Student loan debt has now surpassed credit card debt – read more. Congress is making noise again about permitting student loans to be discharged in bankruptcy – read more. (FYI, at present student loan debt has special status that makes it particularly hard to get rid of.)
Student loan debt is a serious problem for many Las Vegas residents and for our economy. And it’s important to understand what can happen if you do default on your student loans. So what can happen?
1. You lose the ability to negotiate a deferment or forbearance from your lender. Once you default, your student loans are considered due immediately. And once this happens, the door is closed on deferments or forbearances.
2. Any tax refunds you might otherwise receive are subject to seizure by the government.
3. Garnishment of wages. The government can take up to 15% of your wages.
4. Ineligibility for FHA or VA mortgages in the future. In other words, it may be harder to buy a home down the road.
5. Loss of Social Security. When you get older and start collecting Social Security, the government can still come after you and take a portion of those payments.
6. Possible lawsuit by the federal government against you to collect.
7. Significant damage to your credit score.
What to do to avoid this? Be proactive. There are effective strategies for addressing student loan debt problems.
Contact your lender to discuss options ahead of time. Or contact Haines & Krieger at 702-880-5554 for a free initial consultation to help figure out effective strategies for dealing with your student loan debt together with your other debts.