Although you might want to believe otherwise, your student loans are a very real debt, and not one you can ignore. This is good practice for later in life, in that when you accrue a certain level of personal debt, you’ll be expected to pay it back. If you don’t then your lender has every right to pursue you for payment, including suing you. So, the answer to the above question is a resounding yes, you can be sued if you don’t make repayments on your student loans in New Jersey.
Here’s a timeline for how this can happen to you:
Private Loans
You signed a contract when you took out your loan that explained what happens if you default on your loan. Most lenders providing private student loans will consider you to be in default after missing just a single payment, but some do allow you a little bit of time to catch up on any payments you have missed. If you default on a loan of this type, then the entire balance of the loan becomes due immediately after your default on it.
Fortunately, most of you reading this won’t have private student loans, simply because they afford you very little protection in the event of missed payments. There\’s also the fact that you’re given almost no time to catch up on your repayments if you are struggling financially.
Federal Loans
Most student loans in the United States are funded by the federal government, and the rules for missing payments here are a little different, buying you more time as a result. Once you start missing payments on your federal student loan they’ll contact you, using a variety of methods, to let you know that you’re now considered a “delinquent” loan. The first 90 days after missing a payment is critical because after this point your lender will then report you to the credit bureaus as a credit risk. Once your credit score is tarnished, you’ll struggle to get a loan of any type, or any other type of finance or credit. That gives you 3 months to sort out your financial affairs and save your FICO score from taking a knock it could take years to recover from.
If, however, you continue to miss payments for an additional 180 days then your loan will become due for payment in full, just like with a private student loan. At this point you’ve missed repayments on your loan for 9 full months, so you’ll now be considered in default on your student loan.
Avoiding The Lawsuit
They say prevention is better than cure, and this is also true of student loan debt. The easiest way for you to avoid being sued is to by making your overdue repayments or agreeing to an alternative repayment schedule with your lender. Your new repayment schedule could include a longer term for the loan, a reduced interest rate on the loan itself, or both. The key here is to work with your lender to resolve the situation before they take legal action against you.
For those of you who have already crossed the 270-day threshold then you’re probably in the early stages of a collection lawsuit issued by your lender. You should now seek professional legal counsel from an attorney experienced in dealing with student loans in default.