The student loan crisis is now well beyond the $1 trillion mark. The U.S. Department of Education recently released data that 13.7 percent of borrowers are in default. And while student loans often receive special protections under the law, such as bankruptcy discharge rules, or garnishment preference or priority rules, collectors of student loans must still follow both federal and state debt collection laws.
Protections under Federal and State Laws
All debt collectors must abide by the federal laws set forth in the Fair Debt Collection Practices Act (FDCPA), and the Fair Credit Billing Act (FCBA), as well as similar individual state statutes. These laws outline required and prohibited behavior of debt collectors. The following are some tips to help you separate the truth from the tactics of some debt collectors.
- You don’t have to talk to them. If you send the collection agency a cease and desist letter stating that you do not want to be contacted by its representatives, the agency must stop its calls and letters immediately. This does not stop collection activities, such as garnishments and lawsuits, however.
- Don’t give out your personal information. Do not give a debt collector your banking information, your social security number, or information about where you work. The collector is searching for information that will make you a good target for a lawsuit. Many creditors will decline suit on accounts with no income or asset information. Do not volunteer it.
- Debt collectors cannot personally damage your credit. Some debt collectors may exaggerate the damage non-payment will do to your credit. Threatening to damage your credit score is illegal. Delinquency can damage your credit, but an individual debt collector can do anything to accelerate or enlarge the damage.
- They can’t garnish all your income. There are laws that place limits on the amount of wages can be garnished by a creditor. If you are a head of a household, the limit can often be very low.
Special Protections for Student Loan Debt
There are also additional options for repaying federal student loans that collectors don’t want you to know about. The Higher Education Act, which Congress must reauthorize every year, gives you the right to set up smaller, affordable, reasonable monthly payments on your student loan. It also removes the debt from the collector’s portfolio of accounts if you make a certain number of full, consecutive monthly payments. If you have a student loan that is in default, the law firm of Leiderman Shelomith Alexander + Somodevilla, PLLC can assist you in selecting a course of action to manage the debt that is right for you. Schedule a free and confidential consultation with the firm today. Call (954) 516-2566 or submit a web request here.