Every year, more and more student loans head for default status. If you are worried about what actions could be taken against you for defaulting on your student loan, continue reading.
For a great number of student loans, if the loan has not been repaid for 270 days, in the case of a monthly installment loan, the student loan will be in default. Likewise, for most student loans, if a student loan has not been repaid for 330 days, in the case of other types of installments, the loan will be in default. The government has many recourses against you if you do not make your student loan payments and the loan defaults. Some of these recourses include:
- Refunds you are counting on could be taken by the IRS and held until your student loan is completely paid off. A challenge to this action may be possible.
- 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.
- Federal benefit payments meant for you can also be used to repay your student loan. Social security income is a form of federal benefit payment. Limits apply pertaining 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 you would like to get in touch with someone about your defaulted student loan to see what you can do to avoid these actions, you can reach out to the Student Loan Borrower Assistance office at www.studentloanborrowerassistance.org. This office can answer many questions regarding defaulted student loans and possibly guide you to a solution.
If you are afraid that you may default on a student loan or if you have already defaulted on a student loan, you can try to get some additional assistance. To begin with, you can call the Department of Education’s Ombudsman at (877) 557-2575 or go to the department’s web site at www.fsahelp.ed.gov. However, be advised that they will only be able to assist you if you have already tried to solve the issue yourself.
It is never a good thing to default on your student loan. In addition to several recourses to obtain payment of the student loan, your default could be reported to the three credit reporting agencies which will immediately drop your credit score. If the government should decide to use a collection agency to obtain payment of your defaulted student loan, you will end up paying additional collection costs. Don’t allow this to happen! Try to negotiate a repayment plan so you don’t affect your credit history adversely.
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