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 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 student loan attorneys at Loan Lawyers today! Dial 954-523-HELP (4357) to schedule your free initial consultation.