Student loan debt is a hotly debated topic in American politics. Considering that there are currently around 45 million borrowers carrying a debt load of $1.59 trillion, it’s no surprise that student debt is at the forefront of many conversations.

Many people begin borrowing for money college before understanding the gravity of the debt they’re undertaking. There are grace periods and deferment options, but eventually, a loan can end up in default if payments are halted. If that happens, it will damage your credit and make future investments difficult, like buying a house.

The cycle of student loans

It’s helpful to understand how a student loan plays out. Their lifecycle unfolds in four basic stages:

  1. The period while you’re in school
  2. A grace period after graduation
  3. A period where deferment is an option
  4. The period where you begin repayments

Stage four is where the risk of default enters the picture. At that point, you’re fully responsible for all repayment, as well as for any failure to do so.

Understanding the impact of default on your future

Defaulting on a loan always places borrowers in murky waters. In addition to damaging your credit score, sometimes drastically, you may also experience wage garnishments. Any tax returns may be automatically absorbed and placed toward the debt. You’ll also begin accruing interest that can double or even triple the initial amount of your loan.

Can I file for bankruptcy for my defaulted loan?

There are two primary options for defaulted loans: rehabilitation and consolidation. These are normally enough for most people to climb out of default to repair their credit and resume repayment.

In certain extreme circumstances, bankruptcy may be the best option for defaulted loans. It’s difficult to get student loans discharged in that way, but if you can prove the debt will create undue hardship for you and any dependents you have, bankruptcy is more likely to be a workable solution.

Speak with an experienced bankruptcy attorney to understand your options. There is hope in any case; all it takes is planning, persistence, and expert guidance.