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Student loan debt an obstacle to home buying

Arkansas residents may be familiar with the rise of student loan debt and its effects on a young person's ability to buy a home. In the last quarter of 2014, 11.3 percent of all student loans were 90 days past due or later, which was up from 11.1 percent in the third quarter of 2014. Overall student loan borrowing was up to $1.16 trillion, an increase of 7 percent in the last 12 months.

Since 2008, a trend has emerged regarding student loan and mortgage debt. This trend indicates that those with student loan debt are less likely to have a mortgage compared to those who do not have student loan debt. Prior to 2008, those with student loan debt were more likely to have a mortgage as their educations led to higher incomes.

While student loan delinquencies are increasing, borrowers are handling other debts well. Only 7.3 percent of credit card balances were 90 days late while mortgage delinquencies have dropped to 3.1 percent. Those rates are down from 14 percent for credit cards in 2010 and 9 percent for mortgages in the early part of 2010. Overall debt has increased to $11.8 trillion, which is generally a sign that Americans are confident about their ability to handle debt.

Debtors who are having trouble dealing with a credit card or mortgage payment may wish to file for bankruptcy. An attorney may be able to explain which debts are eligible for bankruptcy and how to have them discharged. A Chapter 7 bankruptcy may allow for debts to be discharged in weeks or months. In most cases, those who file for bankruptcy may be entitled to an automatic stay of collection activities.

Source: ABC News, "Large Student Debt Load Limits Young Americans' Home-Buying", Christopher Rugaber, Associated Press, Feb. 17, 2015

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