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rapier
Joined: 16 Feb 2003
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 Posted: Tue Jun 21, 2005 1:51 am Post subject: Defaulting on student loans: consequences |
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Just wondering..has anyone here defaulted on their student loan at all..and if so..what were the consequences? Were you blacklisted..was your degree revoked, were you unable to get copies of your transcripts?
did they send a swat team after you? send a unit armed with AK47's to the airport to recieve you? Put up wanted posters?
I'm only asking because i know a guy who accidentally defaulted..really honest good person, just a little careless at times  |
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Howard Roark
Joined: 02 Feb 2003
Location: Canada
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| Posted: Tue Jun 21, 2005 3:34 am Post subject: |
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Student loans surely work differently in different places. In Canada, your student loan is an agreement between you and the bank/government. It doesn't have anything to do with the university. The university already got paid, by you. They don't care where you got the money from. Only the piper cares about that.
And what will happen? That's open to some argument. Of course it will be sent to a collection agency. And of course the collection agency will harrass you and threaten you to no end. If you don't pay, eventually they can/will sue you.
In the case of a regular loan from the bank, in the most certain event of their successful litigation, you will lose assets if you have any and future wages may be garnished.
I have heard (only from other lay people like myself) that student loans are different and they cannot garnish wages or take anything from you.
It will however do a great job of destroying your credit. This is a very bad thing.
I haven't experienced this personally. A friend of mine is a lawyer in Canada. I asked him. |
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FUBAR
Joined: 21 Oct 2003
Location: The Y.C.
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| Posted: Tue Jun 21, 2005 4:01 am Post subject: |
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| I also think there is a law in Ontario/Canada that prevents students from declaring bankruptcy so that they can get out of paying back their loans. About a year back some former students were planning to challenge the law in the courts. However, I haven't heard any results. |
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funplanet
Joined: 20 Jun 2003
Location: The new Bucheon!
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| Posted: Tue Jun 21, 2005 5:02 am Post subject: |
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Inn the US, bankruptcy does not include student loans except under extreme conditions...
Sallie Mae, who I had my loans under, have programs to get you on track if you do default...
you have to miss 9 months of payments before being declared in default...that's a looooooooooong time not making payments 
of course they will ask you for the money, in full, up front but then will work out payment plans to get you out of default...there is even a 6 month or 12 month program (if you can handle the pmts) which will even take the default off your credit records....as if it never happened...
if you have professional licenses (medical for example) they CAN have your license pulled if you refuse to pay back your loans!!! and that goes for any professional license you earned as a result of your uni studies...
it can even affect VA benefits...
so the moral is......don't default!!!! |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Tue Jun 21, 2005 5:21 am Post subject: |
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| Howard Roark wrote: |
Student loans surely work differently in different places. In Canada, your student loan is an agreement between you and the bank/government. It doesn't have anything to do with the university. The university already got paid, by you. They don't care where you got the money from. Only the piper cares about that.
And what will happen? That's open to some argument. Of course it will be sent to a collection agency. And of course the collection agency will harrass you and threaten you to no end. If you don't pay, eventually they can/will sue you.
In the case of a regular loan from the bank, in the most certain event of their successful litigation, you will lose assets if you have any and future wages may be garnished.
I have heard (only from other lay people like myself) that student loans are different and they cannot garnish wages or take anything from you.
It will however do a great job of destroying your credit. This is a very bad thing.
I haven't experienced this personally. A friend of mine is a lawyer in Canada. I asked him. |
I'm not sure what the OP thinks this has to do with Korean jobs but...
If you default on your Canada Student Loan, the bank turns it over to the government. The government pays the bank back in full. I think you can even miss as much as one payment and the bank just routinely turns it over to the government. After that, any money you have in your bank account is drained away and handed over to the government. Any funds you put in that bank account are likewise removed and handed to the government. They don't even have to notify you. Because some place in that big contract you signed, you gave them the right to do this.
Any tax refund you get is given to the government. The government hands the matter over to a collection agency. And they don't play by all the rules. You also get a big ugly blot in your credit rating which can haunt you suddenly decide to apply for a credit card or a car loan. |
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rapier
Joined: 16 Feb 2003
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| Posted: Tue Jun 21, 2005 5:27 am Post subject: |
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-but all this nasty stuff only affects you if you still live in the country, right? i mean if you live in another country, they'd have to invade to get hold of you.
does anyone have personal exp of this? i guess nobody's going to say, but anyway.. |
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nrvs
Joined: 30 Jun 2004
Location: standing upright on a curve
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| Posted: Tue Jun 21, 2005 6:05 am Post subject: |
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| rapier wrote: |
| -but all this nasty stuff only affects you if you still live in the country, right? i mean if you live in another country, they'd have to invade to get hold of you. |
Sure, but you better have all of your assets offshore. Either in Korea, or if you're a high roller, in the Channel Islands or someplace like that. Even there I'm not sure you're safe from the long arm of the law if a student loan creditor is motivated to collect.
Also, you'd better make sure you never want to work legitimately in your home country again. In the United States, if a judgment is issued against you for student loan non-payment, a hefty percentage of your wages can be garnished. They track you down based on your Social Security number. I worked in an HR/payroll department last year. Employees got their wages garnished often for defaulted student loans.
Finally, as others have pointed out, your credit rating will be terrible and you'll have trouble getting a loan for anything. Car, mortgage, even consumer credit.
My suggestion to your friend: buckle down and pay them down, or at least get back on track by negotiating a payment plan. Student loan debt does not go away until you cough up the cash. |
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The Den
Joined: 26 Jan 2003
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| Posted: Tue Jun 21, 2005 3:13 pm Post subject: |
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| Thank God I finished paying my loans this month. Took me ten years but they are dust. |
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mindmetoo
Joined: 02 Feb 2004
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| Posted: Tue Jun 21, 2005 4:08 pm Post subject: |
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| The Den wrote: |
| Thank God I finished paying my loans this month. Took me ten years but they are dust. |
Mine was paltry. $5000. In 1991 that looked huge, mind you. Especially when you're a fresh grad and there's a recession. But it only took me a couple years to pay off. This was back when OSAP gave grants. My grant paid for my tuition/books. My loan paid for my car insurance. That's about how it went. I pity people today with $30,000 debts. Jeez. |
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Hagwon Muppet
Joined: 18 Mar 2003
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| Posted: Tue Jun 21, 2005 5:56 pm Post subject: |
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| rapier wrote: |
-but all this nasty stuff only affects you if you still live in the country, right? i mean if you live in another country, they'd have to invade to get hold of you.
does anyone have personal exp of this? i guess nobody's going to say, but anyway.. |
Yeah if you're never going back then there's zip they can do. Loads of international students from India, China, and ..... well all over I suppose (lets not single out particular countries or races) default all the time.
Loan companies are starting to be more cautious in lending to foreign students but they know that some are going to default. they just budget for it and get on with counting their money. |
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Tiny_Tibbo
Joined: 21 Apr 2005
Location: In My Skin
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| Posted: Wed Jun 22, 2005 1:58 am Post subject: |
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| does anyone know how long they have to look for ya till they give up and clear it? Is it like seven years or somethin? |
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rapier
Joined: 16 Feb 2003
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| Posted: Wed Jun 22, 2005 2:35 am Post subject: |
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| Tiny_Tibbo wrote: |
| does anyone know how long they have to look for ya till they give up and clear it? Is it like seven years or somethin? |
So long as there has been nothing happen on your account for 3 years, I hear that they have to release you. However, if you do so much as make a phone call or reply to a letter in that time, it legally counts as "activity" and the 3 year clock starts all over.
Theres a lot of hearsay surrounding these things..
What i'm interested to know is, has anybody been denied transcripts for defaulting on student loans from a British University? Apparently it is commonplace in the U.S. |
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Tiny_Tibbo
Joined: 21 Apr 2005
Location: In My Skin
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| Posted: Wed Jun 22, 2005 3:15 am Post subject: |
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| wow!!! only three?? In Canada?.....wonder where the true info on this stuff is......but i did hear about that "no contact" part. |
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schwa
Joined: 18 Jan 2003
Location: Yap
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| Posted: Wed Jun 22, 2005 3:18 am Post subject: |
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This thread makes me nostalgic for the good old days. When genuine claims to undue hardship were grounds to have student loan debts dissolved.
Why is it that foolish consumers & foolhardy businessmen can declare bankruptcy but hapless students are now legislated to be on the hook forever?
Many of those businessmen burned a lot of innocent people & still ended up holding on to their swanky homes & cars. How much did student loan defaults really impinge on bank profits? (Like they ever hurt.)
Teach them a lesson, the banks evidently told the legislators. Easy victims. But those indentured credit slaves might otherwise have had a lot of positive to contribute the economy.
Shortsighted, hurtful, & counterproductive policy, but there it is.
Paying back is always the best option, but what if you simply cant? Best luck, loan-owers. |
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