Is it Possible to Escape the Harsh Outcomes of a Defaulted student Loan?

Do you know the consequences once your credit score falls drastically and your credit card facilities are all seized? Once these happen, you might lose your professional image and might even face legal actions. Well, a student loan defaulter is bound to meet all these unpleasant consequences if he fails to make his repayments within the delinquency period. Every loan borrower is provided a maximum time limit of 270 days exceeding which his loan status gets defaulted. Once done, the defaulter will start facing such unpleasant consequences that can bring stains on his work record.

If you are the student loan defaulter, your loan lender will immediately transfer your case to the collection agency. Once it’s done, the following actions might be taken against you:

• Personal accounts will all be closed
• Loan applications will be rejected
• Credit card facilities will be stopped
• All paychecks will be garnished
• Tax returns will be withheld to pay off your unpaid debts
• Credit score will drop

If the above consequences keep coming one after another, you might even end up getting bankrupt. Well, the good news is that there is still a great solution that can keep you miles from falling into danger. Without any further thought, just talk to your lender. With his help and cooperation only, you can only normalize your loan account. The more you delay to clear off your dues, the tougher it will get to come out of legal complications.

Just keep in mind a few points:

• Be honest to your lender. Tell him the truth as how you actually ended up as a loan defaulter.
• Show necessary documents proving that you are incapable of making repayments.
• Take help and suggestions from him. He will let you know about the best policy you can opt for getting rid of the defaulted student loan consequences.

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In trouble with Student Loan? Seek Solutions with your Lender

In the face of today’s economy, more and more students are finding themselves caught within the nexus of student debt. What tends to worsen the situation is the fact that the students need to come up with a proper repayment plan to avoid falling into the trap of defaulted student loans. If you have a loan, you must pay it off to live a peaceful life, as failure to pay off the loans in time can land you to face dire consequences. A student loan in default can anytime turn your life unpleasant affecting your financial health the most.

To avoid being into such situations, you must consider taking immediate actions to bringing your credit status to normalcy. Well, if you have been wondering about the steps that you might take to fight the odds of defaulting on your student loan; here is a look –

Get in Touch with your Lender

Your lender at present is not only your friend, but a guide too. Once, you find yourself unable to go ahead with the repayment process, always consider getting into a conversation with your lender. You must talk to him clearly and state the reason for being unable to pay off the loan. Additionally you must also tell your lender when you shall be able to pay off the loan. Since, your lender has been dealing with such situations for a considerable time; he or she will surely be able to design a flexible repayment plan catering to your financial needs at best. When it comes to student loan care regarding getting into a defaulted status, your lender is the best one to advice.

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Easy access to student loans without credit history and co-signer

Is your dream of pursuing a professional course being destroyed because of unavailability of loan? Absence of co-signer and credit history must be stopping you from applying for loan. Well, you can get a loan even at this condition; the only thing is that your options will get minimized.

The tips mentioned below will help you to get easy access to loans:

• Search for federal student loans as most of them do not require a credit check.
• Do remember to fill up the free application for Federal Student Aid (FAFSA). FAFSA will help you in receiving loans as it is an integral part of securing government loans.
• One can also apply for Stafford loans which are specially designed for needy students. It is perfect for those who don’t have a co-signer, credit history and at the same time belong to low-income strata. However, the amount granted may be small but at least you will be able to kick off your study.
• Similarly, Perkins loans are designed for students who are in great financial need. The best part of this loan is that the interest rate is only 5% and also the repayment terms are longer than that of Stafford loans.
• Non-traditional students only qualify for Stafford or Perkins loans but at the same time there are many grants and scholarships available. One can use them to complete his/her education.

Thus, you can get loans to complete your studies and pursue for other professional courses. You have fewer options but still you can utilize them to the fullest. There are private loans available but it is better if you keep them as the last resort.

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Be Proactive and Secure a Good Loan Repayment Plan

Student loans are necessary when one is planning for a higher degree. Not only do they provide the student wit the peace of mind that they do not have to earn their tuition while they are studying and can focus their attention completely on their studies. Once they graduate and get a job they will be able to pay off the loans.

However, the times are changing and the graduates are not as confident of getting a good job as they used to be. The job market is at its all time lowest and a number of graduates are extremely under-employed. Therefore, their loans are remaining unpaid and are becoming defaulted. The consequences that include a lowered credit score and wage garnishment among a number of others have a lasting impression on the finances of the defaulters.

The best way out of a defaulted student loan is to make the repayment arrangements in time. For those who are finding it hard to manage the monthly installments can go for the innumerable repayment options. They are the only way in which you can keep the collection agents at bay and also pay off the loan with ease.

The repayment options are only good as long as you have not defaulted on the loans. So, you have to contact the loan lenders or the loan servicers when you realize that the installments are becoming too much to handle for your finances. You might find good offers if you hurry and contact the lenders pro actively.

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Repay Loans on Time to Avoid the Consequences

The present student loan situation has often been compared to the housing loan bubble that took place some years back. A number of house owners who defaulted on their home loans had to hand over their house keys to the lenders.

In the case of the student loan defaulters however there is no such chance. But they will have to face a number of other consequences that are equally bad. Given below are some of them.

Wage Garnishment
The lenders can get the permission to garnish about 15% of the defaulter’s wage in order to repay the loan. This will be quite a burden for those who have a low wage job and a number of responsibilities.

Low Credit Score
A defaulted loan means a low credit score and less chances of financial assistance in future. But in the case of a defaulted student loan the effect is serious as the borrower is usually a student who is just starting out his/her life.

High Interest Rates on Future Loans
With a low credit score, the interest rates on the future loans, if you get them, is going to be inordinately high. Another problem of a low credit score is that you won’t get a good deal when you consolidate the loans.

Interception of Federal Benefits
There are a number of federal benefits that one is entitled to. But with a defaulted loan in the record the lenders can intercept them along with the tax refunds.

Collection Harassment
The collection agents come on to the scene the moment a loan becomes defaulted. You will have to pay the loan in full along with the additional charges that are applied.

Therefore, an unpaid loan can bring along a host of troubles. So, the best way out is to pay the loans off in time and save your credit score from dropping.

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