I have a defaulted student loan from when I lived in CA, now in AZ, which state’s laws determine my fate?
I am now a resident of AZ, during which time I recently had my student loan default. I have no income of my own, but I hope to be married soon, so I am checking into wage garnishment, tax intercept, and other possible methods of collection on my future spouse’s income/tax refund. AZ is a community property state, but what does that mean for me? I took the loan out in CA, and went to school there as a resident. So which state’s laws do I need to be researching?
Injured spouse form should help, but what about that community property state thing?
Student loans are insured by the federal govt., not state.
Most creditors would have to take you court, win judgment, be awarded a settlement, and then wait 30 days before they could garnish your wages. There are two exceptions to this: income taxes and federally insured student loans. They are judge and jury when it comes to collecting and can (and will!) garnish your wages or seize a bank account with nothing more than a letter to the bank or your employer.
I recommend that you do two things:
1) Level with your fiance about this. You DO NOT want him to hear about this for the first time when you explain why your bank account has been seized!
2) This will catch up to you. Next week, next month or next year, but it will catch up. So be proactive and contact them. Work out a payment plan, and then pay back the loan as you can. When you default on a loan that you’re capable of paying back, you are stealing. And you’re not stealing from the “government”, you’re stealing from every hard-working taxpayer in the country. And when you don’t pay your loan, there’s another young kid who can’t go to school since there’s no money because you broke your word. Don’t be a thief and a cheat. Pay your bills.
Good luck!
