Defaulted Student Loan - Know the Consequences For Defaulted Student Loans

Why should you not default on Student Loan?

Unlike the regular loans, getting into a defaulted student loan is very difficult. A couple of defaults doesn't get you there. If you do not pay a single installment in 9 months, you enter student loan default. In other words, unless you have messed up your repayment in a big way you cannot default on a student loan.

There is another reason why it would be tough to default these loans. Over the years there have been many incentives for companies to offer student loans leading to loans structures of various forms that suit people from varied backgrounds and challenges. Besides, student loan interest rates are some of the lowest in the industry. It is important that you don't default on friendly loans like these because such defaults would get recorded against your credit ratings that can affect your salary structures. These defaults can also affect your income tax returns and potential refunds.

And more:

• You would be pestered by the collection agents for repayment
  
• Your bad credits will keep haunting you for a long time
  
• You lose many options for repaying your current and future loans.
  

If you are planning to use Chapter 13 or 7 as a cover, you must read the clauses of bankruptcy. Your student loan does not get cancelled with that.

Contract? 

If you are unable to pay your student loan it is in your best interest to look at alternatives you have to avoid defaulting. It is also a good time to look back at the loan agreement that you signed when you opted for the student loan. You had been enrolled into a legal contract to make the monthly payments on your loan amount on a stipulated due date.

It is not unusual to get into a defaulted student loan due to some un-planned events or change in circumstances. Not just newly graduated students, but also experienced professional can run into such situations that disrupt their fine, financial balance between expenses and income.

Michael Clifford Ramsey writes about Personal Loans on his website, where you will find where you'll find everything you need to know about defaulted student loan