My Student Loan is About to Go Into Default! Do I Need To Worry?
There is a rapidly increasing number of defaulted student loans across the country. This article is devoted to explaining the government’s recourses against you and what you can do about the situation.
After 270 days, a student loan can be considered in default, if it is a monthly installment loan. If the student loan is paid by a different installment method, the student loan can be considered in default after 330 days. The recourses which the government can use to obtain repayment of the defaulted loan are numerous. Following is a list naming a few of these actions:
- Any tax refunds you are expecting could be intercepted by the IRS. These refunds can be withheld until your student loan is paid in full. It may be possible to challenge this action.
- Your wages could be garnished by the government. The government can take a percentage, up to fifteen percent (15%) in some cases, of your wages in order to repay the loan. Again, it may be possible to challenge this garnishment.
- The government can also opt to take certain federal benefit payments to apply toward your defaulted student loan. Federal benefit payments can be payments such as social security income. However, limits do apply as to how much may be taken.
- Although it is possible, legal action is probably the least likely action to be taken. It is noteworthy that there is no statute of limitations regarding student loans and the filing of a law suit. In other words, the government can file as soon or as late as they would like – even many years after you have forgotten about the student loan debt.
If all of these sound like nothing you want to go through, then it might be time to visit the web site of Student Loan Borrower Assistance at www.studentloanborrowerassistance.org. Student Loan Borrower Assistance can help answer a large range of questions with regard to defaulted student loans. They can also help you to find a solution to your problem.
Another source of assistance is the Department of Education’s Ombudsman. This department may be reached at (877) 557-2575 or www.fsahelp.ed.gov. You need to make sure that you have already attempted to resolve this matter yourself prior to calling as the Department of Education’s Ombudsman will not be able to assist you otherwise.
Defaulting on a student loan is not recommended in any way, shape, or form. In addition to the above-referenced recourses, the government can, and probably will, notify the three major credit bureaus, which will cause a substantial decrease instantaneously in your credit score. Additionally, your defaulted student loan could end up with a collection agency which would mean you would pay additional collection costs. Don’t let it get this far! Try to work something out today!
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