Student loans debt is no longer just a national financial problem, it’s become a national financial crisis: over one trillion dollars is currently owed by borrowers, with a per-student amount averaging around $29,000. And nearly three-quarters of college graduates owe money on their loans when they get their degree; money they thought they could pay back with a good job and careful spending, only to find out that the burden consists of the principal and the interest, plus the possibility of not finding a job upon graduation that makes paying off student loans possible.

Many borrowers ignore the lender’s emails, texts, calls and letters, thinking the issue will go away if they never bother with the correspondence. But there’s no positives in pretending there’s nothing to deal with.

What happens to loans and life when you don’t pay back?

The lender takes your taxes

In a move called a tax offset, the federal government confiscates your federal tax refund to pay back your loan. Seizing your state tax refund is also possible, and both refunds will go towards paying off your loan until you respond to the loan company.

Garnishment goes into effect

The lender sends a letter to your employer, ordering the removal of up to 15% of your paycheck from your pocket to your student loan. And that 15% increases as your salary increases, so every raise you get means the lender gets a raise in the garnishment, too.

You face a lawsuit

If nothing else gets your attention, the lender can sue you for immediate payment of the full amount of the loan. No more monthly plan, deferment or modification of the loan; the lender is looking for all the money.

There’s no back to normal through bankruptcy

Unlike other debts, student loans cannot be dismissed through bankruptcy. Once you clear bankruptcy proceedings, the loans immediately go into repayment.

The credit score conundrum

Failure to repay your student loans lowers your credit score, affecting your ability to borrow money for a house, car or other major purchases. A low credit score affects your ability to rent an apartment, lease a vehicle or get a job, since many employers run credit checks on prospective employees, looking at financial history for any signs of illicit financial activity or issues managing money that could lead to problems on the job.

It’s vital to work with, rather than against your loan company and take advantage of loan modification, deferment and forgiveness programs available to you if you qualify. The Credit Care Company offers assistance to student loan borrowers trying to manage the maze of paperwork and rules while looking for debt relief and how to get life back on track. Contact us for information and a free consultation; we’ll help you navigate through the uncertainty and fear and deal with your student loan debt.