How To Escape From A Defaulted Student Loan
Student loans which are granted by the government may be defaulted when you are not able to make payments even after you are reminded time and again
. If you are behind your payments by 180 days, your loan may be declared as a default. It would then be turned over to the guarantee agency in your state, for them to act on it.
A defaulted student loan can be a cause for you to have a lower credit score, for your tax returns to be withheld and for you to be forced to repay through a legal action. When your college loan is declared as a default, you will not be able to receive student aid anymore.
For you to be able to escape a default loan, you can instead cancel your loan, renew it by consolidating it on a different loan or by stopping payments temporarily. However, as with any loan, there are certain conditions that you have to meet before you can take any action on your loan. For instance, for you to be able to cancel a loan, your school should have closed while you were enrolled in it, or if you withdrew from the school.
You can also cancel a loan if you enter the military service or if you choose to teach full-time. If you are under a National Direct Student Loan, your loan can only be canceled if you become a staff in the Head Start Program or if you become a member of the Peace Corps. A Perkins Loan has other circumstances under which you will be allowed to cancel your loan.
You can also have a loan discharge when you declare bankruptcy. However, there are certain limits to this condition. Also, when you are discharged from a student loan because of bankruptcy, your co-signers will not be discharged. This will make them liable to the financial institution from which you got your loan.
To apply for a discharge or a cancellation, you have to meet different qualifications. First, you should have received a portion of your loan. Other conditions that you need to meet are that you should cooperate with the government for any action which would allow recovery of the money from third parties such as the owners of your school. Lastly, you should agree to provide documents which would otherwise help the government process your cancellation and discharge.
How To Escape From A Defaulted Student Loan
By: George Nowling
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