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Legal Notes Blog > March 2014

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By Matthew J Richburg, Managing Shareholder

 

 

The Consumer Financial Protection Bureau (CFPB) reported in June of 2013 that there were 7 million U.S. borrowers in default of their federal or private student loans. [1] Total student loan debt continues to exceed consumer auto loan and revolving credit card debt.  As of January 2014, student loan debt stood at 1.225 trillion dollars.  Auto loan and revolving credit card debt totaled 874 billion dollars and 835 billion dollars respectively. [2]

 

Due to a myriad of macro economic conditions, students graduating from college may find themselves unemployed, or significantly underemployed.  The result is that their student loans may go into default with no long term ability to repay. While in the past federal law provided for the dischargeablity of private student loans in federal bankruptcy, that is no longer the case absent special circumstances. [3]

 

In order to maintain a successful credit-based economy, lenders must have confidence that they will be able to collect from those that default on loans.  Kohn Law Firm (AKohn@)  represents student loan lenders in Wisconsin, covering the entire state  - including filing court collection actions (if needed) in all 72 counties. It is Kohn=s mission statement to treat all our clients= customers professionally, ethically, and professionally.  While the firm would prefer to resolve all matters out of court with voluntary payment from customers, a student loan creditor may need to sue in state court to recoup the balance of a defaulted student loan.  After judgment is entered by the court, there are judgment enforcement options available.  Among these are wage garnishment, non-earnings garnishment, judgment execution, judgment liens, and judgment lien foreclosure.  Kohn handles all aspects of the collection efforts in Wisconsin, from placement of the claim to post judgment remedies.

 

Given that there appears to be an ever increasing market to collect defaulted student loans, we expect to see placements of this type of collection increase in the coming years. Kohn is committed to continuing to be an industry leader in Wisconsin with regard to the collection of student loans in default. 
 



[1] Chopra, Rohit, A Closer Look at the Trillion, article available at     www.consumerfinance.gov/blog/a-closer-look-at-the-trillion

[2]  The United States Federal Reserve, March 7, 2014 report available at http://www.federalreserve.gov/releases/g19/current/default.htm

[3]
  United Student Aid Funds v. Espinoza, 130 S. Ct. 1367 (2010)

Posted: 3/13/2014 9:43:51 AM by Tom Connor | with 0 comments