Wilmington Consumers Could Lose Their Homes Over Student Loans – Are You in Danger?

Look out for Wilmington student loan lawsuits

Image Source: Flickr User Joe Gratz

Every day across America, thousands of people fall behind on their student loans and go into default – including consumers in Wilmington. Default is when you fall more than 270 days behind on your student loans and is quite serious. Federal student loans have no statutes of limitation, and their debt collectors have enormous power to try and force you to pay. The latest numbers indicate that $137 billion in student loans are in default. In most cases, the federal government sends collection letters with payment demands. Now the Department of Education is taking drastic new steps to rake in cash it's owed.

New Lawsuits Coming to Some Student Loan Debtors

NPR reported that the federal government had instituted the new lawsuit program in 19 US cities. Since 2015, lawsuits filed by private law firms on behalf of the federal government have skyrocketed. In one city alone, the number of suits filed went from a handful a year to more than 130. If you’re a Wilmington consumer behind on your student loans, you might find a process server on your doorstep one day handing you notice that you’re being sued over your college debt.

The recent lawsuits filed target those student loan debtors that are in default and have assets worth attaching a lien to via a judgment lawsuit. Already, student loan servicers can garnish your wages and attach any income tax refunds before you get them. This new lawsuit trend steps things up and can put your home at risk. For those that owe just a few thousand dollars, it’s not that big of a deal. But if you’re one of those that owes tens of thousands, a lien on your Wilmington home can wreck your future.

Could You Face a Student Loan Lawsuit? 

If you are in default and own a home, you might be on the receiving end of a notice that you’re being sued over your school debt. What can you do if that happens? Most consumers sued over their student loans don’t bother to show up to court because they can’t afford a lawyer and can’t pay the debt. But if you don’t show up to court, the creditor will get a default judgment against you. The judgment might even be in the wrong amount because you didn’t show up to defend yourself.

The recent lawsuits, as reported by NPR, seem to be targeted at those that are least-equipped to pay them such as those on disability, low income, that never graduated college, or otherwise can’t afford the debt. The only thing the suits seem to have in common is that they are homeowners. Reportedly, student loan collectors are specifically targeting homeowners because this makes the cost of filing a lawsuit worth it because they know there’s a high-value asset to target.

How Bankruptcy Can Help

In some instances, filing bankruptcy can help directly with student loans. There is an additional action your attorney can file called an adversary proceeding. This action sues your student loan provider to request a discharge of some or all of your federal loan debt. 99% of bankruptcy filers with student loans don’t ask for relief of their educational debt. It costs a bit extra to file this proceeding but may be worth it. In many cases, at least some relief is awarded by the court.

Adversary proceeding cases most likely to be granted relief are those where the filer is earning a low wage, is permanently disabled, has a chronic illness, or is an older consumer. Even if filing bankruptcy can’t lessen your student loan debt, by ditching other debt, you can create room in your budget to help you better afford your student loan payments.

To find out more, contact the Law Offices of John T. Orcutt. Call +1-833-627-0115 now for a free Wilmington bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro or Wilmington. Be sure to check out reviews to see what our clients think about their experience with our debt experts.