Legal Question in Credit and Debt Law in Michigan
delinquent student loans
I have recieved a few letters from my bank regarding a delinguent student loan and to call for repayment options. When I called, they gave me two options; 1 - to pay the balance in full (13K) or 2- to pay $600 a month for two years. Dut to limited funds, I am not able to pay either of these amounts. I was hoping to bring the loan up to current with regular payments or pay what I can for now. They are now saying a judgement will be filed against me. What exaclty does this mean? And do I have any other options?
2 Answers from Attorneys
Re: delinquent student loans
What they mean is that they are going to sue you for the balance, and obtain a judgment against you, unless you have a valid defense to the case (which is highly unlikely). Put something in writing to them offering to pay whatever you can afford monthly. Even if they reject and it goes to court, you can show the judge you tried to work out a payment plan, and they wouldn't work with you.
If they do get a judgment, they can garnish your wages, income tax refund, etc. However, there is a limit to the amount they can take out of your paycheck (25%).
They are likely playing hardball with you to see if you can really afford to pay $600 or so a month. But if you can't, don't sign any agreement. Ask for what you can afford, and then what happens, happens.
Re: delinquent student loans
They have to file a lawsuit before they can get a judgment. That is their right and then once they have a judgment, they can do things like garnish your wages, bank accounts, or state tax refunds.
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