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Debt Relief – Insolvency – Bankruptcy Information » Student Loan Help » Does anyone know the penalties of defaulting on a student loan?

Does anyone know the penalties of defaulting on a student loan?

I was wondering if anyone knew what the penalties were of defaulting on a student loan. My loans have changed hands so many times and I’ve tried consolidation and all that seems to do is get me in more hot water. The other day I was sent a letter stating that I was about to default on a loan and that I would be subject to litigation. How much jail/prison time is involved? I’ve gotten to the point where I don’t care anymore. I mean suing someone for not having money is stupid, but our justice system lets it happen all the time.

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4 Responses to "Does anyone know the penalties of defaulting on a student loan?"

  1. dfmcdaniel082597 says:
    Bad credit for atleast 7 years and they take your income tax returns until it’s paid off!!!
  2. MrsS says:
    I don’t know about legalities but defaulting on a loan of any kind seriously screws up your credit.

    Obviously, you have a college education and you’re now an adult. Your credit rating is extremely crucial. It’ll affect purchasing a car, a home, renting an apartment, etc. These days, even auto insurance agencies run credit checks and this affects the type of rate you’ll be paying.

    By defaulting on this loan, you’ll have a low credit score and that’s a serious consequence.

  3. Found-1 says:
    Penalties involve
    1. Increased finance charges and high penalty fees once in default (a loan of $1,500 would quickly become a loan of +$6,000)
    2. Wage garnishment
    3. Income tax return confiscation
    4. Bad credit (no house, no car, no apartment)
    5. No further federal student financial aid

    Also – Bankruptcy will not discharge student loans and there is no “statute of limitations” on them. In 15, 20, 40 years from now they will still want their money, plus all the extra interest and fees.

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