Student loans are, by far, the most common debt in America. There’s $1.2 trillion worth of student loan debt owed right now, and as much as 10 percent of that might be in default. Obviously, you should pay your loans, but things do happen, life spirals out of control, and payments get missed. And how is the government responding to these cases? With the U.S. Marshals.
Take the experience of Paul Aker. The Texan took out a $1,500 loan in 1987, and had to default. Last week, armed marshals were at Aker’s door to arrest him, and take him to court where — in order to not go to jail — he had to agree to a repayment plan. Believe it or not, this is 100 percent legal, and it’s likely going to happen more and more in certain states. In fact, some people are leaving the country altogether to avoid it.
Why? Governments local, state, and federal are increasingly selling their debt to private collection agencies. However, the debt remains a debt to the government and isn’t converted into private debt, like a credit card. Because debts to the government are dictated by different rules from private debt, that gives debt collectors more leeway in how aggressively they pursue the debt and the tactics they can use to chase it down. For example, in 22 states, they can take away your driver’s license. Since the debt is in default, it’s easy to take it to federal court and get a judgement against the debtor, issuing a warrant for their arrest.
Oh, and did we mention that all of this can happen without your knowledge? You won’t know a debt collector is using this tactic against you until the marshals knock on the door.
Student-loan reform has been a political issue for a surprisingly long time, but that doesn’t help people who got loans before the reforms were instituted. The best thing to do, if you’re in default, is regularly search public records for warrants and try to deal with the situation before a grimy tactic is pulled on you.
If history is any indication, it’s only a matter of time until the debt collectors push the limits even further.
(Via Fox 26)