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Ever wonder how many days you could be late on your student loan payment before you are considered in default status. Well, you are considered in default once your payment is 270 days behind. Once this takes place, the lending institution can come after you with the power of the government. The entire balance of the loan will become due. You will not be eligible for a deferment or forbearance. There is no statute of limitation on collections. You can't discharge the loan in bankruptcy. You can't get further loans. The school may withhold your transcripts, and your tax refund will be intercepted. Your wages can be garnished. Your credit report will be damaged, collection fees will be added to your balance, liens can be placed on your personal and real property, and your bank accounts and other assets can be seized.
How do I get out of default status?
Ask the lender for a payment plan based on your income.
Try to get into the loan rehabilitation program. With this plan, you make 12 on time payments, and then a new lender will buy your loan providing you with a fresh payment plan and a lower monthly payment.
Consolidate all of your defaulted loans. You will get a better interest rate and payment plan under a different lender.
Settle your balance by seeking a compromise with the lender.
File for bankruptcy after proving undue hardship. You must show that your present income is too low to pay the loan, and there are various steps you must take to prove your case.
File a Chapter 13, and your interest, collection attempts, wage garnishments, and tax refund interception will stop while you are paying back your loan.
As you can see defaulted on your student loan could have a tremendous negative effect on your personal and financial life. When you are in default status, most lenders will assist you with bringing your account current. However, you have to take action and use one of the above techniques that fits your situation.