Defaulted student loans, wage garnishment, tax refund offset
If you default on student loans, many unpleasant things will happen. You will be immediately reported to the three credit reporting agencies - Experian, Equifax and TransUnion, and your credit scores will be ruined for some time. But this could be the least of your concerns. Defaulted student loans will also trigger some heavy governmental action. It has more than a few potent weapons at its disposal, and believe me, will not hesitate to use them.
If you become delinquent on your student loans, the Department of Education will likely get Internal Revenue Service involved. IRS will intercept any income tax refund you are entitled to, until your student loans are paid in full. This very popular method collects hundreds of millions of dollars on defaulted loans.
Then, if don't have any refunds coming your way, the government can garnish a limited portion of your wages. It can take up to 15% of your disposable income. The only thing it can not do is to take more than the equivalent of 30 times the current federal minimum wage, which is currently $6.55 per hour.
Next, the government can go after some federal benefit payments, including Social Security retirement benefits and Social Security disability benefits, but not Supplemental Security Income as reimbursement for defaulted student loans. You will get to keep no less than $9,000 per year or $750 per month. And, no more than 15% of your total benefits can be garnished.
Finally, the government and private lenders can and will sue you to collect defaulted student loans. Unlike other debts, there is no time limit on suing to collect delinquent student loans, so you can be sued indefinitely.
Thu Mar 12, 2009 10:03AM | Copyright: www.bad-credit-advisor.com | More in Student Loans | Comments (0)
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