There are a lot of different kinds of government loans, like loans to go to school, start a small business, or even buy a house. When the government gives money and loans to certain people in the community, it is seen as a social service. World War II was the start of a lot of programmes to help people in the United States. As time has gone on, these programmes have grown a lot, which has made the people they are helping very happy. But before anyone takes out a government loan, they should know what they are getting into and what will happen if they don't pay back the loan.
It's important to understand the difference between government loans and other loans. Most of the time, if you don't pay back a loan, traditional lenders can't do much to hurt you. This varies from state to state, but in Texas, a creditor must sue you to get any relief, and even then, most of your personal property, as well as your wages and retirement accounts, are safe. Even though this is legal in some other states, it doesn't happen very often.
When it comes to government loans, this is very far from the truth. If you don't pay back a government loan, they can do almost anything to you except put you in jail. Because they are the government, they have the right to garnish wages, take tax returns, and seize property.
In a bankruptcy situation, it is also interesting to compare the two and see how they are different. Even though the bankruptcy code is not easy to understand, most debts are not protected by it and can be wiped out or "discharged" under certain conditions. But this is not true for most government responsibilities. For example, you can't get rid of student loans or tax debts by filing for bankruptcy. Because of this, if you didn't pay your student loan, you could ask the bankruptcy court for help, but you wouldn't get any. You would have to pay back the loan, or you could get into a lot of trouble.
Government loans should not be taken lightly. Student loans from the government are helping more and more people pay for college. But decisions about borrowing money in the form of a government loan should be given extra thought.
