Question:
Dear Steve,
I just contacted a pro-bono legal service in my hometown to try to deal with federal & private defaulted student debt but I wanted to reach out to you as well to get another perspective.
My dad, a veteran, who co-signed, might lose his military pension if I can’t deal with this. I’m also out of work due to downsizing and I’m not particularly smart about money at all! Help!
Holly
Answer:
Dear Holly,
Federal student loans don’t have cosigners anymore. If your dad is involved in these and they are federal student loans then he would have had to take out a Parent PLUS loan. In that case, he is responsible for the debt, not you. It is true that if he did default on a federal student loan that any government money due him could be garnished. But he would not “lose” his pension.
With federal student loans, you do have the option of income-driven repayment plans which can get you a $0 monthly payment and keep the loans out of default. This is not an option for private student loans.
If these are private student loans then it is unlikely they could garnish his pension benefits if the lender sued, won, and went for a judgment.
If these are private student loans and you have not paid in a number of years, then these loans might be beyond the statute of limitations in your state. That is a defense you’d have to raise as a defense if you were sued over the debt. It is certainly an issue to discuss with the free legal service in your town.
Your father may want to contact HELPS for low cost legal protection regarding the debt.
While I don’t have enough information to give you a step-by-step plan, you have given me sufficient information to know there is a solution that may be able to address your debt situation without letting it spiral to wage garnishment.
I’d recommend you keep your appointment with the pro-bono legal service you connected with and talk to them about the legal ramifications of dealing with this debt if it is private student loans. They may be able to also help you get some clarity on exactly what kind of loans you have.
Please come back and post an update in the comments below after your appointment with them. With more details, I can give you more specific advice.
