What are my options regarding a defaulted student loan?

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What are my options regarding a defaulted student loan?

Unable to pay my student loans. I was paying something on each but one has gone into default. The loan company said they want us to pay today. They gave us some options, but they are way beyond what I can afford. I need advice now. They said if we didn’t it would be turned over to a collection agency and they could take other options. I was just contacted about it late last week that it went into default. Can they do it that fast and what can I do? I got sick last year and have medical bills as well. I had insurance but it didn’t cover anything.

Asked on August 24, 2011 Pennsylvania

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If you are unable to pay your obligations including one specific student loan due to financial hardship resulting from an illness, the best thing for you to do is to keep in contact with people or entities that you owe money to and try and work out a written payment plan on terms that you can accept.

Unfortunately, if you owe on an obligation and it is past due, the creditor can can declare it in default and turn it over to collections. A creditor can turn accounts over to a collection agency quickly. It all depends upon the circumstances of each matter.

Many people in your position who cannot pay their obligations due to large debt and small monthly cash flow find that their only option for relief is to seek bankruptcy protection. A bankruptcy filing may be your only option to get back on your feet financially.

You should consult with a competent bankruptcy attorney about your financial situation.

Good luck. 


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