Payment difficulties

Here are a few terms you may hear when dealing with payment difficulties. We’re committed to working with you, so please contact us if you realize you’re in financial trouble.

Delinquency and default

Delinquency occurs when you fail to pay all or part of your monthly student loan payment.

  • You may be charged late fees for delinquency, which can add to your Total Loan Cost.
  • You may lose any interest rate reduction programs you were eligible for.
  • Late payments may be reported to consumer reporting agencies and can have a negative impact on your credit report.

Default is the most serious—it means you’ve failed to repay your student loans and can have serious consequences.

  • Once your student loan is in default, the entire Current Balance becomes due, not just the missed monthly payments.
  • Your default may be reported to the consumer reporting agencies, where it can stay on your credit report for up to seven years.

Before your student loan becomes delinquent and goes into default, chat with us or give us a call. Let’s work together for a solution.

Abby explains student loan delinquency and default

If you’re considering bankruptcy

It’s important to understand that qualified education loans, as defined in Section 221(d)(1) of the Internal Revenue Code of 1986, aren’t dischargeable through bankruptcy absent a showing of undue hardship. You can refer to IRS Publication 970: Tax Benefits for Education for more information about qualified education loans.

An automatic stay is imposed when any bankruptcy is filed. The effect of the automatic stay and what we do depends on which type of bankruptcy is filed.

  • If a Chapter 12 or 13 bankruptcy is filed, we suspend online access and communications, including billing statements, for the borrower and the cosigner.
  • If a Chapter 7 or 11 bankruptcy is filed by the borrower or cosigner (but not both parties), we only suspend online access and communications for the person who filed the bankruptcy.

When the automatic stay ends:

  • If the student loan isn’t discharged, servicing, collection efforts, online access, and all communications will resume.
  • If the student loan is discharged, the filing party is no longer responsible for the loan.

In all cases:

  • Interest continues to accrue during the bankruptcy case, which is likely to increase the Total Loan Cost.
  • The non-filing party remains responsible for the loan.

If you have questions about the treatment of your student loan in bankruptcy, please consult with an attorney.

If you’re experiencing financial difficulties, please chat with us or give us a call so we can discuss any options that may be available.

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