It is a difficult time to be a college graduate in the United States. You have probably heard the statistics. Approximately 70% of graduates find themselves with some kind of student loan debt. The current average balance owed is $30,000. In San Diego, the problem is increased by a unusually high cost of living. When a student loan goes into default, some form of legal action is inevitable. When this happens, a San Diego Student Loan Lawsuit Attorney can help.
The approach towards student loan debt depends on whether the loan is private or federal.
If you are in default on a federal student loan, apply for the income-based programs
Federal student loans come with many benefits. They have deferments, forbearances, flexible payment plans, and options for loan forgiveness. However once an federal loan enters default status, these benefits are no longer available. You lose eligibility for deferments, flexible repayment plans, and lose eligibility to qualify for additional student aid. Also, the debtor may be subject to wage garnishment (up to 15%) and treasury offset. Finally, the government can issue an order to the IRS to withhold your tax refunds and use that cash as payment on your defaulted loan.
One of the bigger consequences of defaulting on a federal student loan is that the lender has the power to charge huge collection fees, sometimes in the range of 16%-25%. Over a period of a few years, these collection fees can add up to be a very substantial portion of the total outstanding balance.
These are powerful collections tools.
The good news is that there are various means to rehabilitate a federal student loan. Rather than retaining an attorney to handle a federal student loan, it is advisable to work with the government.
If you are facing a default on a private student loan, retain a San Diego Student Loan Lawsuit Attorney
Like federal student loans, private student loans receive special treatment in bankruptcies. This makes discharge impossible in the vast majority of cases. And like federal student loans, private student loans can also lead to wage garnishments and bank levies. But there is a crucial difference: a private student loan lender must bring a lawsuit and obtain a judgment against the debtor first. A San Diego Student Loan Lawsuit Attorney can be very helpful in potentially preventing this from ever happening.
Another important consideration is that it is commonplace for private student loan lenders to require a co-signor in order to provide funds to an applicant with questionable credit. Generally, the lender has the same remedies against the co-signer as they do the primary obligor, which includes bringing a lawsuit. Sometimes the lender is actually more interested in pursuing a co-borrower then the primary borrower, because they know the co-borrower has more substantial income and/or assets that could be subject to debt collection. But a co-signor can also assert additional defenses that a primary borrower cannot.
If you are dealing with a lawsuit based on a student loan, a San Diego Student Loan Lawsuit Attorney can help. Feel free to contact The Jake A. Walton Law Firm. We are focused on handling student loan issues and would be happy to speak with you.