Maxing Out Forbearance
Ken wants to try and use the forbearance period on his student loan to accomplish something, but does Dave agree?
QUESTION: Ken has $65,000 in student loans and a $16,000 car loan, to go along with $4,000 in credit card debt. Should he max out the forbearance period on his student loan to pay on the other stuff? Dave says there is a problem with that, and one other problem as well.
ANSWER: That’s an OK thing to do, but the only problem is that it’s going to continue to accrue interest, so it’s like you’re borrowing on the student loan to get the other stuff moving. On top of that, you need to sell this car. The car might be worth up to $12,000, so put it on the market and get rid of it. The other thing to look at is getting your household income up for a period of time. You guys are in a big hole, and you need to create some income in this process.