Minnesota's statute of limitations for student loan debt collection falls under the state's written contract laws. A student loan in default can have far reaching consequences including damage to your credit score, wage garnishment and even reductions to your retirement funds. Some of these actions can occur well after the statute of limitations has expired.
Written Contracts
A student loan debt is usually considered a written contract for debt collection purposes. This is because of the promissory note you are required to sign when the student loan is first created. This legal document indicates the student loan represents a debt that you are required to repay. The promissory note also details the terms of repayment including the total amount of money extended to you for your education and the applicable interest rate on the loan. The promissory note may also mention the relative difficulty of discharging a student loan through bankruptcy and consequences of default on the account.
Statute of Limitations
In Minnesota, the statute of limitations for debt collection of a student loan is six years. Your creditor has this amount of time to pursue a court judgment against you to force your repayment of the debt. Debt collection practices may continue past this six-year period, including phone calls and mail, even if your creditor is not able to bring a civil action against you. Additionally, the student loan default notation on your credit report may remain for up to seven years.
Obtaining a Judgment
Wage garnishment is a legal means of forcing you to repay a debt like a student loan in Minnesota. Up to 25 percent of your gross weekly earnings or the equivalent of 40 times the federal minimum hourly wage -- whichever is greater -- is subject to garnishment upon the order of a Minnesota court. A creditor has up to 10 years to collect on a successful domestic judgment from a Minnesota court before the statute of limitations expires on the debt. This means your wages could be subject to garnishment for a long period of time before you see any relief.
Student Loan Default
Defaulting on a student loan, especially a federal student loan, has far reaching consequences other than debt collection. The federal government may withhold portions of your Social Security retirement if you have an unpaid student loan as well as any refund from your federal or state taxes. Additionally, you are barred from securing new federal student aid while you have a student loan in default. The default may prevent you from securing new professional licenses and affect your security clearance level if you are a government employee.
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