An Essay on What to Do If You Default on Your Loan
If you’ve defaulted or missed payments on your student loan, you may be getting calls from the loan company at your work or home.
Even if you’ve had to leave school or you’ve found it difficult to get a job, you still need to make your payments.
If you miss payments for 270 days or more, you are considered to have defaulted which could have serious repercussions.
The most important thing to consider if you default educational loans is that even though you can get rid of student debt, defaulting may ruin your credit rating.
It can make it very difficult for you to get a home loan, credit cards or a mortgage.
The IRS may refuse to give you any income tax refunds until you’ve repaid the loan.
A student defaults on his/her student loans may even end up having their wages levied until the loan is up to date.
Try to sort out a repayment plan with the lender and/or the government to pay back your education loans if you’re experiencing difficulty.
So how can you avoid defaulting?
The first thing to avoid is borrowing more than you can afford to pay back.
Even if that means that you have to miss or delay a term or two of college to work and earn the money you need, that’s a better choice than going into default that you cannot catch up.
Also, if you find you’re facing hardship and struggling with your repayments, contact your lender and make an arrangement you can afford.
Another option is consolidating on any defaulted student loan.
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What are the consequences of defaulting on a student loan?
1) You may not get any more financial aid.
2) The whole loan becomes due in full.
3) Collection costs of up to 19.
5 % may be added to your loan.
4) The default is lodged on your credit file for up to 7 years.
5) Your employer may be served a legal document requiring that they deduct and pass on 15% of your earnings towards repayment of your loan.
6) You may be sued for the repayments.
7) The government may refuse to give pay some of your Social Security benefits.
8) Your tax refunds may be suspended and put towards your loan repayments.
9) You won’t be allowed to defer and Federal interest benefits may be withheld.
10) You might not be allowed to renew your professional licenses until your loan is repaid.
And you’ll still have to repay the defaulted loan so try your best to avoid defaulting.