Dont let default upset your financial future Default is a real financial challenge but it doesnt mean that all is lost for your financial foundation. The key to avoiding or bouncing back from default is to maintain contact with your lender or servicer as soon as you anticipate any financial challenges. ReadyForZero is a company that helps people get out of debt on their own with a simple and free online tool that can automate and track your debt paydown. Tax Refund Offset, should you fail to pay on your defaulted loans, you may have your tax refund applied to your student loan payment. This is an automatic process and one that can be particularly difficult should you rely on your refund or end up owing the IRS taxes. Lowered credit score (and resulting consequences the default will be noted in your credit report and will continue to be visible to lenders even if the default is quickly resolved. Keep in mind this hit on credit can impact your eligibility for loans, increase your mortgage rates, and even impact your future employment opportunities. The government can sue you at any time after your student loan has reached default status. Higher interest rates, along with a lowered credit score youll also face the higher interest rates that often accompany a lower score. Your loan holder has certain responsibilities once you are delinquent. During the first 15 days, they must send at least one written notice or collection letter. At some point, they must also let you know about the availability of the Department of Education Student Loan Ombudsman.
Delinquency and Default - FedLoan Servicing
Go into the conversation prepped with your financial stats and account information. Your lender or debt collections agent will be able to talk you through the process of working through the tasks ahead and setting up a plan that you can manage.