When you borrow money to attend school, you’ll need to pay it back,
with interest. But what happens when you can’t make your monthly
payments? After a certain amount of time, your loan will go into default,
which can carry heavy consequences. To help you better understand why
you should avoid this at all costs, let’s take a closer look at
what going into default means for your financial standing.
When Is My Loan In Default?
When you don’t make your student loan payments, your loan will be
considered delinquent. When you don’t make a payment on your student
loan and are delinquent for 290 days (roughly about nine months), your
account can be placed in to default, which is far more severe. “Default”
is essentially the point where your creditor determines that you aren’t
going to pay back your loan, and therefore that they should move to collect
it in whatever legal way possible. Defaulting on a loan can lead to serious
damage to your credit score and possibly even collection lawsuits and
methods being used against you.
Consequences of Default
If your loan is placed into default, the first thing that will happen is
your lender will immediately make any outstanding balance due in its entirety
through a process known as “acceleration.” When this happens,
you’ll lose a lot of your rights, such as the ability to pursue
a forbearance, deferment, or the ability to change your repayment plan.
At this point, your creditor will report your loan being in default to
the three major credit bureaus, which will damage your credit rating significantly,
and then file a lawsuit against you to try to obtain the ability to use
other debt collection methods. If this lawsuit goes in favor of your lender,
they may gain the ability to withhold your tax refunds or federal payment
benefits, garnish your wages, place or even place a lien on your bank
account, all to apply collected funds towards your outstanding balance.
Perhaps the worst part: your educational institution may choose to withhold
your transcripts until your loan has been satisfied.
Don’t settle for accepting these consequences without standing up
for your rights as a consumer. Get help from the Fort Lauderdale debt
attorneys at Loan Lawyers today! Dial (844) 344-4813 to schedule your
free initial consultation.