What if my student loan is in default

Once the private loan goes to the party that ultimately controls it, you can begin negotiating for a settlement. In rare cases, student loans may be discharged in bankruptcy. You must file a Chapter 7 or Chapter 13 bankruptcy to do so, and you must prove repayment would impose a financial hardship. Additionally, your lenders may be present to challenge your request. What happens if you never pay your student loans?

If you never pay your student loans, you could lose your professional license, wages, or tax refund. You will also owe even more money as interest accrues. The fact is, not paying your student loans can have lasting damaging effects on many parts of your life. In more extreme cases, wage garnishments, court summons, and even arrest warrants have been used to track down defaulted borrowers who have skipped out on their student loans.

What happens to my student loans if I die? What happens to student loans if you die depends on the type of loan you have at the time of your passing. Instead, the student loans may be passed on to the estate, and assets, investments, and bank accounts will be used to offset the student loan balance. Schedule a free minute call with me today. I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

Stanley tate Student Loan Lawyer. Federal student loans enter default after payments are days, or 9 months, past due.

Private student loans can enter default as soon as payments become days, or 4 months, past due. The timeline for defaulting on private loans varies by lender. Student Loans: Default vs. Delinquency Default and delinquency represent 2 different stages for borrowers that have missed their student loan payments. What can happen if you default? The consequences of defaulting on a student loan may include: Lost income.

To collect on defaulted federal student loans, the loan holder can garnish your wages, withhold your tax refunds and other government payments, like Social Security Benefits. They can be granted wage garnishment through a court order if they win a judgment against you. Private lenders can also access your bank accounts if granted through the courts. E ven though a loan may be in default, it will still accrue interest and late fees, thus increasing the loan amount. Additionally, collection fees are charged for the collection process of a defaulted loan.

Speaking of jobs, defaulting on student loans can put your career at risk. Laws vary from state to state, but your state may revoke your professional license if you default on a student loan. Some vocations impose a fine for members who default on their student loans. Additionally, your school can withhold your college transcripts and your diploma until your student loans are repaid. Losing out on an FHA loan means having to apply for conventional mortgages that require larger down payments.

How do I know if my student loans are in default? How to get out of default The U. Department of Education lays out 4 options in which borrowers can get out of federal student loan default: Repayment Rehabilitation Consolidation Settlement Each method can prevent and stop the consequences of default if you contact your loan servicer quickly.

Option 1: Repayment Repayment is the option that provides the immediate and complete resolution to your student loan default is repayment. Option 2: Rehabilitation Student loan rehabilitation may be the best option for most borrowers. Option 3: Student Loan Consolidation Another quick way to get out of default is to consolidate your federal student loans into a Direct Consolidation Loan.

To qualify for a consolidation loan, you must either: Make 3 consecutive, on-time monthly payments on the defaulted loan, or Agree to repay the new consolidation loan under an income-driven repayment plan. How to consolidate defaulted student loans Step 1: Log in to studentaid. Step 2: Choose the loans to consolidate. If your loan holder is unable to obtain payment from you for days, they will take steps to place the loan in default and attempt to collect on the loan.

Default is the failure to repay a loan according to the terms agreed to in the promissory note. For most federal student loans, you will default if you have not made a payment in more than days. During the months in which you have failed to make payments on your federal student loans, your servicer must exercise "due diligence" in attempting to collect the loan - your servicer must make repeated efforts to locate and contact you about repayment.

If you have not received a letter from your servicer and you believe you may be in default, contact your servicer immediately. Ask about repayment options and find out if it is possible for you to avoid default. Delinquent federal student loans are eligible for postponements and repayment plans that could make payments more affordable, such as income-driven repayment , deferment and forbearance. You cannot use these options once loans default, so contact your servicer immediately if you fall behind on your payments.

Many private lenders will help you catch up on payments by temporarily lowering your monthly payment or allowing you to pause repayment with a deferment or forbearance.

Log in to studentaid. Your account also includes information about your servicer, if you need it. Pull your credit report. Your credit report will list federal and private student loan defaults under the negative information section. You can get a copy of your report for free once a year at annualcreditreport. These resources may not be updated in real-time, so your loan could be in default and not show up as such. Receiving calls from a debt collector is another sign of student loan default.

Federal student loan holders can place defaulted student loans with a collection agency if you do not make payment arrangements with them.

Private student loans are typically considered "charged off," or uncollectible, after days of missed payments and can be sold to a collection agency.

If collectors are harassing you over your federal or private loans, you can submit a complaint to the Consumer Financial Protection Bureau. The CFPB also has sample letters you can use when responding to bill collectors. A student loan default can affect you in many ways. Penalties of default include the following. To collect on federal student loans, your loan holder can garnish your wages and withhold your tax refunds and other government payments, like Social Security checks.

If they receive a judgment in their favor, they can garnish money from your paychecks or even your bank accounts to pay your defaulted loan. A student loan default and the late payments that preceded it can remain on your credit report for seven years. This negative mark can make borrowing for a car, home or additional schooling more expensive — or potentially impossible.

Default can also hurt your ability to rent an apartment, sign up for a new cell phone plan or even get a job. Late fees and interest will continue to build on your debt, increasing the amount you owe. You can also be charged costs for the collection of your defaulted loan. License suspension laws and enforcement vary greatly from state to state. But if you work in a field like medicine or teaching, your state may suspend or revoke your professional license if your student loans default.

However, your lender can sue you to repay your loans. The Education Department offers three clear ways to recover from federal student loan default: repayment, consolidation and rehabilitation. Each can prevent or halt the consequences of default if you act fast enough; the best one for you will likely depend on your priorities. When student loans default, the full amount owed becomes due immediately.

If you can afford that, you can pay off your loans and be done with your debt. Personal loans typically carry higher interest rates than student loans. You can discharge defaulted student loans via bankruptcy , but federal student loans are trickier to get rid of through this process than other debts.

Private student loans may be easier to discharge in bankruptcy. Make sure bankruptcy is right for you because it has a long-term effect on your finances.

If you go this route, look for a bankruptcy attorney who specializes in student loans. To rehabilitate your loans, you must make nine monthly loan payments within 10 consecutive months. You can only rehabilitate a student loan once. If you choose this option, make sure you can afford your payments once you complete the process, likely by enrolling in an income-driven repayment plan.