What Happens If I Default on My Student Loan Payments?
Many student loan borrowers still have a significant amount to pay towards their debt each month – even years after receiving their degree. In fact, the average monthly student loan payment is currently at $393. Since this amount can be an overwhelming addition to your monthly expenses, many people get into the habit of missing their student loan payments. Missing your payments can put you at risk of defaulting on your student loan.
You’re considered to be in default if you don’t make your scheduled student loan payments for at least 270 days. The consequences of defaulting can not only impact your ability to borrow but can impact your finances as well. Consequences include:
- The entire unpaid balance of your loan and any interest you owe becomes immediately due
- You can no longer receive deferment or forbearance, and you lose eligibility for a repayment plan
- It can ruin your credit score
- You lose eligibility for additional federal student aid
- Your wages may be garnished. This means your employer may be required to withhold a portion of your pay and send it to your loan holder to repay your defaulted loan
- And more
How to Avoid Default
The best way to avoid default is to notify the loan service provider that you can’t make payments. In most cases, student loan service providers can provide you with a flexible payment plan that works for you. Whether you need help making monthly payments or experienced a change in your life that might impact your monthly loan payments, notifying your loan servicer can help you avoid default.
What If a Default Impacts My Overall Finances?
If overwhelming student loan debts are piling up with all the other debts you owe, you may need help to achieve debt relief. Our team at Wadhwani & Shanfeld has helped over 20,000 people across California repair their difficult financial situations. We can review your situation and help you determine which debt relief option is right for you.
Contact our Los Angeles bankruptcy attorneys today at (800) 996-9932 to schedule a consultation!