Upon leaving college, many students enter the school of hard knocks. They discover how
difficult it is to earn enough money to meet their student loan obligations, typically ranging from
$20,000-$50,000. Since most student loan debt cannot be discharged through personal
bankruptcy, things quickly go from bad to worse.
In fact, U.S. Department of
Education statistics indicate that over 11 percent of student loans are currently in default
compared to only five percent in 2001. Most of this increase occurred since 2007, largely due
to the tight job market and high unemployment plaguing recent college graduates.
Negative consequences of student loan default
Nine months after you leave
college, your student loan payments come due. If you do not pay as agreed, your loan soon goes
into default. The U.S. Department of Education defines default as failing to make loan
payments for 270 consecutive days within two years of leaving school.
Here are some of
the painful consequences that follow missed student loan payments:
Garnishment of wages
Offset of your federal and
state tax refunds
eligibility for federal loans such as VHA or
Damage to credit history,
which can last seven years
Collection or legal action against you
Steps you can take to remedy the
The following strategies are just some of the options graduates in default can
several student loans into a single loan with more favorable payment
Rehabilitating a federal
loan by making nine on-time monthly
Seeking a deferment by
going back to school
payments using your credit card
Speaking to your lender to negotiate a payment
Considering volunteer work
that offers loan deferment
Whether you are in Dallas, Richardson, Plano, or
elsewhere in Texas, it is important to reach out to the lenders and take decisive action to limit
the damage when it becomes tough to repay your debts.
If you are having trouble paying your bills and saddled with calls from creditors, the
Lonergan Law Firm, PLLC can help
determine if bankruptcy is right for you. To learn more about the bankruptcy services we offer in
the Dallas-Fort Worth area, including Richardson and Plano TX, contact a Dallas bankruptcy lawyer today.