LEGAL GUIDE
Written by attorney John Todd Malaise

Defaulting on Student Loans

College students are living in the present with no thought of tomorrow…until they start nearing graduation day. That college education came at a price and now graduates have to start thinking about how they are going to pay off their student loans. Students may have trouble finding a job after graduation or a job that provides enough income. Students will default on their loans if they do not make payments for 270-360 days. This does not mean that there are no payment options available to make these debts affordable. The federal government has provided many ways to pay off your loans and these options should be explored before it is too late.

Defaulting on your loan means that you are no longer eligible for deferment, so you need to make sure that you apply for payment options before you reach default. All students have a six-month grace period before they must start repaying their loans. Once that six months is up, you have the option for filing for a specialized kind of repayment plan pending qualification. If you cannot afford standard repayment, you may qualify for extended repayment. With this option, you must have more than $30,000 in debt but not possess an outstanding balance. Extended payment gives you 25 years to pay off your debts with a fixed or graduated rate. Graduated repayment is another option and it gives you up to ten years to repay debts. Payments start low and increase every two years.

There are also income-based plans that allow you to only make a monthly payment that is affordable with your income. Income contingent repayments allow you to pay either 20 percent of your monthly income or an amount calculated by “amount that would be paid of the loan over 12 years multiplied by an income percentage factor that varies with your yearly income" according to the Federal Student Aid department. You are not obligated to stick with these plans either. If you realize that the one you chose is not working for you, you may switch after a year and sometimes less.

If none of these options are right for you and you are still struggling with paying off your loans, you should know that student loans cannot typically be absolved through bankruptcy. If you come to this point, a wage garnishment may be sought against you by a creditor. A wage garnishment is a legal request that seeks to take money as payment from an employee’s salary. To avoid a wage garnishment you should seek professional help from a bankruptcy attorney. There is a defense against these kinds of creditor tactics, but you should speak with a legal professional in order to develop a strategy in your defense.

Additional resources provided by the author

The Malaise Law Firm is a bankruptcy law firm serving residents of the San Antonio, Texas area. They have a reputation for caring for each one of their clients as individuals and providing them with the financial help that they need during times of crisis. Defaulting on loans can seriously tarnish your credit and your future ability to make purchases such as a home or car. Often, students are not aware of what they are getting themselves into when they sign up for student loans and it may end up in the threat of wage garnishment after graduation. If you want a defense against creditors, then speak with a San Antonio bankruptcy lawyer from their firm. They will be able to help you whether the garnishment is already in place or is about to take place. You should be able to retain control over your finances instead of having creditors take over. If this is the kind of legal help you are looking for, then contact a San Antonio wage garnishment attorney from Malaise Law Firm today.

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