Consumer Law

Bankruptcy and Student Loans

By M. Stan Herring

The BKBlog has posted an article that discusses the effects bakruptcy has on student loans. Student loan creditors have become more active in collecting their money in light of the current economic decline. Different "collection resources" are available for student loan companies looking to collect their money, however

There is one statute that permits student loan creditors to garnish wages without the need to first go to court.Student loan claims can also offset tax refunds.

The blog cites an email that was sent to them.

I am unemployed and have defaulted student loans. I was married last April and my husband's tax return was offset as a lovely wedding gift. I am researching how to file for bankruptcy for my other debts and also looking into how to prove "undue hardship" regarding the student loans. In the meantime, we were curious about whether or not my husband's wages could be garnished? Since I am unemployed, this would devastate us. Also, once I get a job, if they are garnishing my husband's wages, would they be able to garnish mine as well ? at the same time?

According to this article, both spouses are subject to wage garnishment, as well as having their tax return seized. Bankruptcy would do little good.

If you are considering or dealing with bankruptcy and have questions or concerns, feel free to contact us.

Full post as published by Alabama Consumer Blog on April 07, 2009 (boomark / email).