Can filing bankruptcy stop wage garnishment on student loans?
If you’re experiencing significant financial struggles, you might be worried about wage garnishment. It’s one of many consequences that come with not paying your student loans and other bills.
What are the other consequences?
Your Loan Could Go Into Default
If you don’t make any payments on your student loans for nine months, your loan will be considered in default. At that point, the entire balance of your loan will be due and your credit score will take a big hit.
Additionally, the government can garnish your wages and seize your tax refund to try and collect what you owe.
Your Interest Rate Could Be Increased
If you’re in default on your student loans, the government can increase your interest rate to more than 25 percent. That means you’ll end up paying even more money over the life of your loan.
This might not seem like the worst thing in the world if it solves your immediate problems and helps you avoid garnishment or loss of assets.
However, one of the benefits of student loans is the low-interest rate. Sacrificing this to create a temporary fix might be something you eventually regret.
You Could Lose Your Loan Eligibility
If you’re in default on your loans, you’ll likely be ineligible for future student aid. That includes grants, scholarships, and work-study programs.
You Could Have Your Wages Garnished or Bank Accounts Levied
The government can garnish your wages if you’re in default on your loans. They can take up to 15 percent of your paycheck to put towards what you owe.
This means if you’re already struggling financially, your situation will get even worse. The best thing you can do is address the problem and avoid garnishment.
Can filing bankruptcy stop wage garnishment from student loans?
Maybe. The best thing you can do is contact an attorney as soon as possible and discuss your options.
You Could Have Your Tax Refund Seized
The government can also seize your tax refund if you’re in default on your student loans. They’ll use that money to try and pay off what you owe.
Your Credit Score Will Take a Hit
If you’re in default on your student loans, your credit score will take a major hit. This will make it difficult to borrow money for things like a car or a home.
If you’re having trouble making your student loan payments, be sure to reach out to your lender as soon as possible. Can filing bankruptcy stop wage garnishment student loans? Can you lose your home or be turned down for a job because of student loan debt?
These are all things you can discuss with an experienced bankruptcy attorney.
There are many options available to help you get back on track with student loans, including deferment or forbearance. Your goal is to not allow yourself to fall into default, as the consequences can be costly and long-lasting.
Can Filing Bankruptcy Stop Wage Garnishment on Student Loans?
Maybe. Every situation is different.
Working with an experienced bankruptcy attorney can help you get organized and avoid wage garnishment and other serious consequences.