The internet was abuzz recently with news that armed U.S. Marshals arrested a Houston man for failing to pay a $1,500 student loan that he had received in 1987 to pay tuition at Prairie A&M University. The man was temporarily detained before being brought before a judge, who ordered him to repay $5,700 for the loan and accumulated interest, plus $1,300 in expenses associated with his arrest. Remarkably, this is not an isolated incident. U.S. Marshals are reportedly preparing up to 1500 arrest warrants to individuals who hold old student loan debt.
The Houston debtor's arrest for his 30-year old debt was purportedly not preceded by any recent notices or demands for repayment. Legislators and debt collection experts are questioning the practice of arresting individuals for old student loan debt. The U.S. government, which guarantees most loans for higher education expenses, is apparently taking a position that failing to repay student loan debt is the equivalent of stealing from the government.
The average student debt load for college graduates in 2015 grew to $35,000. Unless the government changes its debt collection practices, it can be expected that non-payment of those loans may ultimately lead to similar arrest actions by U.S. Marshals. Rather than allowing a debt situation to get that far out of hand, individual debtors will be better served if they contact their lenders to negotiate payment and debt resolution options.
Most recent graduates will have an option to make lower payments against their student loan debt, with payments calculated as a function of their income. If student loan debt continues to be a problem even with lower payments, debtors can contact their lenders to negotiate debt reductions or loan extensions. At the far end of the spectrum, an individual may be able to get rid of student loans by failing bankruptcy if they can prove that repaying those loans will cause an undue hardship. Debtors should remain aware, however, that this argument will succeed in only a minority of cases, and that student loan debt will not be discharged in either a Chapter 7 or 13 bankruptcy.
On the bright side, a bankruptcy filing can help you address student loan problems and prevent the future prospect of an arrest by U.S. Marshals. Please contact us if you are having trouble repaying your student loans. We can help you explore your payment options and assist you in negotiating with lenders before your problems become unmanageable.