Millions of students and families across the U.S. carry some amount of student loan debt. The cost of schooling combined with a difficult employment environment for recent graduates can make it very hard for people to keep up with paying back loans. While this is unfortunate, it does not mean that people can ignore their financial obligations to repay loans.
Collecting unpaid student loans can certainly be a challenge for educational institutions and lenders. However, there are a number of ways that parties can pursue and collect the money they are owed.
Unpaid student loans can add up quickly, and students have a few options for trying to deal with student loans before the situation gets out of hand. But if and when a person fails to address an unpaid loan, it will go into default. When this happens, there are a few remedies that schools and other lenders may pursue to collect loans.
Some of the common ways to prompt payment includes:
- Wage garnishment
- Contacting debtor in accordance with the Fair Debt Collection Practices Act
- Applying tax refunds to unpaid loans
- Revocation or suspension of professional licenses (in some states)
- Filing a lawsuit against the debtor
Pursuing these options can be time consuming and it can be difficult for parties to understand what they are and are not legally allowed to do in order to collect payments. Because of this, it can be wise for lenders to discuss their options with an attorney familiar with collections laws and procedures.
When a debtor has gone nine months without being able to resolve or effectively address missed loan payments, lenders have the right to take action against someone who has defaulted on his or her loans. Knowing what steps to take can be crucial for parties looking to recover funds.
Source: FindLaw.com, “Consequences of a Student Loan Default,” accessed on Feb. 23, 2015