My Student Loans Have Defaulted

Now what?

Due to my many years of being mentally ill, my student loans have finally defaulted. The government is threatening many scary things, but I’m uncertain if they’re all actually true.

Can Dopers help me out with some questions then?

[ol]
[li]Can they garnish my husband’s wages?[/li][li]Can they take our house or cars (two; one for him and one really old one for me)?[/li][li]Can they trash my husband’s credit?[/li][li]What are the odds they’ll sue me over 100,000 in debt?[/li][li]If they sue me, what does that even mean?[/li][/ol]

I think that’s everything. If anyone can help, that’d be awesome. Thanks in advance.

Are you drawing SSD/I? If so, and your loans are federally insured, you may be eligible to have the loans forgiven. There’s a form the U.S. Dept. of Education can send you. Otherwise, you’ll need to talk to a lawyer licensed in your state to determine what personal exemptions may apply. In my state, your home and primary vehicle are exempt from execution by anyone except a mortgage or purchase money security interest.

No, I’ve never wanted to get on disability and now (as in 2 weeks ago) I’ve finally been able to start working again (well, 20 hours anyway). And yeah, I know talking to an attorney would be best, but I just wondered if anyone here had any personal experience.

And by the way, I’m in Texas.

I do know that student loans are not affected by bankruptcy so it won’t help you.

Yeah, unfortunately we’ve already done the bankruptcy thing anyway, so you’re right there.

It is possible, at least in theory, to discharge federally insured student loans in bankruptcy, but the standard of proof is very high. The debtor has to prove a pretty extreme hardship scenario, and relief is rarely granted. Not sure about non federally insured loans.

Other things to consider–did the husband co-sign or otherwise guarantee the loans? Did anyone else? If the debtor doesn’t pay, or discharges his obligation in bankruptcy, the creditor will probably then seek to collect from any co-signors or guarrantors.

If there are no co-signors, and the debts are federally insured, the Dept. of Education can initiate an administrative wage garnishment and serve same on your employer, in some states. I am not licensed in Texas, and have no idea what their law may be.

I’d be dubious about a creditor being able to garnish the husband’s wages unless he was a co-signor/guarrantor, but again, you’d need to talk to someone licensed in Texas to know for sure.

Unless your husband cosigned on your loans, I don’t believe they can go after his wages or credit report. If you file jointly they can take any tax return you receive (including his portion). If you start working again your paycheck will likely be garnished, I am sure you have already realized your credit report is trashed. They could definitely put a property lien on your house if it is in both your own and your husbands name (they can’t “take” your house however). The cars they can take unless it is solely in your husbands name. They cannot take any property without suing you first (although they can garnish your paycheck without this step). I have no clue how likely it is they will sue you over 100k, other then saying that is quite a bit of money and if they think they can recover a good portion of it from suing, they will.

Obviously, this is a large enough sum of money that you need to see a lawyer, I make no guarantee about the accuracy of the above information.

I sent you a PM. I used to work for Raytheon that did the wage garnishment for defaulted financial aid and student loans.

Pay them $10 - $15 a month.

As long as you are making payments they will be unable to get a judge to garnish anybody’s anything. The judge will say, “Well, she’s trying to pay!” In fact, they will never bother to take it before a judge because they know this, all too well.

Whereas if you do nothing and just let it default, the judge will say, “She’s making no effort whatever to repay!”

It will totally piss off the collections people as they will be unable to pursue you in court, (unless you’re sitting on millions, have won a lottery, have a yacht, etc.), and that’s worth at least $10 a month!

I learned this from a bankruptcy trustee, tried it, and it worked perfectly!

On review, you’ve already defaulted, it may be too late. Start making monthly payments, ASAP, either in cash or from an account, (set up at another bank than the one you frequent), used just for this payment.

Thanks everyone for your answers. I’ve now had an offer of help from someone here on the board, so maybe some passing mod can close this as I think I’ve gotten what I need. Thank you all again.

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So ordered.

BANG!

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