Law Suits

You can be sued forever on your defaulted student loans. And the Department of Education is suing former students more and more frequently. Student loan collection lawsuits filed by the Department increased by 55% between 1997 and 1998.

What property the Department of Education could take from you depends on where you live. In most states, the Department can go after your bank and other deposit accounts, and valuable personal property such as cars and antiques. The Department can also file the judgment with the county records office to create a property lien -- a notice to the world that you owe money. In some states, a judgment entered against you automatically creates a lien on any real estate you own in the county where you lost the lawsuit. In other states, the creditor must record the judgment with the county. When you sell or refinance your property, all liens must be removed, usually by paying the lien holder -- before the deal can close.

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