2 votes

What happens to personal / student debt in after a currency collapse?

My wife and I have a hefty amount of student debt ( through Gov loans + Sallie Mae )
What happens to this debt after a currency collapse?

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Any non government loans you have will be adjustable rate. These are scary. Pay them off. They will max out on interest rates before any currency collapse happens. Get a second job if you must. Get rid of credit card debt.
My thinking is government student loans are ok. These are fixed interest loans and if you borrowed money any time in the last 10 years they are probably already negative interest relative to the CPI. Though maybe not relative to your salary... but even so if you keep your job through the collapse you may benefit-- if your salary increases at half the rate of inflation during the collapse, eventually that will be greater than the 2-4% interest on your gov student loan. but you still have to pay off the principal, especially as these loans cannot be bankrupted.
Otherwise
Have some savings in gold/silver for worst case.
If you are not risk averse and are certain of currency collapse build up a portfolio shorting treasuries. Dont day trade, just put your money in TBT or similar ETF and plan on using this in ten years and you cant lose. These may go down in the near term but on the ten year time scale are guaranteed to make a killing (if they open the market to pay you after the collapse) or at least pay back at a higher interest rate than most investments.

nothing will happen

If you're holding out for a big discharge, you will be disappointed. Your IOU will possibly be traded at a discount but it will be bundled with millions of $s of other loans so you will not have access to buy back your loan at say $.80/dollar unless you want to buy a million dollars of other people loans.

Sorry, man. No jubilee for you.

You can hope for a currency collapse (a total economic disaster) whereby you can pay off your loan at a very steep inflation discount. But that rests on your ability to get yourself massive wage increases during the crackup boom.

Good luck with that.

deacon's picture

the bankers already own

everything that is financed
if a default or collapse happens,the ones
who owe them money will lose everything they own
we use THEIR debt instrument (fiat) they just let us borrow
it from them,with interest of course,
the ones who have their money,say in a bank or otherwise
will lose that too(it will be worthless)
the money is debt,we live in a debt based society,we finance the debt
we are the debt(on paper or computer program)
they can do what they want with what is theirs,and they will
debt will not go away,as long as the fed res,the IRS and the
fed gov uses debt bases funds
apparently we don't even have a way of discharging it anymore
so we cannot default or collapse,but they(the banksters can and do)
all they do is shift their debt to us for collateral
this is just my opinion,but seems to be their MO
deacon

If we deny truth before your very eyes,then the rest of what we have to say,is of little consequence

It's highly unlikely that

private debt will be forgiven (ie mortgage debt vs bankster mortgage security debt) so what will probably happen is your payments/interest will be inflated at the same rate as inflation, and if a new currency is laid in the place of the old they will convert your debt to the new standards of the new currency.

“When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic.” – Dresden James

The government and/or lender

The government and/or lender cannot change the interest rate retroactively, unless if it is an adjustable rate loan. Having been through school myself, I know for a fact that the government does not offer these types of loans. I'm not sure about debt that was issued privately (e.g., through Sallie Mae, as you mentioned). If I was you, I would not count on such a scenario happening anytime soon. Also, if you really think this is going to happen, I would buy an ounce of gold or something like it to preserve purchasing power throughout the process.