Question about student loan in default, can they go after my house?

[Anonymous]

As a result of the bad economy and problem getting a job, I have recently defaulted on some of my student loans.

I currently live in a house that I hold the title to, I am worried that they can go after my house, can they do that if they get a judgment against me?

If they can then I plan to warranty deed the house to a family member that I trust so I can protect myself.  Should I be worried about this or am I being paranoid?

[Jazzzy]

I think you're getting way ahead of yourself.

Have you contacted your lender? Have you asked for their help/suggestions?

School loan default can cause a multitude of problems...wage garnishment, taking your future income tax refunds, etc. Don't give your house away because of this. They will get their money anyway, and you will no longer own your home. Also...do you have a mortgage on your home? I don't think your mortgage company will allow you to deed the house away.

Welcome to the forums, BTW. Do some reading here, and you may come up with a solution.

[Anonymous]

I own the house free and clear.  And obviously I would only do this with a close family member that I trust implicitly.

 I will try to contact them, but I just wanted to know whether my house is any way in danger from them.

[Anonymous]

I would talk to your student loan company, there are numerous deferment and forbearance options available and they will be more than happy to help you get into one of them.

[Anonymous]

I know for a fact that State Guarantee Agencies can't go after your house.  But you do need to work out something with them.  They can garnish your wages, Income tax returns, Tax credits, Lottery Winnings etc.

[Anonymous]

Thank you for answering my question.  Would you happen to have a link or something that I can verify so I can be 100% sure?

Yes, I want to work something out, but finances are tough right now and I didn't want to have somebody on the phone tell me "pay up or we're going after your house".   Just wanted to know what my worst case scenario is and how far they can push me.

[MattH]

---

@Anonymous wrote:

Thank you for answering my question.  Would you happen to have a link or something that I can verify so I can be 100% sure?

Yes, I want to work something out, but finances are tough right now and I didn't want to have somebody on the phone tell me "pay up or we're going after your house".   Just wanted to know what my worst case scenario is and how far they can push me.

---

In a situation like this, instead of relying on any Internet site I suggest you talk immediately with a local lawyer.  This kind of situation involves numerous laws, both Federal laws and State laws, and also depends on specific details of the facts.  Be aware that student loans have an extra-special legal status and are almost impossible to escape: they can garnish wages without getting a court order first, and in most cases student loans cannot be discharged in bankruptcy cases, for instance.  On the other hand, there are various options for repayment so there is more flexibility than with most lenders.  So I suggest you talk with (1) a local lawyer, (2) a student loan counselor at your institution, and (3) the lender.  You can probably work something out, but it's gonna require talking with actual human experts face to face.

[Anonymous]

Thanks to all the replies, I am not relying solely on this forum for my information, that would be really stupid.

I just wanted to get this one question answered and thought maybe somebody here might know the answer to the question. I talked to a CA for my lender today and what they want me to pay to get out of default is still more than I can afford right now, so as I continue to negotiate with them, I wanted to know what is the worst case scenario that they can do to me. 

[Anonymous]

This is actually what I do for a living.  What we can do is limited by Federal Regulations.  The Federal Regulations that apply to student loans are in Chapter 410. It says nothing about seizing property.  Furthermore unless you tell the Guarantor or CA that you own your house outright we have no way of knowing.  Yes, student loans are about impossible to get rid of.  If you don't pay them off before you retire you risk having your Social Security and Disability benefits being garnished.  Request a hardship from the CA or guarantee agency.  This will likely involve you sending in documentation of your expenses and your income.  From there an affordable payment will be established for you based on your situation.  If you do not trust in the Guarantor or the CA to be fair regarding your situation you can request a hearing.  If you have any disputes regarding your debt request a Grievance. 

If you are really concerned about this you may want to consider consolidation.  On your credit report it will show as paid defaults and a new loan.  Keep in mind if the loan that you have in default is a consolidation you will not be able to consolidate again.