I’ve Decided to Stop Making My Private Student Loan Payments


Dear Steve,

I owe a total of $47,000 in private student loans. I have decided to stop paying the loan, since the $300 a month payment for the next 30 years has me completely broke. My grandmother is a co signer on the loan but she is very old and living in a home right now and doesn’t need her credit. I have also talked to my family about this decision. I recently went thru a bankruptcy so my credit is very bad at the moment.

I have a few questions after reading your article.

1. Will they be able to garnish my wages? if so how much and for how long?

2. Will they be able to take my tax return? If so for how long?

3. Could they take my home or any of my belongings?

4. Once it goes into collections for how long can they try to collect money?

Thank You,



Dear Chris,

They could sue you, go for a judgment, and then apply to garnish your wages. A garnishment would be dictated by your state law but generally it is no more than 25% of wages. Ironically for some people, that amount is less than the payment the lenders are sometimes asking for. Garnishments are not available in all states.

A private student loan lender will not be able to intercept your tax refund. But of course if you are getting a big refund each year you might want to think about adjusting your withholdings to put more money in your pocket each month instead.

Nobody wants your old shit.

They can try to collect forever but the statute of limitations is what controls how long it is legal to sue you. But they can always sue you after the statute of limitations is up, you have to raise the fact it is past the statute of limitations as a defense.

See also  Can I File Bankruptcy and Not Impact My Private Student Loan Cosigners? - Matthew

If you went through bankruptcy recently did your lawyer raise any argument about discharging the loans? For example, this type of private student loan can be discharged.

It is true that following a default, there are new options open to you. Read this article.

I would make sure that your family and grandmother are aware that collectors might try to reach her as well since she is a co-signer. But if your grandmother has not assets to speak of and is living off benefit income, while she could always be sued, she might be able to be garnished.

It would be a good idea to talk to an experienced student loan attorney, you can find one here that is skilled in litigation, and come up with a plan on how to deal with this as the default moves forward. Knowing what your strategy will be will put you in a proactive mode than a reactive and more stressful mode.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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