What Happens if I Default on a Private Student Loan?
by DeLadurantey Law Office, LLC on November 26, 2014
If you have a private student loan. it is important to understand there are many difference between it and a federal student loan. Most federal loans offer you fixed interest rates, repayment options, forbearance/deferment and other beneficial options. In contrast, these options may be offered by your private loan lender, but there is no guarantee.
An additional difference is the collection tools used by the government versus those used by a private lender. If you default on a federal student loan. there are many ways the government can collect from you without obtaining a court judgment first. Private student loan lenders can only commence collection efforts (outside of sending demand letters and making harassing telephone calls) after they have filed a lawsuit against the borrower and obtained a judgment.
It is also common for private lenders to require a co-signor on the loan. As a result, the co-signor is responsible for paying the full amount and will be included in any collection lawsuit. Once the private lender has a judgment against you and your
co-signor, it may pursue a garnishment of your (and the co-signor’s) wages and/or your bank account. The garnishment of your paycheck can be “continuing,” which means certain amounts can be deducted from every paycheck until the full amount you owe is paid in full.
A judgment-creditor can also obtain a judgment lien against your real property. Most creditors do not attempt to collect on this type of lien unless you sell your home or other real estate and you have equity in it.
If you are past due on your private student loan payments or your loan is already in default, it is time to get help. Let us work with you to negotiate a settlement or to investigate any available defenses to a lawsuit filed against you. The quicker you get us involved, the more likely we can obtain a positive result for you.
For your student loan, bankruptcy, foreclosure, and debtor’s rights matters, contact DeLadurantey Law Office, LLC at (414) 377-0518. We serve the counties of Milwaukee, Waukesha, Kenosha, and Racine, including such areas as Milwaukee, Merton, Delafield City, Waukesha City, and Kenosha. Visit our web site and like us on Facebook .