It isn’t me who is in default, but a relative, and I’m wondering what is likely to happen. Briefly, here’s the situation: He is in his 40’s and the loan was taken out more than 20 years ago. (The original amount was roughly $4K, now up to $12K+ with interest, penalties, whatever.) During that time he has worked a total of exactly one year (well, eleven months), otherwise depending on the support of family, friends, or significant other. (He has some problems, needless to say.) Ironically, it was that year which seems to have brought this issue to the forefront again, with the small “tax rebate” due him in 2001 instead being sent to the dept of education, which caused them to begin pursuing this debt again after at least fifteen years of silence. (FWIW, it is not the DOE per se but a collection agency calling.) He is single with no dependents; he lives with his girlfriend, who supports them both with a regular job. He has exactly three assets: one car and one truck, both early 80’s models, neither running; also one small mid-80’s model camper, running, which he travels in and lives in occasionally. No savings, no income of any sort, no property. The house where they both live ordinarily is in her name, both deed and mortgage. All other bills, such as utilities, are also in her name and paid by her. Her income is barely sufficient to cover living expenses, so it’s not as if she can just pay the debt for him to get rid of it. They have no legal relationship, although she does have power of attorney to handle his business affairs. There is no expectation that he will work or have income in the foreseeable future.
I am not advocating the morality of failing to pay ones debts and obligations – I myself put an astronomical percentage of my monthly income toward paying off towering debts that taught me a painful lesson in fiscal caution. Neither am I looking for legal advice. I’m just wondering if anyone else has ever had any first-hand experience with something similar, or any idea what recourse the collection agency would have in such a situation. I know (I think) that they could get a judgment against him and garnish his wages, if he had any, or garnish government payments like social security, if he had any, or, presumably, put a lien on his house, if he had one, none of which apply. What other things should they be worried about? Can something like a modest camper be seized? Can a person actually go to jail over such an issue? Or are there other awful things I haven’t thought of?
