Loan Default - What Happens When You Can't Pay
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What students do
- Trace the default timeline from a missed payment through collections and wage garnishment
- Read a line chart tracking a credit score drop across each missed-payment milestone
- Calculate a wage garnishment amount under the federal 25% disposable-pay cap
- Identify the options a borrower has before default and explain how each one helps
What it covers
- The difference between delinquency and default, and why delinquency comes first
- What a charge-off actually means, and why the debt is still owed afterward
- How collections and a court judgment lead to wage garnishment
- Deferment, hardship plans, and refinancing as ways to stop the slide early
Learning targets
- Define delinquency, default, collections, and wage garnishment
- Trace the default timeline from a missed payment through charge-off, collections, and wage garnishment
- Read a line chart that tracks how a credit score drops across the missed-payment milestones
- Identify the options a borrower has BEFORE default and explain how each one helps
From one teacher to another
By the third slide the room always goes quiet, the credit score line falling step by step down Devon Carter's timeline, and nobody expected a lost job to end in wage garnishment this fast. Students trace his 720 score through the missed payment, the charge-off, and the collections call, then calculate his garnishment themselves under the federal 25% cap. The moment I care about most is the last slide, because it's still reversible, almost every step of it, if you call the lender early.
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