I hate to openly talk about things like this, but honestly, there are debts that people can turn their backs on. For instance, I have a XM radio subscription in collections which I never signed up for their services (I guess the dealer ship signed me up automatically or I didn’t read the contract carefully). Student Loans on the other hand, would be considered something that we should not take lightly. This article is about defaulted student loans and what you should understand as a borrower.
What can happen if my loan is defaulted?
Have you fallen behind on your student loan? It’s probable that your phone is blowing up like crazy. If your loans default, the government will launch a full-scale over-the-phone assault. Their guard dogs will hound you down, and these types of phone calls could get pretty intense. When I say guard dogs, I am referring to the collection agencies “servicing” your loans. The agencies do all the dirty work for the big-dog (Dept. of Ed). Since the government gives out student loans like free samples at COSTCO on Sundays, it would be unethical for them to directly collect on these student loans. This is exactly the reason why collection agencies get involved. The collectors will call, and call, and when you think it stopped, they will call again. They will even go as far as contacting your family remember or friends. Legally they are able to contact your “references” as long as they believe that it is a way to contact you.
If you’re making pretty good money, it is possible that a lawsuit will be filed. Since you have a valid debt, and you owe the money, you’ll be defense less.
If you let this linger long enough you’ll be dealing with a bigger problem, wage garnishment. Your employer is legally obligated to take a chunk out of your paycheck, and send this amount as “involuntary” payment.
Remember “Involuntary” payments do not count towards any type of formal program. Of course, the money will be applied to your account, but not allocated in your favor. Keep in mind with a student loan garnishment 80% of your payment will go towards back-interest and 20% will go towards the collection cost (Collection cost could be waived if you play your cards right). The sad thing is, typically, the garnishment amount is much higher than “Voluntary” payment programs.
It’s hard when you have to say good-bye to your FULL paychecks but just when you get through grieving and you start to enjoy your life again, another friend named TAX RETURN will depart. The Government doesn’t care about the extras in your life, and as long as you are a little bit above poverty level they will continually rape your paychecks and tax returns. They will flip the village upside down until your loan is paid in full.
Often time people are under the assumption that the Federal loan will just fall off of their credit report. But, that is a total misconception, Federal loans have no “statue of limitation”. This means that your student loan will be shackled to you as long as you live. The good news is unlike “time-shares” these student loans will not be passed on to your kids when you depart from this world.
There are options for people in default, but the odd thing is no one is talking about them. There are debt relief programs out there that allow people to make reasonable payments based off of their income opposed to making payments based off of the balance. There are programs designed to take your loans out of default with minimal payments. If you do this right you can rehabilitate your loans, stop the garnishment (threats), tax offset, fix your credit, and get the collection fees waived. The information is out there, but the sad thing is the people in our country decided to not do their homework.
My advice to anyone with defaulted loans: Invest your time and money in the right places, and research, research, research! Don’t waste your money on lawyers and debt relief companies because historically they can’t help, they just want your money. So with that said, DO IT YOUR SELF!
I’m Christopher Kay The “Rogue Student Loan collector.” I’ll tell you everything you need to know about Defaulted Federal Student Loans Stopping student loan garnishment, Stop Tax offset, Fixing your Credit, Lowest payment plans, Different payment plan types and everything you need to know about defaulted Federal Student Loans.
Did you know that to the federal government, defaulting on your student loans is considered almost as serious as not paying your taxes? In today’s worrying economic climate, many recent and soon-to-be graduates might be concerned about the possibility of student loan default. Here’s the cold hard truth about going into default… and some good news for you if you’re already in this situation.
First, it’s important to know what student loan default is. You are considered in loan default when you have made no scheduled payments on your student loans for at least 270 days. This applies to anyone whose loans are currently considered in repayment. If your loans are being deferred because you are currently attending school at least half-time, or for any other reason, your loans will not go into default.
Student loan default can come with some pretty hefty penalties. These may include:
a) Serious damage to your credit report. – The negative effect on your credit report created by loan default cannot be underestimated. Even if you’ve never been in default, the ability you’ve shown to repay/manage your student loans is one of the first things a loan officer may look at in addition to your credit rating when determining eligibility for a car or home loan.
b) Withholding of wages and other income. – The government may decide to garnish your wages, a certain percentage being withheld from you and going directly to loan payments before the rest of your monthly paycheck reaches you. Other funds such as federal tax returns and lottery winnings can also withheld. Of course, if you win the lottery, paying off student loans should be on the top of your priority list anyway.
c) Professional license and transcript blocks. – If you have earned a professional license, such as a medical, cosmetology, or real estate license, you can be prevented from receiving that license while your loans are in default. An even more common problem is a transcript block. Many jobs available to college grads require that you submit a copy of your college transcripts as a part of the application process. If your loans are in default, the school(s) you’ve attended are not allowed to release official transcripts to other institutions until the default is resolved.
But the good news is…
For most of us, it’s not easy to go into student loan default. No one (the schools, lender banks, guaranty agencies, or the federal government) wants you to go in to default. So you do have options and resources to help you keep that from happening. Some of these are:
a) Deferment and Forbearance – Deferment allows the postponement of payments in cases of economic hardship, re-enrollment in school, or disability. Forbearance is a similar condition which allows for the lowering of minimum monthly payments based on your situation.
b) Alternate payment programs. – Rather than a standard loan repayment schedule, you may choose an income sensitive, graduated, or extended plan. Graduated and income sensitive repayment plans may be a good option for those who are unsure how much they will be earning during their first years out of college or entering into an unstable job market. Extended repayment is an option available to borrowers with more than $30,000 in federal loans. It allows you to repay over a 25-year period, rather than the standard 10 years.
c) Consolidation – Under current federal loan programs you may be eligible to consolidate your student loans. In essence, consolidation involves taking out a new loan with a lender bank or servicer to cover all of your current student loans. This allows you to work with a single lender bank (rather than multiple banks if you took out your student loans through more than one lender), may lower your monthly payments, and opens up whatever new payment options your consolidation lender may offer. Many banks offer consolidation loans, some even marketing them aggressively through mail and phone solicitations. So it’s important to approach this option with the attitude of an informed consumer to determine what offers might work best for you.
As always, the first and best resource you have when it comes to managing your student loans are the people who are there to help and work with you. If you’ve started missing payment, chances are your lender bank is already trying to contact you. It’s best though if you speak with your bank’s representatives before it reaches that point, and always make sure they have current contact information for you. Also, the financial aid counselors/administrators at your school should be available for you to consult with even after graduation. Repayment is a process that takes place primarily between you and your lender bank, but a school’s FA counselor can at least point you in the right direction even if they don’t have all of the details you are looking for.
Student loans no wonder can help the students in enduring the educational finances quite easily but in case you fail to make repayments on time, after completing your studies, things can get really nasty for you as it can lead to loan default.
The time period that determines you are in default can vary widely depending primarily on the kind of loan you have taken. For instance, if you are availing Federal loans and you somehow skip making a payment, you won’t directly be categorized under defaulters but in fact your condition will be that of a dereliction of duty and you will be provided a 9 month time before the institute terms you a loan defaulter.
On the other hand, Private loans won’t treat you with that leniency, in case you skip making a payment, mind it, you will be in default right there and then. Now being in default mean, you are required to clear up all your payments instantaneously. However, it’s not just that in fact being in default can create some really troubling issues for you like first of all you won’t be able to postpone your payments and it will blotch your credit history. This eventually will make it difficult for you to get credit cards, mortgages, auto loans etc.
It is important to know the exact duration of the grace period. Usually the Federal loans offer 6 months of grace period after you are done with your graduation. This period varies considerably in private loans so you need to clarify all such minutiae by asking your loan provider. You can certainly go for loan consolidation during the grace period as this consequently reduces the amount of monthly payments but on the down side, this can increase the period for repayment and will eventually make you pay more interest.
Other choices for you can be of loan postponement or Deferment and Forbearance. However, for the former case you need to be either unemployed, suffering from financial turmoil, studying in an accredited graduate fellowship or some rehab program. While in the latter case you can only avoid paying the principal amount but you have got to pay the interest rates after all. But despite all this, you still need to ask your loan provider for entering into forbearance.
What To Do When In Default:
However, in case you are in default you need to go for consolidation as early as possible. Well, it will help you combining all the loans into a single one which consequently will make it much simpler for you to repay the amount plus it will reduce the payment per month as well.
Aside from this you can also go for loan rehabilitation but make sure you settle for nominal monthly payment that you can pay feasibly. You can check out FFEL loans and Perkin loans rehabilitation rules and regulations to see which loan rehabilitation suits you.
If your car insurance is due for renewal and you are considering buying another policy then this article will provide you with important facts that you should know about. Car insurance policies are getting increasingly expensive and you should do all that you can to reduce your costs. How much you have to pay for your car insurance is dictated by a variety of factors as they apply to you and your vehicle.
In this article we will examine coverage limits, your age, gender and marital status, your location and insuring other household members. All of these factors will have a great influence on how much you will have to pay for your policy.
Coverage limits are generally dictated by the price that you are willing to pay for your insurance. A higher level of coverage will generally result in higher premiums. The best way to find a good value policy is to comparison shop. Nowadays it is generally accepted that the best way to do this is by using a car insurance comparison website.
Your age, gender and marital status will have a great effect on the auto insurance rates that you are offered. Insurers rate drivers using a variety of criteria, if you are a young single male driver you will usually have to pay higher rates. If you are a middle-aged female married driver then your rates will be lower. Insurers calculate the best car insurance rates for you by comparing levels of risk. Those groups which are statistically more likely to be involved in an accident have to pay correspondingly higher rates.
Location plays an important part in deciding how much your premiums will cost. Drivers who live in an urban environment will usually pay more than those from a rural area. This is because drivers who live in cities and heavily populated areas are more likely to be involved in an accident, or to have their car stolen or vandalized. Insurers generally offer better rates if you’re able to demonstrate that you keep your vehicle in a garage at night. You may also be able to improve the security arrangements of your automobile by fitting an alarm, immobilizer and steering wheel lock.
Insuring other household members will have an influence on the cost of your policy and the best car insurance rates that you offered. If you have teenage family members living with you and they are added to your policy, then your costs will increase. This may still work out cheaper than if your teenage driver were to have a separate policy in their own name.
In conclusion, there are a variety of different factors which can affect your ability to be offered the best insurance rates. Some of these are coverage limits, how old you are, whether you are male or female and whether you are married or single. Your rates will also be affected by the area where you live and whether other household members are included in your policy.