Why You Should Avoid Defaulting On Student Loans

by DeLadurantey Law Office, LLC on October 14, 2014

Caution1Defaulting on your student loan can have very severe consequences. The federal government has the authority to commence collection efforts against your without obtaining a court judgment. This means that collection can be quick and effective, which places your finances in a very precarious position.

The government has three collection methods it commonly uses once a student loan borrower goes into default:

  • Wage garnishment. The government has a collection tool called the “administrative wage garnishment,” which allows them to take money out of your paycheck without obtaining court approval. Further, a maximum of 15% of your wages can be garnished by the government to apply toward your student loan debt.
  • Tax refunds. When you have a defaulted student loan, any income tax return you are entitled to receive can be seized (in full or in part) by the government and applied toward your debt.
  • Offset of federal benefits. If you receive certain federal benefits such as Social Security, certain Railroad Retirement benefits, and benefits under the Black Lung Act, the government can seize your payments and apply them toward your defaulted student loan.

The government also has the ability to file a lawsuit against you, but it will only take this action in certain rare circumstances because the above tools are typically effective in collecting past due amounts.

A defaulted student loan can also make you ineligible to obtain a federal job. If you hold a federal and/or state license, it can put your license in jeopardy. The board that supervises your profession or vocation can refuse to certify, suspend or revoke a member’s license. This may include professions such as teachers, attorneys, healthcare professionals, insurance agents and similar vocations that require licensing.

The “defender of the little guy,” DeLadurantey Law Office, LLC. handles student loan debt and bankruptcy matters (Chapter 7 and Chapter 13) in Milwaukee, South Milwaukee, West Milwaukee, and Milwaukee County, including the municipalities of Bayside, Brown Deer, Cudahy, Fox Point, Franklin, Glendale, Greendale, Greenfield, Hales Corners, Oak Creek, River Hills, Shorewood, St. Francis, Wauwatosa, West Allis, and Whitefish Bay. The firm also can handle your debt negotiations, debt relief, and mortgage loan modifications.   Contact DeLadurantey Law Office, LLC by phone: (414) 377-0518. Like us on Facebook.

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