Paying back student loans when you are struggling financially can be the hardest challenge to go through. The financial consequences of defaulting on your student loans can be widespread. Escaping this situation may sound impossible, but there are options if you ever find yourself in these circumstances. Talk to a Chattanooga bankruptcy attorney if you have any concerns about bankruptcy.
DANGERS OF STUDENT LOAN DEFAULT
After student loans are not paid off for a long enough period of time, they go into default. Student loans usually become defaulted when 270 to 360 days pass with no loan payments. Default means the loan lender is taking action to force you to pay off the loan.
There are several financial dangers that can come from defaulting on your student loans. Some of the major consequences of student loan default are:
- You can be sued
- Portions of your wages are taken
- Your income taxes are taken
- Your credit score is damaged
Once this point is reached, you will not be eligible for any other loans, deferments, or financial aid. This means you will not be able to seek financial help when you might need it most. In some cases, people with disabilities will lose portions of their Social Security benefits.
Those with professional licenses will be unable to renew their license. This can be detrimental when you need your license to continue earning an income. The last thing you want is to find yourself unable to pay bills on top of your student loan default challenges.
HOW TO ESCAPE STUDENT LOAN DEFAULT
Escaping student loan default may sound impossible, but you have options. There are two main ways to escape student loan default; loan rehabilitation and loan consolidation. Loan rehabilitation means you will agree to make nine payments on your loan within ten months.
To start this process, call your loan lender and ask them if you can agree to this plan. This plan will have you make monthly payments you can reasonably afford for that ten months period. Doing this will take you out of default status on your loans.
Loan consolidation involves either using an income-driven payment plan or paying three full monthly payments before consolidating. Consolidation means combining all your student loans into a main loan with one interest rate. When your consolidation request goes through, you escape default, and other options for paying your loans open up.
One last option is to try for student loan discharge, which will have your loans decreased or canceled. You could qualify for this if:
- Your school shut down
- Your school engaged in misconduct or deception
- You become disabled
BANKRUPTCY ATTORNEY IN CHATTANOOGA, TN
Defaulting and falling further behind on student loans can be terrifying and make you feel like your situation is hopeless. You can call us at Tom Bible Law today at (423) 690-7712 to figure out what options you may have surrounding bankruptcy. Our legal team of Tennessee bankruptcy lawyers might be able to help you escape a major financial disaster. You can find us throughout the Tennessee cities of Chattanooga, Kingsport, and Tullahoma.