These days more and more people are falling behind on student loan payments. If you fail to pay your loans for 360 days, you may be in default which can wreak havoc on your credit worthiness now and in the future.
Not only will your credit score take a hit, if you have past due federal student loans, Uncle Sam can be relentless. The government can garnish your pay, seize your tax returns and even dog you as you age by taking some of your Social Security.
Oftentimes, an inability to pay student loans is just the tip of the iceberg. Financial difficulties often translate into getting behind with other creditors as well which may lead to creditor harassment, a home foreclosure or car repossession. In these cases, bankruptcy protection may be a good option.
Student Loan Default Options
Although student loans are often not dis-chargeable in a bankruptcy, most unsecured debt is dis-chargeable including credit cards and medical bills, which can lower your burden. Bankruptcy can also stop creditor harassment and provide you options for keeping your home or vehicle.
Defaulting on student loans or other obligations is not a good situation, however, working with a bankruptcy attorney to alleviate debt in a Chapter 7 or 13 bankruptcy may enable a borrower to get back on track financially. Contact the Peoria bankruptcy law offices of Charles E. Covey at 309-674-8125 to discuss your options under bankruptcy protection to improve your circumstances.