Student Loan Default
What is Student loan default? Default is when you've
failed to fulfill your loan obligation. When referring to
a student loan, it means you haven't made payments or payment
arrangements on your loan.
The Consequences
Because of the laws surrounding student loans, it's almost
impossible to get away from student loans.
Here are some hard facts:
- The chances at getting your student loan discharged in
bankruptcy are slim to none. You have to be "totally,
permanently disabled", to even have a chance at removing
your liability for the loan.
- There's no statute of limitations on collection of
student loans. That means the lenders and their
collectors can come after you for the rest of your life or
until you repay the loan, whichever happens first.
- Student loan default stays on your credit report for
seven years, making it hard to get approved for credit
cards, mortgages, auto loans, and even employment.
- You won't be able to get federal financial aid until
you totally repay loan or make arrangements and six
consecutive timely payments.
- If you have a professional license, you may not be able
to renew it until you've rectified the situation.
Your lender may use a collection agency or attorney to
collect payment on the loan. In that case, you're subject
to be responsible for the cost of the collector or the
attorney, increasing the total amount you owe.
*You can be sued and have up to 15%
of your take-home wages garnished.
Options After Default
Once you've defaulted on your loan, you can certainly
continue to attempt to ignore. It will make life
difficult to for you, especially while it appears on your
credit report.
Or, you can call your lender and attempt to work out a
plan. You'll be surprised to find that many lenders are
willing to work with you. Find out what it will take to
get caught up and your payment options once you're back on
track. After you've made 9 to 10 consecutive, timely
payments (not wage garnishments), your loan will be out of
default status and the status on your credit report will be
removed.
Note: If your loan has recently defaulted
and the lender has not filed the default claim, you may be able
to stop them from doing so by bringing your delinquency to
under 270 days. Consolidating your loans during this
period of time is also an option.
Related Resource:
Take Control of Your Student Loan Debt "Failure to
pay back your student loan can mean having your wages
garnished, tax refund intercepted and your credit damaged. Take
Control of Your Student Loan Debt presents simple, effective
ways for you to get out of student loan debt.
The book clearly explains: What the repayment options
are ? how to postpone repayment ? how to avoid default ? how to
handle collection efforts by the government ? how to get out of
default ? when to choose bankruptcy.
Take Control of Your Student Loan Debt includes sample forms
and letters. "
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