Student Loan Debt Collection: Know Your Rights

With an increase in tuition fees and overwhelming rise in inflation, it has become quite difficult for college students to make ends meet. The obvious solution for them is to opt for student loans. Although students can choose from a variety of options, all loans have to be repaid at some point. That's exactly when students find themselves in trouble and at the mercy of student loan debt collection agencies.

There are reports that college students who graduated in 2009 had to deal with an average loan debt of $24,000, which represented a 6% increase compared to 2008. In fact, repaying student loans is usually the most difficult task for recent graduates, mainly because the unemployment rate for recent college graduates 20-24 years of age is quite high.

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If you default on your government guaranteed student loans, there is a defined structure regarding the way the federal authorities recover the debt. One of the most commonly used methods to recover default student loans is to cut out a chunk of any income tax refund that may be due to you. It is also possible that the government will start taking fifteen percent of your monthly income, after taxes. You can challenge both your monthly income cuts and any tax refund offsets; however, there is no guarantee that you will succeed.

The government typically uses third-party debt collection agencies to collect on default student loans. In fact, the government assigns scores to various debt collection agencies who bid for government contracts, and awards additional accounts to those agencies that score the highest. For this reason, you need to be aware that there are many practices that are illegal when it comes to debt collection. The Fair Debt Collection Practices Act (FDCPA) makes many debt collection tactics punishable by law. For instance, a debt collector cannot lie to you, harass you or abuse you in any way. He or she cannot use false pretenses to get money from you. They cannot call you at certain times, and cannot call you at your place of employment if your employer doesn't allow it. If you write to a debt collector to stop any further contact with you, they cannot ignore that either.

The reason many debt collectors get away with doing such things is that people don't know that they have rights that protect them from such tactics. If you are a victim of an overzealous debt collector, it is important that you understand that you can also file a lawsuit against any debt collector who has harassed you.

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