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Debt in Education The loans and financial obligations that last for longer than one year are generally regarded as long-term debts. It is important to exercise a regular control over such debts, on the part of every individual, to avoid turning them into financial burden. The long-term debts main characteristic is that it usually doesnt apply a deadline for the repayment of the whole amount of borrowed money, which makes borrowing money very appealing from legal point of view, since it allows a great degree of financial flexibility. Nevertheless, there is always a danger that long-term debts accumulation tendency can become uncontrolled. It happens when individual or organization borrows money from a few different sources that guarantee a low interest rates. People often overlook the fact that paying fixed amount of money on annual or monthly basis does not eliminate financial obligations, on the part of borrower, for as long as the whole debt is being paid off.
There are a few legal procedures to deal with long-term financial obligations. The most commonly used one is called debt consolidation. It is rather a preventive measure against an uncontrolled debts accumulation. Its main objective is to reduce an overall interest rates.
This is accomplished through reconsidering a different aspects of loan plans, which individual is currently signed up or. For example, it might prove more beneficial for the individual in the long run, to sell part of its property, in order to reduce an overall amount of debt, rather then complying with its monthly financial obligations by the mean of borrowing money from other institutions. Homeowners can consider home equity loans, since the interest on this loan is tax deductible, for as long as it doesnt exceed the value of house. Another option is borrowing money via margin account. This can substantially reduce the loans interest rates but it is also very risky, since it heavily depends on current financial tendencies in every particular market and it could result in situation when the whole amount of borrowed money will be asked to be returned immediately. Another legal procedure is called debt settlement negotiation.
If person finds itself in very bad financial situation, he can seek for the legal aid in dealing with its creditors. In order for him to be eligible for the temporary delay in carrying out its financial obligations, he would have to prove the rising of new personal circumstances, which unable him to fully comply with the terms of financial agreement. This can be very difficult, as most of creditors make a special reservation for force de majeure situations, when they land money. Nevertheless, creditors are very likely to enter into debt negotiations if there is a danger of debtor filing for bankruptcy, if agreement cannot be reached.
The third and the final legal procedure to manage long-term debts, is filing for bankruptcy. If court recognises that person or organization is unable to stick to its financial obligations, it can announce it as bankrupt, which would automatically deprive the creditor of right to pursue administrative or criminal charges against debtor. In this case, individual or companys physical assets will be sold to cover its immediate debts. It is highly recommended that everyone take a credit counselling, before accepting a financial responsibility. Although, credit companies and banks are trying to describe their loaning services as people oriented, the nature of process of loaning money for the interest hasnt been changed much, since it was first invented. It is important to remember that receiving payments on time and coming up with the interest profit, after the debt has been paid, is creditors minimal goal.
It would much rather make individual to surrender its property, even if he misses a few payments. Thats why most of banks and credit organizations require people to sign a loan contract, where they pledge their property to the creditor, before they can get any financial benefits. Long-term debt is like a good food it can only benefit person for as long as he doesnt consume too much of it
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Research essay sample on Long Term Borrowing Money
