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  1. #1
    Join Date
    Dec 2010

    Default Does the Department of Education Wait Four Years to Sue You for Defaulted Debt

    There is a Bloomberg news story about a teacher getting garnished. Within the section titled "Last Resort" a spokesman for the Department of Education says lawsuits are a last resort and former students get sued after 4 years of non-payment. Is that true? Was I told this when I signed up for the loan? This is news to me. I thought the garnishments were somewhat automatic and do not need a jury, etc. You know, bam, you are in default, here is some paperwork. Fill out this info, where you work, social security number, etc if applicable.

    Why are they waiting that long? Can you tack the 270 or more days of delinquency on there as well prior to default? It takes 4 years and 9 months before you get sued for federal student loans?

    I saw this story and did not know anyone to ask for an answer, figured ExpertLaw community would know. Read that article, 5 million in default!

  2. #2
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: Does the Department of Education Wait Four Years to Sue You for Defaulted Debt

    There are a number of reasons why any creditor might wait before litigating. They could crunch the numbers, for example, and find that people who have defaulted for three years or less often resume paying. They could determine that people with less than three years of default typically haven't accrued enough of an arrearage to justify the court costs and legal fees, even if tacked on to a judgment. It could be a funding issue - they can only afford to litigate so many cases a year, so they start with the oldest and run out around the four year mark. Etc.

    The student loan issue is going to become a bigger and bigger problem.

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