan" genius.

[climber159]

[Louis VI]

Defaulting on government student loans is like cheating on taxes - cunning!

What's karma for *beep*ing the federal gov't out of a few thousand?

[Rothbard]

Did GM and Goldman-Sachs pay off their loans? Why hold the OP up to a higher moral standard than those guys?

The cost of a university education has been inflated well beyond its value in the passed three decades. I don't see anything wrong with attempting to pay closer to its true value (which, depending on the major, is probably close to zero). Besides, is the OP doing anything illegal? I don't think so. And who is he really hurting?

If it were me, I would pay it (as I am doing right now), but I don't see anything morally wrong with what he is doing. Especially in light of the corporate/govt malfeasance that typified the end of the last decade. When will the Obama deficits be payed off? This is tears in the ocean compared to that.

[Rothbard]

[Rothbard]

[climber159]

[Missihippi]

Op, if and when you decide to move back, expect to pay for everything in cash and renting for the forseeable future.

[Rothbard]

[climber159]

[Rothbard]