delequint student loan - unsure of next step

Most collection agencies will not accept any reductions in the first shot. However, if you can negotiate well, you may be offered to pay 70% - 80% of the total.

Your debts are added with too much interests and fees. Perhaps, you can look for some consolidation company for managing your repayments and negotiate a lower pay off with the lender/collection agency.

All CA's for federally insured loan can and regularly do settle student loan accounts. Generally they will waive some or all of the collection fees (which can total up to 18.5% for staffords and 33% for Perkins loans.) Sometimes they will waive some of the interest.

I do not recommend you cash out an IRA. I would recommend that you go for rehab or consolidation.
A standard payment for rehab is calculated at 1% of your balance..so if you owe $10k, the monthly pay would be $100. You need to make 9 on time monthly payments to qualify. However, if you cannot afford the 1% payment, you are entitled to "reasonable and affordable" payments. This regualtion is straight out of the Higher Education Act. The CA will more than likely require a financial statement including pay stubs so qualify for a lower pay. (FYI...if the CA does not wish to cooperate and give you the lower payments, you can contact the student loan Ombudsman for assistance. )

The other option is consoloidation. I recommend the Direct Loan Program thru the DOE. Since you are defaulted, you will automatically be assigned to the ICR (income contingent repayment) plan, where your payment is made as a percentage of your income. Due to the fact that you have other IRS and child support obligations, they will work to give you a lower payment if you cannot afford the ICR payment. They are easy to work with!!

Thank you both for your advice.

Am I correct in assuming that when she talks to the CA that if she requests that the loan be rehabed that there will be no trouble in doing so? In other words, can the CA deny the request? Can the CA insist on an amount higher than 1% of the debt?

Also, and I admit there are not a lot of details yet (spouse is embarrassed to ask), but the CA called her employer, asked for HR and talked to them. Again, not sure of what all was discussed, but we know for sure the CA gave full idenitfication of the CA and had HR give spouse message to call them. As I understand it,there are provisions of the fdcpa that prohibit contact with third party other than (in case of employer) to verify name and contact information(phone). Where is the line here when the CA has gone too far in contacting the employer?

Thanks again.

Sounds like the CA has verified your husbands employment for purposes of initiating Administrative Wage Garnishment. Totally legal. If your spouse has not talked to the CA yet and the CA has not been able to reach her, having HR pass a message is something we reguarly did. I would assume that you will receive a garnishment notice shortly....it is extremely important that the notice and objections to garnishment be returned immediately or the garnishment will go thru.

They can ask for a higher pay than 1% but with your other obligation such as IRS and child support, if they do not cooperate, I would highly suggest that the next call or email be to the student loan ombudsman.

Spouse's work schedule of late has been disruptive to more than just this matter.

It may be necessary for me to contact CA and act on spouse's behalf.

Here is my game plan...I would prefer to get this taken care of without putting us in a bad situation...so if anything I suggest is unreasonable, I would appreciate feedback.

When I call, I will give pertinent information to verify identity and my connection to the account in collection. I will then attempt to establish that the desire is to rehab the loan. At that point I will outline the IRS and support obligations and request that the rehab be set at 1% of the total amount (including all fees...at this point, I do not see an advantage in trying to negotiate down the fee). If that is agreeable, I would think a direct payment option would be better suited to ensure timely payments so there is no misunderstandings in meeting the terms of the rehab.

How does that sound?

I just do not want to stumble here and make a mess of this.

Thanks

Thanks for all the advice. It went pretty well all things considered. The CA wanted 2%. After all that it turns out though that rehab was not an option. The spouse had problems prior to our marriage with this loan and had a few DOE judgements already. Would have been nice to know beforehand.
The CA was still excellent though and helped me work into a doable solution. It is going to be extremely tight, but given the alternatives....at least it is going in the right direction again.

Thanks again for the advice.

from fhtim..can't seem to log in..anyway

The CA did say something that is interesting, but I did not ask further about it. The CA told me that we could contact the DOE and "cut a deal" to pay the amount in full. She told me that they would accept an amount that turns out to be less than the total of the principal and the interest.

How accurate could the CA have been? How do they know how much the DOE would accept to pay it out? If it is possible to do so....how does one go about it?

Not sure how we can come up with the cash, but from what the CA was telling me...as opposed to paying the monthlys all the out vs paying it off, we would cut the total costs to us by almost 60%.

The DOE wont authorize going below principal and interest....just wont happen. Getting 100% waived is next to impossible. DOE looks at your spouses earning potential over the next 25 years. I only had a couple of full interest waived during the time I was in collections and both were extreme circumstances. One of leaving the country permanently, and the other was retired and was offering a settlement out of her husbands estate.

Keep in mind that anything you settle on, you will be tax on the following year via a 1099. So you could end up in deeper IRS problems.

I have made the 9 payments leading to loan rehab. I arranged for payments via my credit card. Yesterday the ca called and gave song/dance about someone set it up wrong and they needed one more payment and would only take a checking acct. number or moneygram. I asked they simply put it on my cc. they stated the gov't. had cut off cc payments the day prior. I found this hard to believe as my cc payments usually post later in month. After several phone calls to ca and several hangups by ca, I smelled a rat. I called the DOE and they stated my loan was ready for rehab, that I had made my 9 payments on time and the ca needed to release my loan. They also advised that the ca should not have asked for my checking info. They provided an alt. phone number for the ca( which unfortunately led back to same ca reps.). When I told the ca what the DOE had told me, they put on hold for a few and then returned and stated my loan rehab paper work was going out that night. I followed up with the DOE and they verified the paperwork was being sent.
Don't accept what the ca tells you. Verify info with DOE. Many ca use biz names same as or similiar to official gov't programs. Don't be fooled.
Good Luck!

I might also add the people at dept of ed were great. They also allow me file a complaint against ca over the phone and gave me an address for DOE collection complaints to send additional info to. My ca was a really sleazy outfit, trying to boo game me into sending one extra payment to them and also giving them my bank info. Heck, I was paying, save the bs for those who aren't. If anyone has had similiar situations, please post.

Quote:

SoapLady, you give some very good advice on student loans and I think you should stick to that and not give advice about using or not using IRA's and savings.

Guest,
That is just plain rude. She is investing her own time to help others and the least we should do in return is show the lady some respect.

Quote:

Guest, It's your choice which advice to apply in your real life and which one to discard. Don't stop something good that is being discussed here. Someone will find it helpful in his/her situation. Soaplady has posted many suggestions and they are helpful.

Good lord, that is a foregone conclusion for any student loan borrower. Even me, and I used to collect the infernal things.

I consolidated my student loans with educational direct. All of them or so I though. Just yesterday I get a bill from Sallie Mae for a completely differnt loan that I was a month behind on. The bastids!

Hey Ari,
Have not seen you in here in a while.The ole cajun was starting to get lonely :wink: On to topic,All I know from my student loan for a short tragic mistake as a college student is they are like taxes.They never ever go away so work out what you can and pay them. If collector is being abusive,contact dept. of education and let them know about since they are the customer.

It has been a week now. I get a call from the agency (different rep) stating that now I have to fill out some kind of application.

I am concerned as I read some of thses posts about the CA's and what they represent when talking to me. I had this ca give me an exact $ figure to close this out and pay it in full. The figure she gave me covered the loan and most of the interest, but none of the additional ca fees. I had been working with some family members about getting together the cash to pay this out as it would save us thousands over the other option. Now I am concerend as to whether the ca was or is able to do that or even if it was just a way to try and get a lump sum payment and then come back a week or two later and say.."oh sorry, that amount was not accepted by the DOE as full payment, you still need to make additional payments".

Any help would be appreciated.

BTW, I appreciated the advice from soaplady about our IRA. It is sound advice. Even if we still consider it an option in an emergency, it is best to keep any retirement intact if at all possible.

I finally get to log back in. LOL

That last post was mine, for those who were wondering who the heck that was.

I thought the payment process had been taken care of a week ago, they got all our payment information and even the first payment....now there is more before it can move forward?

On paying it out...should I call this particular CA back and get her to give in writing the amount of the payout she gave to me over the phone as well as some type of written assurance that this will settle the account in full before I fork over any lump sum payment based on what she stated on the phone? Seems to me that would be a reasonable course before I commit to borrowing this lump from someone else, only to stuck with two loans to repay not just one.

Guest,
Everyone on these boards are volunteers.I spend on average of 10-12 hours a day helping when I can,researching when I am clueless.I jumped on you with
the comment that was directed at soaplady. I just want you and everyone else that comes to the the student loan
section to realize that she and Jedi mistress Ari are some of the most experienced in this stuff. My parte
is in credit repair and keeping collectors on the narrow line of legal collecting. I would add if you are uncomfortable about ca,have them put in writing what you owe and what is being applied to balance.Once that is done,call ed dept. and get their opinion.

The CA basically operates as a proxy from the guarantor. If they offering you a settlement, which it sounds like with no collection fees, they should have no problem faxing you a settlement letter. The settlement amount is usually good for 10 days or so. The settlement letter will state the name of the guarantor and if you pay within the time frame is totally enforceable. Several times when I was in collections, borrowers had settled accounts with previous agencies and had the proof. We would then immediately close out the account and send a notation to the guarantor with copies of the settlement paperwork. (Occasionally these accounts are simply not closed out properly, hence they are sent to a new CA.)

Thanks soaplady.

That sounds like what I will do. When I know I am able to put my hands on the cash within 48 hours of getting the letter, I will get this particular CA to send me that letter. In the long term we can save more $ this way. It is hard running around hat in hand, but getting back on your feet is never an easy process. If we can a few thousand over the entire process, then it is a good investment. We can use that savings to go towards retirement.

I do appreciate your advice about our IRA. I am not sure who that other person was, but I understood exactly what you meant and what your intentions were.

Hi! I found this post tonight after searching on student loan info. I am in a similiar position as Mike H in his post. Quote:

i have dealt with the Direct Loan Program, with some defaulted student loans. They DID help me out.....they helped me make payments ( depending on my income) AND brought my Student Loan 'current' ( out of default). The Direct Loan Program, in my opionion, has really helped me.