How will you Handle the Issue of Defaulted Student Loan
Nowadays career aspirants are always hunting for better job prospects. In order to build a competent career and avail unlimited job opportunities you need to achieve higher education from a premier institute. In the last couple of years the fees of these educational institutes have increased in leaps and bounds. Students coming from humble background find it very difficult to meet with ever increasing educational expenses. Both government and private financial institutes offer student loans, so as to enable them to fulfill their financial requirements. At the time of borrowing the loan the money lending institute require the student to sign an agreement. According to the term and condition of the agreement, the student need to repay the loan amount on or before the scheduled date, as mentioned in the promissory note. If the student fails to do so he will be identified as defaulted student loan holder.
The reasons for not being able to repay the loan amount are many; however the main causes are limited job opportunities, over borrowing, and economic hardship. In case of non repayment of loan amount, the money lending organization will initially send you reminders. You need to confirm what amount you owe and to whom. Next step will be to immediately get in touch with the financial agency, and explain under what circumstances you failed to repay the loan. You may also place a request with the financial institute, in order to defer the time meant for repaying the loan.
When you fail to repay the loan in-spite of several reminders, your loan falls under the category of student loans in default. It usually happens when the financial institute does not receive any loan payment over a period of nine months. If you default on a student loan you will have to face several negative consequences. They are:
- Automatic deactivation of your bank account may take place
- Until and unless you repay your previous loan amount, you will not be in a position to avail any other financial assistance scheme.
- You will not be able to use your credit cards, as they will be blocked automatically. Your credit score will be affected adversely.
- If you are employed than 15% of your emolument will be sent by your employer to the concerned monetary organization, in order to repay your loan amount. This is known as wage garnishment.
- The money lending institute can even take legal action against you.
Many financial institutes hire debt collection agencies in order to recover the unpaid loan amount from the defaulted student loan holder. These agencies often violate the FDCPA laws and as a result you are subjected to threats, abuse, and even physical harassments.
If you are a defaulted student loan holder you may seek the help of different student loan assistance programs. There are many organizations that provide support to the student loans in default customers and help them to find different options for consolidation of defaulted student loan or the rehabilitation program. These programs will help you to restore your previous status and improve your credit score.
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