You spent the last four years working hard to get your college degree, so you could create a good future for yourself. When you graduated, the job market wasn’t quite what you expected and now you’re behind on your student loans and possibly facing legal action.
Consumer credit laws were put into place to help people just like you. People who want to pay off their student loans but can’t afford even the most minimum of payments. We’ve put together a guide to help you know your rights when it comes to consumer credit and student loans.
Research and use it to help yourself.
Your Rights as a Borrower
If you have federal student loans, then you have many options for repayment. Even if you’ve paid for a while, if you haven’t defaulted, then you can still get various payment options.
One of the best is income-based repayment. If the problem is you don’t make enough money to make your standard monthly payment, then they adjust it based on your income. Some people can pay as little as nothing until they reach appoint in their income that they can make payments.
You can also defer payments for several months if you have experienced a hardship or other issue that has temporarily limited your income or has become a major expense. The worst thing you can do is default on your loan, which opens you up to a civil lawsuit and potential wage garnishment.
Consumer Credit Laws: Limits on Collections
If you don’t pay your loan, the creditor will attempt to contact you to find out why. There are several federal and some state laws that dictate what a creditor can do to collect on a debt. Most creditors understand their limits, but less scrupulous ones may break the rules and you can report them.
Debt collectors have the right to call you at work and home, but only if you allow it. If a creditor calls you at work and you tell them not to call again, then they can’t. They can also contact family members and other references to find out your contact information.
They cannot threaten you with criminal action or jail time. That’s illegal. Being in debt is not a criminal offense and they cannot threaten you to get you to pay.
What Happens When You Default?
If you default on your loan, then the creditor can go after you in court to get you to pay your debt. They must set up a court date and you must be served and can defend yourself.
You can plead your case at the court hearing, but if you are found in fault, then they can garnish your wages, take your federal income tax return and, if necessary, seek your assets.
The good news is most agencies have programs that help get you out of default. It requires you to pay a certain amount each month for a set amount of time along with your wage garnishment.
Once you are out of default, you are once again open to the various repayment options.
You’ll Get Out of Student Loan Debt
It may seem impossible when you face a mountain of student loan debt, but there is a light at the end of the tunnel. If you need help, there are consumer credit laws designed to give you options and limit the abilities of the creditors.
If you are facing and administrative wage garnishment for a student loan, then please explore our site.