Consequences of Defaulted Student Loans
Private Student Loan Default
Since these loans are provided by private lending companies they do not have the Federal oversight that Federal loans do and therefore do not have specific solutions for those who are in default, including the ability to get them back out of default. These loans, like Federal loans, cannot be discharged through bankruptcy. Consequences of defaulted private loans are:
~~Derogatory Credit Report: Once in default, your loan will be reported as such. Although the damage is done, we can help you learn what you need to rebuild your credit. Sometimes we are able to work with your creditor to modify some of the collection activity.
~~Lawsuit: Getting a judgment is another big hit to your credit report and allows the collecting agency a lot more leverage to get money from you through wage garnishment and bank levy. We have options to stop this process, even you have already been served a summons for court.
~~Wage Garnishment: Once a garnishment is in place, it will generally continue until the loan is paid in full. Since additional penalties and interest also accrue, it may never get paid. We have much better strategies to handle this situation.
~~Bank Levy & Property Liens: If you own property, a lien can be placed so that if you sell, the student loan debt has to be paid to the creditor before you receive what is left. A bank levy will let them take the balance in your checking or savings account. We can prevent this from happening.
~~Got a co-signer? Your co-signer is just as legally responsible for the debt. Creditors will go after your cosigner just as aggressively as they do you. We can help you protect your co-signer.
Federal Student Loan 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. Tactics used by these agencies can include:
~~Garnishment of wages: 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 get a judgment first. Even if you cannot live on the balance of your paycheck, they can still take the garnishment. Recent government rules have made it even more difficult to end garnishment once it is in place. If you are facing the possibility of garnishment, don't wait to call.
~~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. Agencies will add continuing collection charges and you could end up paying 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. As long as you owe the funds, the negative entry could stay on your credit reports indefinitely. We can help you begin to rebuild your credit.
~~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: You could be summoned to court by the Federal government resulting in a judgment being placed on your record, damaging your credit even further. 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.
Copyright 2012 Professional Student Loan Solutions, Inc.: Defaulted Student Loans. All Rights Reserved.
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AGGRESSIVE COLLECTIONS
In this economy, collection representatives have become even more aggressive in the collection process. 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 employees receiving such calls at work. Keep in mind that collection agencies are not interested in helping you solve your problems. We can keep your collection agencies in check and find the best solutions possible.
BANKRUPTCY
Federal Law prevents both private and Federal student loans from being discharged in bankruptcy. However, our attorneys specialize in using other aspects of the law to protect our clients when needed. Many people file bankruptcy too soon or when it wasn't necessary.
