What to do if I have recently defaulted on my federal student loans of $36,000 due to a variety of family crises?

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What to do if I have recently defaulted on my federal student loans of $36,000 due to a variety of family crises?

I am in touch with the Dept. of Education, and just received the financial statement form and – aside from the fact that my family’s situation doesn’t seem to fit the form. I’m wondering whether the money I have in a mutual fund might be vulnerable. The funds were part of my retirement from the school district and I am saving it for disabled husband, since I am several years older than he and he will have no source of income after I die. Currently, our only income is my monthly retirement benefit. I’m terrified.

Asked on August 14, 2012 under Bankruptcy Law, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

I suggest that you consult with an attorney who practice in the area of consumer law to assist you in the defaulted student loan situation. Possibly a re-write of the loan where you would be able to make consistent monthly payments given your current financial situation.

The funds in your mutual account could be suject to a levy in the event of a judgment against you. Another option is to call the lender's representative to discuss your current situation and try and work out a monthly payment schedule.


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