Consequences of Default
Since Federal Student Loans are guaranteed by the Federal government they cannot go away with time or be discharged through bankruptcy. Therefore Federal and State Guarantee Agencies and their Collection Agencies have a tremendous amount of leverage in the collection process.
What can happen when my student loan is in default?
In this economy, the government agencies and/or their collection representatives have become even more aggressive in the collection of monies due. Although there are laws to protect your rights in debt collection, there are many collection agencies that are very aggressive in their collection tactics. You may experience high pressure phone calls at both home and work that can be disruptive and frustrating. Most employers take a very negative attitude toward their employees receiving collection calls at work. Tactics used by these agencies can include:
Garnishment of wages: This is a popular tactic of agencies and collectors to collect on student loans. It is a simple process for wages to be garnished for a student loan and it guarantees them to collect monies owed, unless you quit or lose your job. They do not need to go to court to start garnishing your wages. You could be facing a percentage of your pay being taken every pay period in an amount that is much higher than what your normal monthly payments would be. Even if you cannot live on the balance of your paycheck, they can take the garnishment anyway. Recent governement rules have made it even more difficult to resolve a student loan once it is in garnishment. If you are facing the possibility of garnishment, don't wait to call, we can usually stop it before it starts, depending on where you are in the garnishment process. If you are already being garnished we can almost always stop the garnishment, depending on the agency you are being garnished by. Call today to find out how we can help.
Heavy penalties & high collection charges: Defaulted student loans carry heavy penalties that can quickly increase the balance of your student loan and double or triple the amount owed in just a few years. When the student loan goes into default, there is a twenty five percent default fee that is attached very quickly. If you loan just went into default, or is about to go into default, we may be able to help you avoid this fee. In addition, agencies will add continuing collection charges raising your cost even higher. With these kinds of costs you could pay on your student loan indefinitely! Stop your loans from growing out of control with our program.
Loss of Income tax refund: Seizure of your income tax refund is another very common practice of student loan guarantors and collection agencies. Our program will stop this from happening.
Derogatory credit rating: One of the most detrimental entries on your credit report is that of a defaulted student loan. You may not qualify for a home mortgage or may pay an extremely high penalty to qualify. If you can qualify for an automobile loan or other financing, you will be penalized with extremely high interest rates. As long as you owe the funds, the negative entry could stay on your credit reports indefinitely! With our program, your default will be either be eliminated on your report or your defaulted student loan will be reported as paid in full. We can help you begin to rebuild your good credit again.
Revocation of Driver's License and/or Professional License:
Many states are now revoking or refusing to renew driver's licenses and/or professional licenses of individuals who have defaulted student loans. Eliminate this possibility with our program.
Lawsuit initiated by the Federal Government: In addition to the defaulted status on your student loan, you could be summoned to court by the federal government resulting in a judgment being placed on your record, damaging your credit even further. These judgments can be renewed every seven years. You could avoid a lawsuit by taking care of your student loan through our program.
Ineligibility for additional financial aid: As long as you have a defaulted student loan, you will be ineligible to receive any additional financial aid or student loans to continue your education. Once your student loans are out of default, you will once again become eligible.
Copyright 2009 Debt Free Services, Inc.: Student Loan Finance Options. All Rights Reserved.
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