Professor Gregory Germain recently answered questions about personal loans at Wallet Hub. He discussed tax implications, recommended uses for a personal loan, and the pandemic’s impact on personal loans.
When asked about what happens if you have trouble paying back a personal loan, Germain said “First, you have to cut back your living expenses and develop a plan to pay off your debts as quickly as possible. This is not easy. It requires you to recognize that you got into this situation by living above your means, and that things have to change. If you are so far in debt that you cannot economize out of the situation, you need to consider filing bankruptcy and starting over, if you are eligible for a discharge in bankruptcy. But bankruptcy will be only a temporary measure if you do not change your living and spending habits. Ultimately you have to earn more than you spend, and make prudent financial decisions, if you want a future of financial freedom, security and prosperity.”