While graduating with a college degree is a dream come true for some, repayment of student loan debt can quickly turn into a nightmare for graduates. Today, many graduates are struggling to keep up with their student loan payments. Once a student loan account has been delinquent or past due for 120 days or more, it can be declared in default. Borrowers who find themselves in default on their student loans face serious penalties.
Loan servicers or debt collectors can get a court order to garnish a borrower’s paychecks to collect on outstanding student loan debt. No hearing is required for the debt collector to do this. Borrowers simply receive notice that their student loans are in default and that the loan servicer is going to garnish their wages. The court orders the borrower’s employer to withhold a portion of his or her paycheck. This portion can be as high as twenty-five percent (25%)! All of a sudden, the borrower will just notice that his or her paycheck is less than they normally expect it to be. This can have a serious effect on the borrower’s lifestyle and the financial stability of the borrower and his or her family.
In addition to wage garnishment, borrowers who find themselves in default may also be deprived of their tax returns. Loan servicers may garnish a borrower’s taxes in order to recoup outstanding student loan debt. This means the tax return will just be withheld from the borrower. The loan servicer will intercept the tax return that would normally be mailed to the borrower. Even the borrower’s spouse’s tax returns are subject to tax garnishment for outstanding student loan debt. As a result, defaulting on student loans often effects not only the borrower, but also his or her entire family.
It is important for borrowers who are in default or nearing default status to take immediate action to save their paychecks and tax returns from becoming subject to garnishment. Borrowers should never ignore a notice of default. The consequences of default can be extremely difficult to avoid or escape without the help of an attorney from Student Loan Law Group. Student Loan Law Group’s attorneys employ strategies to prevent garnishment and rehabilitate a borrower in default so that they can transition to a manageable repayment plan for their student loans. Borrowers who have received notice of default or who are struggling to make their monthly student loan payments should contact Student Loan Law Group today to consult with an attorney about their rights and options.
