The Harsh Consequences of Being Sued for Unpaid Student Loans
If you fail to repay your student loans, the financial, legal, and reputational consequences can be severe. Being sued for unpaid student loans can lead to a judgment against you, which means you could be required to pay the full amount, plus costs, and interest.
Financial Impact
When a loan is overdue, the loan servicer or the Department of Education may file a lawsuit to collect the debt. The lawsuit can result in a judgment that unites you to repay the debt. This judgment can have a significant financial impact, as the total amount you owe often includes:
The original loan amount Late fees Default interest Collection costsFurthermore, if you do not comply with the judgment, the lender can take further action, such as garnishing your wages, levying your bank accounts, or even placing a lien on your property. These actions can severely impact your financial stability and credit score over the long term.
Legal and Reputational Consequences
Beyond the financial repercussions, being sued for unpaid student loans can lead to legal and reputational consequences:
Bankruptcy: While it's possible to discharge student loans in bankruptcy, it’s a challenging process. Disguising the debt as legitimate educational expenses to discharge through bankruptcy can be seen as fraud and may further complicate the situation. Employment: A lawsuit for unpaid student loans can make it difficult to find or retain employment, especially in professions that require you to disclose financial obligations. Prospective employers may view you as a high-risk candidate, and you might be required to explain the circumstances to current employers or potential future employers. Reputation: Even if you don’t face legal action, the stigma of being a borrower in default can affect how others perceive you. Neighbors, family, and friends may see you as a less reliable individual, which can impact personal relationships and social status.Personal Struggles and Testimonies
Consider the personal stories of individuals who have struggled with unpaid student loans. Take, for instance, the example of a graduate who used part of their student loan funds for non-essential purchases such as Uber rides, Starbucks drinks, and clothing:
If you end up with a judgment against you for the full amount plus costs and interests, it's akin to any loan agreement. You were fully aware that all the charges you made for the Uber, Starbucks, Nikes, and others would eventually have to be repaid. Did you not understand that using funds intended for education for extravagant lifestyle purchases was inappropriate?
Moreover, would it not exacerbate the problem if you attempted to disguise the debt as legitimate educational expenses in an effort to discharge it through bankruptcy? This would not only be deceitful but also highly unlikely to succeed.
Would you present yourself as a desirable candidate to potential employers, or do you think your tax-paying neighbors or relatives would view you as an honorable, honest, and employment-worthy prospect? Certainly not, as I have hired people right out of prison and have more respect for them than draft dodgers and student loan shysters.
I served my country actively and resumed my graduate-level education after discharge, working multiple part-time jobs simultaneously. My expenses and part-time income were almost equal, and I nearly paid off my loans before my graduation and licensure. By that time, a used car with over 250,000 miles was my primary asset.
Conclusion
The consequences of being sued for unpaid student loans are profound and far-reaching. From financial strain and legal battles to reputational damage and employment challenges, the repercussions can last for years. It is crucial to proactively manage your student loan debt and understand the potential risks associated with failing to repay it.