Federal Student Loan Collections

Post graduation, paying off
student loans
provides Piggy _banka great deal of stress to consumers.  In
our suffering economy jobs are harder to find than ever before no
matter what type of degree you carry, and repayment of loans proves
more difficult than ever imagined.  In fact, last year alone
the amount of outstanding student loans surpassed the amount of
credit card debt in our county. 

Once your repayment plan begins, if you default on your
federal student loan
, the entire balance of the loan may be
accelerated or due in a single payment.  After acceleration,
the loan is often placed with an agency for collection adding to
your expense, as you become responsible for repayment of the
principal and interest of the original debt as well as the
collector’s costs incurred to collect repayment. 

The Department of Education, the entity ultimately responsible
for guaranteeing student loans, may obtain repayment by withholding
money from income tax refunds.  Additionally, the Department
of Education can withhold up to 15% of your paycheck without first
obtaining a court order.  This action, known as an
“administrative wage garnishment”, does not require the collector
to obtain a judgment in a court of law when collecting on federal
student loans.  However the collector must still follow
prescribed protocol.  When a collector intends to garnish to
collect repayment of the loan, the loan holder must first send
notice of the proposed garnishment and provide you with 30 days to
object to the forced repayment.  The objection must be in
writing, and upon receipt, a hearing will be set up either in
person or by phone to present your case.  Based on the
information provided and the documents submitted a decision whether
or not to proceed with the garnishment should be rendered within 60
days.             

While the strict
guidelines of the Fair Debt Collection Practices Act (“FDCPA”)

are applicable in the
collection of student loans
, with such a large amount of debt
looming, debt collectors frequently go above and beyond the letter
of the law to collect on debts that no matter the situation must
eventually be paid off in full.  If you feel your rights have
been violated under the
FDCPA
relating to collection efforts of a student loan, contact SmithMarco P.C. for a free case review