Defaulting on Student Loans
Failing to pay student loans can have long lasting and severe consequences. Although these debts may fade into the background of everyday life once you are out of school and employed, they can no more be ignored than your mortgage or car payment, even though the the easy thing to do is to push them to the bottom of the “necessary to pay” list. Student loans obtained from the US Department of Education can be pursued for payment by the Department using some powerful tools at their command. As student loans are becoming more and more a part of bankruptcies, consult with Bankruptcy Lawyers From Everett if you find yourself in debt.

Additional Collection Fees
The loan guaranty agencies that guaranteed your loan can charge you collection fees if you fall into arrears. If the Department of Education hires collection agencies to go after you for payment, then they charge the Department Education a commission for their collection agents, which is passed along to you also. So, you could end up owing, not only the amount for your loan, but collection fees and commissions – plenty more than you bargained for.

Snatching Your Tax Refund
Each year at tax time, the loan guaranty agency that guaranteed your student loan reviews your records to see if you have owed money for 90 days. If so, they notify the IRS who then intercepts your tax refund. The loan guaranty agency will then inform you that the IRS will be keeping your refund. This process will continue each year until your debt is paid in full. This is the easies way for the Department to recoup late payments and it collects millions of dollars every year in this very way.
If you find that this way of doing it is inappropriate, you do have recourse:
Notify the guaranty agency in writing and with evidence within 65 days of the date of the notice that you have:
• Paid the arrears in full
• You are making payments under an agreement or you have been granted a forbearance, a delay or a cancellation.
• You have become permanently disabled since taking out the loan.
• The loan is fraudulent and not your loan.
• You dropped out of school or never started school and the school has not refunded your money.
• You have filed for bankruptcy and completion of the action is still imminent or else your loan debt was discharged.
• You obtained the loan to attend a “trade school” that closed prior to your completion of the course or else you were mistakenly certified to receive the loan.

Wage Garnishment
The loan guaranty agencies can garnish your wages for payment of monies in arrears. This means that the agency can order your employer to give over to them a percentage of your paycheck up to a maximum of 15%. There are limitations on the amount that can be stripped, however. The fill 15% cannot be taken as it would mean that your weekly income would be less than 30 times the federal minimum wage. You can file an object to the garnishment for the same reasons listed above for taking tax refunds or if you have returned to work within the last 12 months or if the garnishment would present extreme hardship. Everett bankruptcy lawyers can provide additional information on garnishments for this purpose.
Garnishment of Federal Benefits
Social Security retirement and Social Security disability benefits may also be garnished for loan arrearages repayment. Supplemental Security Income is not affected. The first $9000 or $750 per month may be taken but the total amount may not be over 15% of your income. If your Federal benefits are not over $750, then no money may be garnished.

Lawsuits
The Department of Education can file suit against you for failure to pay on your student loans. Unlike some other debts, there is no time limit on this and they can sue you forever. However, the Department is unlikely to sue if they deem you have no assets that total the value of the loan or if suing you would cost them more than they would gather.
For further information or to ask for help, contact the Department of Education’s Ombudsman. Note that there are some steps that are necessary before actually speaking with an ombudsman, such as their “self resolution checklist” and “FAQ on resolving loan problems”. Bankruptcy Lawyers In Everett can also present other options for avoiding default on student loans.