Default Student Loans

Default student loans can destroy your personal credit and can make you eligible for student loan collection practices that can disrupt your life in a number of ways. Default student loans are becoming more and more an issue with college graduates and the level of student loan debt that is currently in default is at a record-high level. Ever since the bankruptcy laws were changed thus making it virtually impossible to discharge student loan debt in any kind of bankruptcy filing graduating students have had little recourse when they couldn’t make their student loan payments. Default student loans have therefore actually become a common trend throughout the student loan industry and it has become a serious problem for both lenders and students.

If you have a student loan then you probably already know that you must make your payment on time each month to prevent it from going into default. Once a student loan hasn’t been paid for 180 days then it is typically considered to be in default and the collections process begins. The actual time intervals and other details can vary depending on the kind of student loan and the actual lender, but most of the time defaulting on a student loan can start a process you don’t want to be a part of.

What happens exactly once you default on your student depends heavily on whether it is a federal or private student loan. If you have defaulted on a federal student loan then you have made yourself eligible for a number of additional measures the government can take to try and recoup their money.

First the IRS can intercept any of your income tax refunds. This method has increased in popularity substantially over the past ten years or so and the government will not hesitate in utilizing this method. If you feel that the tax refund offset was particularly unfair for your situation then you can learn more about challenging an offset by visiting the Student Loan Borrower Assistance website at www.studentloanborrowersassistance.org.

The government can actually take a certain portion of you current income if you have defaulted on any of your federal student loans. This is known as “wage garnishment” and it allows the government to take up to fifteen percent of your disposable income per month. You can challenge a wage garnishment much in the same way you can challenge a tax offset and the best thing you can do is revisit the aforementioned website to learn more about a wage garnishment challenge.

Your federal benefits can also be taken from you if you have defaulted on your federal student loans. It is much like wage garnishment in the respect that the government can only take up to fifteen percent of you benefit and they cannot leave you with benefits less than 9,000 dollars per year or 750 dollars per month.

The federal government as well as private lenders can sue you if your student loans go into default. There is actually no limit that prevents the government or a particular lender from suing you, so a collection lawsuit is something you’ll always have to worry about as long as your student loan debt is in default. There are various kinds of defenses to these kinds of lawsuits and it is important that you visit the Borrower Assistance website to see what your options are.

Defaulting on your private student loan debt will make you the target of debt collectors and other collection agencies that will harass you via phone and other methods. You do have certain rights with these debt collection agencies so it is important that you find out where you stand exactly so that you don’t crumble in the face of such efforts.

Private student loan default is particularly nasty in that your credit will be ruined and your actual debt will continue to pile up via interest and fees. Private student loan lenders will begin to charge you all sorts of penalties and random fees when you default so it will become increasingly more difficult the longer you let your student loans stay in default to ever get them out. In the end it is up to you to find out your options and to take the necessary action steps that can lift your student loans out of default. Student loan default can be dealt with accordingly if you know what you’re doing so perform the correct research and go ahead and do what you have to do to resolve the situation.