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Student Loan Default — Can I lose my house if I'm claiming Alabama homestead exemption?



hey guys welcome to this video we're going to talk about student loans today in this video and here's a question that I received recently a VA's student loan that is going into default can I lose my Alabama house over this or will my homestead exemption protect me so let's first of all make sure we know what homestead exemption means that's basically hey this is the house I live in so it lowers your taxes and in Alabama at time I'm recording this video it's about fifteen thousand dollars the quote exemption now if you're married that'd be a total of thirty compare this two places I think Florida has may be either ridiculously high or may be unlimited homestead exemption we keep it pretty small here in Alabama but this person knew that their home yeah they were claiming homestead exemption so they have been told and that's why they asked a question since I'm claiming homestead exemption my house is totally safe right well the answer is no but we have to back up even further and say well what type of student loan do you have two basic types there's federal and private either one of those can sue you but it's very very rare at least that I see a federal student loan policy and part of the reason is when you file a lawsuit you're doing that so that you can get a judgment so that you can garnish wages and things of that nature well with a federal student loan they can go through the administrative wage garnishment process and basically send you a letter say hey we're gonna have a hearing on this if you want one most people ignore it and so basically within the Department of Education they say okay well let's decide if we win or the consumer wins shockingly the Department of Education almost always wins well once they get that sort of administrative order it it really is the same thing as a judgement in the terms of garnishing your wages and they can also intercept your tax refund and there's some other things they can do but point is why go through a lawsuit if you can almost just snap your fingers and you can start garnishing somebody's wages intercepting their tax refund now a private student loan cannot do that they have to sue you to get a judgment to sue you serve you beat you at the in the case get a judgment and then they can garnish your wages then they can garnish your bank count but to answer this question they also put a lien on your house so if you go to sell your house refinance your house you've got to pay off that lien or you can't do it but they can also do a sheriff cell which it's kind of like a foreclosure where your house will be sold and then the proceeds will go to pay off any liens so if you have a mortgage on it but also including the judgment lien and so it's not commonly used in Alabama but it's used more than it ever was before so to answer the question yes you could lose your house to a private student loan judgment or even a federal judgment federal student loan judgment but there's a good news if it's a federal student loan there's all sorts of options available you can primarily look at rehabilitation in essence you make about nine monthly payments at a reasonable affordable rate and you get back on track so if you have a federal student loan definitely ask whoever you're dealing with Department of Education a debt collector whoever it is say what are my options can i rehabilitate this loan is there some other option I have am I entitled some type of forgiveness if it's a private student loan they really don't have to do any of that it doesn't hurt to ask but you could think of a private student loan it's kind of like a big credit card except it's very hard to file bankruptcy again so that's kind of a long-winded answer to get to this point first figure out what type of loan do you have if it's federal see what your options are if it's private then you want to look at can they sue me a statute of limitation expired who is the one that might sue me do they even own the debt or has it been passed around half a dozen times so there definitely are some options and if you're in Alabama feel free to give us a call 205 eight seven nine two four four seven or Alabama consumer calm and if you have general questions or comments feel free to put those below and always feel welcome to subscribe to our Channel thanks for watching this video guys and I'll catch you in the next one bye bye

Glenn Chapman

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