Student loan debt is still another biggest issue impacting American people today. The US education department reported that the national cohort rate was 7.3%. You may simply ignore your debt, but it is not a good idea as there can be serious consequences. In most respects, taking a student loan has the same consequences as not paying off the bills on your credit card. Contact a debt collection defense lawyer Chicago if you cannot pay off the student loan.
What happens if you do not pay back your student loan
The federal government pays most student loans and has the power about which debt collectors can dream.
When your loan payment is due for 90 days, it will be known as “delinquent.” Your credit rating will start taking a hit. It means that any new credit applications may be rejected or only be given at higher interest rates to risky borrowers. Bad credit will follow you in several ways. Potential employers often go through applicants’ credit ratings and determine their character. It is also the same for cell phone service providers who can deny you the contract you want.
Account will be in a ‘default’ state.
If your payment is due for 270 days, it will be known as “in default.” The financial company to which you owe the money will refer your account to a collection agency. The collection agency will try to make you pay. The debt collectors will tack on fees to cover the money collecting cost.
It will take years before the federal government gets into the case, and when it does, they can seize your tax refund and pile up your outstanding debt. It will garnish your salary, which means they will contact your employer, collect a portion of your paycheck, and send it directly to the government.
You can avoid these consequences, but you have to act before the loan is in default. Many federal programs are developed to help and are open to all who bear federal student loans but not to the parents who borrowed for their youths. These programs reduce loan payments and make them affordable based on the student’s family size and income. Even the government may contribute portions of the loan’s interest and dismiss the remaining debts after you pay over a period of years. The loan is discharged but only after paying for a straight 20 to 25 years.