paying one loan while being garnished by a creditor

by brooke
(seattle, wa)

Do I have to pay another debtor while I am being garnished by another? I just started making payments on my federal student loan but found out today Im being garnished for a private student loan. Can I suspened payments on my federal loan while being garnished without penaltys or interest?

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Jan 18, 2012
paying one loan while being garnished by a creditor
by: Debtcollectionanswers

Brooke:
It is EXTREMELY important that you keep up with your federal student loan payments and not default on that loan. This is because unpaid federal student loans will haunt you until they are paid in full and because unlike private loan lenders, the federal government has virtually unlimited means of collecting on past due federal loans. Without suing you first, it can garnish your wages, put a lien on an asset your own, take money from your bank account and take your tax refunds. Furthermore, you cannot use bankruptcy to get rid of unpaid federal student loans. Also, when you default on a federal student loan, you will not be eligible for new federal student loans in the future and the past due loan will do serious damage to your credit history and your credit score, which will make it difficult for you to get credit at reasonable terms, and can also make it difficult for you to rent a place to live, get a good job or purchase adequate insurance.

If you have not yet defaulted on your federal student loan and you don't believe you will be able to keep up with those loan payments while the private lender is garnishing your wages, get in touch with your federal loan lender immediately to explore your options for avoiding a default. They may include negotiating a new loan payment plan you can afford; loan deferment, which allows you to delay paying on the loan for a specific period of time (during the deferment period, interest on the unpaid loan balance will not accrue); or forbearance. With forbearance, your loan payments will either be reduced or postponed for a limited period of time, but unlike with a deferment, interest on your loan will accrue during that period.

Once you have defaulted on your federal student loan none of these options will be available to you and sooner or later, the federal government will come after you for the money you owe.

Bottom line, it's essential that you keep up with your federal student loan payments and that you work out a way to avoid a default. Good luck!



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