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If you have recently defaulted on a student loan, you may just be hoping that it will go away.  This isn’t an uncommon thought, but unfortunately, this is one type of loan that will not just disappear!

Why you do not want to be in student loan default

If you have a student loan default, chances are your phone is ringing off the hook.  The government hires very aggressive collection agencies that will harass you to no end.  On top of this, unlike many creditors who never take the time to sue, if you have a job chances are you will end up in court.  Once you lose, a judgment will be issued against you.  This will then turn into a wage garnishment.  What this means is that the government will take a portion of your paycheck each month before you ever see it.  On top of this, they will also take any income tax refund that you have coming due to you.

To make matters worse, if you have a federal student loan, there is no statute of limitations on how long you can be collected from.  This means now or twenty years from now, the government is going to do everything that they can to get money from you.

The good news at there is a program through which you can rehabilitate your loan.

How student loan rehabilitation works!

Once you have successfully rehabilitated a student loan, it is no longer in default status.  The record of default will be deleted from your credit bureaus.  You will also be eligible for things like deferment and forbearance should you need these things in the future.  One of the reasons that many people seek to rehabilitate their loans, is that it stops wage garnishment.  Also, the IRS will stop seizing your income tax refunds.

The requirements to rehabilitate a loan are fairly simple.  For direct, FFEL and Perkins loans, you must make 9 full loan payments over a 10 month period.  Only payments that are made voluntarily by you count.  (i.e., payments made through wage garnishment don’t count)  Once you have made these payments, your loan is officially out of default.

Handling debt cannot be completely effortless plus it can be extremely worrying.  When you retain quite a bit of student loan debt, you feel stuck in your place following graduation day when you should feel free.  The troubles that debt brings are unbelievable in most situations.

What else is there you can do?  You could consolidate your student debt.  This may or may not be the proper choice.  This is the best chance for individuals to lower their regular costs if they aren’t at this time affordable.  Decreasing your expenses and paying down the debt is a much better idea.

Consolidation will allow you to decrease your monthly payments and lower your overall interest charged because you get a lower interest rate with your new consolidated loan, ideally.  This could hurt your credit, so I recommend avoiding it if you can pay off your loans without going to another extreme such as bankruptcy.