LA JOLLA, Calif., Nov. 4, 2014 /PRNewswire/ — Nationwide, student loan debt exceeds $1 trillion. According to a recent report from the Government Accountability Office, four percent of Americans between the ages of 65 and 74 had some form of student loan debt in 2010. As of 2013, student loan debt among seniors grew to $18.2 billion. Of this amount, approximately $4.5 billion has been defaulted on by these seniors. So what happens to senior citizens that have defaulted on their student loan debt?
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1. Your federal benefits, wages and tax refunds can be garnished.
If you default on federal student loans, the government has the right to take some federal benefits to help satisfy this debt. This includes Social Security benefits and Social Security disability, but does not include Supplemental Security income. The law does limit the amount the government can take from these federal benefits. The cap is 15% of your total benefit, and you cannot be left with less than $9,000 per year ($750 per month). For seniors still earning a paycheck, your wages can be garnished for up to 15% of your disposable income. However, there are limits to what can be taken and the formula is tied to the federal minimum wage. Finally, your tax refund can be taken to pay off your student loans. You may have the right to challenge federal benefit and wage garnishments.
2. You might be sued by your lender.
Private student loans are unsecured debts. Consider them as an equivalent to credit card debt. Lenders that provide private student loans have the right to sue you if you fail to make your payments. The ultimate goal for the lender is to get a judgment against you. Once your creditor has a judgment, their right to collect is limited by state law. In California, this includes attaching liens to real property you own, garnishing your wages or levying on bank accounts. However, private lenders cannot get to your social security benefits to satisfy a judgment. That fact could give you a huge advantage in negotiating a settlement on your private student loans if you are dependent upon federal benefits as your sole source of income.
3. Where do you get help?
There are a number of online resources you can access to determine what type of relief you may be entitled to for your federal student loans. Some include the Department of Education, Consumer Financial Protection Bureau, and Debt.org. Private student loan options are more limited. If this process intimidates you, I would encourage you to seek the assistance of an attorney that has a focus on consumer debt relief. Weighing your options on both federal and private student loans is important and could wind up costing or saving you thousands of dollars. For those at a retirement age, your decisions and the related consequences are amplified. Especially if you rely on federal benefits for the basic necessities of life. Get help, know your options and don't feel afraid to tackle your student loan debt.
Daniel R. Gamez, an attorney focusing exclusively in debt settlement, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in La Jolla, CA. For more information, please contact Daniel Gamez at 858-217-5051, Email or visit gamezlawfirm.com.