What Happens When You Become a Defaulted Federal Student Loan Borrower

April 22, 2019 Off By admin

So what if you are not financially stable? That doesn’t come
on your way to reach your professional goals. The federal Government is
there to assist you in furthering career advancements. You might have
heard and read a lot about unpaid student loan that has landed the
borrower in trouble. Are you stepping back since you don’t want to be a
sufferer? Think again, there is enough for you to learn before you drive
into a conclusion.

From Student Loan delinquency to Defaulted Student Loan- the Phase in Between

Before you quit the idea of pursuing a Federal student loan you must
look into the matters involved. Deferring a payment won’t land you up in
a defaulted status unless you are unable to make payments for more than
9 months time. So, have you heard about delinquent student loan? Well,
it all starts with your inability to make payments. Your delinquency
period starts as soon as you miss out on your payment.

Failure
to comply with obligations stated in the contract may also lead you to
experience a defaulted status. Once you declare delinquency the lender
has certain obligations to fulfill. Within fifteen days you will be send
a written notice. The notices send to you during the delinquent period
will inform you about the span that is left with you to clear your
payments.

However, it is to be noted that if the delinquency
last for 9 months or more, you will be stamped as a student loan
defaulter. Student loans in default add to the misery of many who are
unable to repay the amount. On the contrary if you are finding it tough
to make the payments, you can readily request the lender to allow you in
postponing the same.

The consequences
The student loan defaulter has to confront with a host of difficulties like the ones stated in the following lines:

Seizing
tax refunds: The Federal Government has the right to seize you tax
refunds. This may happen till the time you don’t pay off the outstanding
amount.

Salary cut: The Government may even slash a portion of
your salary if you are a defaulter. The amount slashed from your salary
may exceed to 15% of your gross income.

Seizing Federal
benefits: The Government may also seize Federal benefits from the
borrower as reimbursement for the outstanding amount.

Get Sued: As a defaulter you might get sued by the Government. Lawsuits against defaulters are common.