Can a Lien Be Placed on My Home Due to Defaulted Student Loans?

Failure to repay student loans may result in a property lien.

If you borrow money to fund your education and fail to repay the loan, it is said to be in default. Defaulting on a student loan may have severe legal consequences that include your lender placing a lien against your home.

Types

A student loan may be owed to either the federal government or a private lender. The federal government may place a lien on your property for a debt in any state. A private lender's ability to do so, however, depends upon your state laws.

Facts

You may be able to discharge your student loan through bankruptcy prior to the property lien being filed. To do so you must prove that, due to a hardship, you are unable to pay the student loan and will continue to be unable to pay it in the future.

Considerations

You will be notified of the impending property lien beforehand and given the option to pay off your defaulted student loan to prevent the lien from occurring. The time you have to do this varies by state.

Time Frame

Each state has a statute of limitations for property liens. After the statute of limitations expires, the lien will no longer be in effect.

Effects

After a property lien is in place, you will be unable to sell your home and receive any profit from the sale until the amount of the lien is paid in full.

References

• OmniLaw: Student Loan Collections
• Student Loan Borrower Assistance: Student Loans and Bankruptcy
• Hillard/Rogers: Judgment Liens on Real Property - Recent Decision Causes Uncertainty Title Companies, Bankers and Lawyers

Resources

• Federal Student Aid: Addressing Your Defaulted Student Loan
• Nolo: What Happens if You Default on Your Student Loans?