I would like to ask a few questions about a large Wells Fargo student loan my girlfriend has that's going into default. Specifically, I'm unclear on what all of the consequences are of defaulting. I know that they will most commonly go after your wages, assets, etc. It doesn't look like they can imprison you, and suing seems pretty pointless in this situation since there are no assets to seize.
The loan is for about $65,000 and one of her parents is the co-signer.
She rents and drives an old damaged car. No investments (outside a small 401k) and very little savings (less than a thousand) in her bank account. She works more than full time with two jobs, and probably earns about $1800 per month.
I expect them to try wage garnishment eventually, and they may get their 20-25% of her wages. What else can they do besides sue for the co-signer's assets, which are also extremely limited (co-signer is unemployed, no savings, small house, etc)?
There are also a couple separate government loans in her name only that are barely being kept afloat right now. Does it make sense to keep paying on these, or should she default on all of the loans and let the lenders fight over the 25% of her wages?
Obviously, there are no easy or kind answers here, since a series of bad choices and circumstance has led to an unavoidable default. My own instinct is to tell her to default on all of it, since she's going to end up with garnished wages anyway. It's not what I want to say, but having 25% of the wages garnished would be far less than the monthly payments owed on all of these loans combined (counting payments requested for the defaulted loan, it would vastly exceed her income). Nothing else makes sense to me in this situation, but I could be wrong.
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