Student loans are a
different kind of debt. These loans are unsecured, which means they were given
out on good faith that they will be paid back. When applying for school loans,
the borrower is essentially asking for money in order to pursue their higher education
with the promise that once finished with school, and after a set number of
months to find a job, payments will begin. Most people who are looking for a
way into into colleges and universities are not thinking about all the
difficulties or possible causes for this type of loan to be a hardship. Student
loan debt is something that will never go away on its own. Only in rare
circumstances will a student loan be forgiven, even bankruptcy will not bring
relief to this debt.
Why are student
loans so different?
For starters, the
funding behind your loan is from the government. These loans are not affiliated
with any bank and therefore are not subject to the same collections rules.
There are similar ways in which each can go about collecting the money owed,
but the Department of Education, which funds these loans, have an unlimited
amount of time to collect.
Regular bank loans
and credit card debt have a statute of limitations. Depending on the state you
live, these creditors will have a certain amount of time to try to get their
money back. This time period is usually 7 years, but some states differ. Once
the time limit is up, there can be no more attempts to collect the money.
Student loans do not have a statute of limitations. In other words, the Department
of Education can continue to attempt to collect on your loan until it is paid
off.
The creditor will
usually make attempts to collect on unpaid loans for a few months and then use
an outside collections agency to continue the process. Some companies will have
their own inside collections departments who will try for a longer period of
time before it processes out to a third party. The Department of Education does
not always use third party collections, but when they do, the outsourced party
earns more money per dollar collected from these loans and have been known to
be more assertive with their collection attempts. No matter what creditor is
behind your debt, the collections agencies are governed by the same Fair Debt
Collections practices Act. This guidance protects consumers' rights. No one may
threaten, mislead, or harass as a means to collect debt. If you ask them to
stop calling your work, they must comply. Collectors are not allowed to
deliberately embarrass as a collections practice. Know your rights when it
comes to third party collections. Report agencies who are not following proper
procedures.
Creditors do have
the right to take you to court to get a judgement which would allow them to
place a lien on property, garnish your wages, or freeze your bank accounts.
Filing for
bankruptcy will help a person find relief with debt... but not with student
loan debt. Only under rare conditions, for example, being totally and
permanently disabled would a student loan be excused.
In addition to
other collections practices, the Department of Education can take money from
your tax return, Social Security payments or garnish your wages to begin
collecting on your debt. Since there is no statute of limitations procedures
will continue to happen until your debt is paid in full.
You can dispute
your student loan obligation. The Department of Education has extremely limited
legitimate reasons to comply with your request. You may dispute your obligation
by proving extreme hardship, theft of identity, promissory note was not signed,
or if the debt was all ready settled in another way. There are also rare
instances that could also allow you to be forgiven.
To dispute the loan
amount or to claim financial hardship there will be legal work involved. Hiring
a collection attorney to work with your student loan debt will be the best
possible avenue to assist you under these circumstances.