My Student Loans fell into default years

OK.... To start with, I'm gonna move this to the Student Loan board. It should get more exposure there, and be seen by more expert members.

There... That's better.

Now, I'm not the student loan expert in these parts, but maybe I can help a little. First off, them taking $478 out of your account without authorization sounds wrong to me. NCO doesn't exactly have the most savory reputation, though, so I certainly believe it happened. collection agencies collecting on federal student loans are regulated pretty tightly by the government, so there may be something you can do about it.

Secondly, I think the size of the payments may be too much. I seem to recall reading that a 1% monthly payment was sufficient to rehab, as long as it's paid on time, consistently. Sorry, I don't remember where I read that, but I believe it was on a government site. Check this page, scroll down to 'Student Loan Rehabilitation.'

While you're at it, check the rest of the info that's linked to that page. Lotta good stuff there...

On consolidation [once you get rehabbed], check with the government for consolidation possibilities. Look at all the numbers, and compare them to what your CU is offering. You'll likely come out ahead with the government. Dunno about where you are, but here [Vermont], a private lender can't get within shouting distance of a government deal.

Now, all that should give you something to chew on until better help arrives. And rest assured, there is better help available, and it'll be along soon.


Best -

Wulf

The key phrase here is "They say the can set up the payments tentatively". You did not call to revoke the payment so even without a signature, you did in fact authorize the payment. The CA did nothing wrong.

Yes you are entitled to reasonable and affordable payments on your student loan. Payments will be based on your household income. You have to ask for it....they are not going to tell you about it. And you do not want your credit union refinaning your loan either. They sound like a bunch of idiots....a check drafted to the US DOE is not a lien and it COULD be stopped if it was unauthorized.

Dear Soaplady,

You are so smart when it comes to "student loans" and the repayment/defaults thereof. I am very glad you are here. We need you.

Thanks,
Luke

Okay, so from your advice, my plan is as follows:

1. Call up NCO Financial Services, try to negotiate a lower payment. Simply put: I cannot afford $478, that's more than I pay in rent per month and is more than my paycheck some pay periods if there hasn't been a lot of work, and even 1% would be $436 a month which is still too high. Anything above $250 is really pushing it to be honest, and that's still making sacrifices on my part to afford it.

2. If they will not substantially cut my payment, go to my Credit Union about getting a loan for the amount of the 8 remaining payments, $3824, and use that money to tell NCO and the DOE to get bent.

3. If the credit union won't loan me the money, then call up NCO and tell them that unless they can lower the payments, the deal is off, revoked, rescinded ect. I see what check number they used (320) on the check they produced and from what I've been able to put together they are using that sequentially for their checks, and I'm going to put a stop on checks 321 through 328. The person I spoke to at one branch who said there was nothing they could do looked new and, frankly he looked intimidated by the fact it was a collection effort in any way involving the government. I'm thinking that if I go to the branch on campus (it's a University credit union), I'll get somebody a lot more experienced at dealing with things like this.

4. If I can either get substantially lowered payments or the money from my CU to pay the payments, I get my loans out of default and look to consolidate. I don't automatically go to the CU and see what kind of deal I can get from the gov. My Credit Union has been very good to me in the past regarding interest rates, getting me a rate on my credit card that beat the pants off of other banks, and gave my fiancee a rock-bottom rate on her car when she bought it, so I've learned to have a measure of trust in them as a lender.

For starters, you cannot call them with an attitude. You NEVER tell a government student loan CA or the DOE to get bent...you will find yourself immediately headed for a garnishment. At this point in time, with a government default on your credit report for such a high amount, you are unlikely to get an unsecured loan without paying thru the nose. With a garnishment you will not be able to consolidate, nor will you be able to rehab without making voluntary payments on top of the garnishment payments.

You need to call them up without an attitude and tell them that you wish to rehab your loan, but you need reasonable and affordable payments per the Higher Education Act. If they refuse, you calmly tell them that you will contact the student loan Ombudsman, informing them that you are being denied reasonable and affordable payments. You can excercise your rights without refusing payments.

Next year for your taxes, try Turbo Tax online. Easy peasy. [/left]

My apologies if I implied I would actually call them up and tell them off. I didn't actually mean to say I'd tell them off, I am just frustrated enough with the situation I want to give them what money I can and get on with my life.

Thanks for the information about citing the Higher Education Act and the Student Loan Ombudsman, I'll be sure to mention that if necessary. I really want to pay it off the best that I can, but what they are offering is just plain too high.

Try to work with them if you can! My brother is dealing with a garnishment of $200 per week for his student loan! No, he never called or anything like that, but he is now having major financial troubles considering his hours at his job have been cut from 40 to between 20 and 25 hours per week and there is talk of some people being laid off. Now on top of this, he has rent, child support, day care for the weeks he has his daughter (he and his ex have 50/50 custody and he is still paying child support), plus the IRS are garnishing his wages for taxes that he had taken money out of his 401K to pay when he had his own business that his wife at the time never sent in, and he also has a finance company that keeps calling my house from where he still owes a balance on a car that he let get repoed and was resold. He almost was evicted but was able to get some help from my parents. So best advice, work with these people if you can!!!

Soaplady, thank you for jumping into this. I just couldn't make the words flow at the time, and was really hoping you'd see this thread.

You have no idea how relieved I am that happened upon this blog!!!!!! I was looking for advice and you are in the EXACT same position I am in. I called about my student loans just yesterday and they told me WORD FOR WORD what they told you!!! I owe 70k and they said I could pay $820 monthly and when I said I COULDN'T afford that, I too, was directed to another special department. They said that I could pay $470 a month and that was the lowest I could go. I can't afford that either. Like you, I could probably be able to manage $250 a month. There has to be some resolution other than paying nearly $500 a month for the rest of my life. I know that I ultimately am responsible for the choices I have made, but I need to support my two young children. Please relay to me any more info that you get about the subject. Again, thank you and I wish you luck with the student loan folks.

Problem with paying even $250 per month on a $70k debt is that your interest alone is about $400 per month. With rehab $250 may be deemed affordable but based on your balance is not really reasonable. This does not make you a good candidate for rehab. Clear as mud right?

I would honestly suggest you pursue consolidation with the Direct Loan Program. You will automatically assigned to to the Income Contingent repayment plan . You will be stuck with both the negative tradelines of the default until the SOL for reporting runs out, but financially I think you will be better off.

I am in the same boat as most of you. I have one batch of student loans for $50k. They contacted me and told me I had to make a $1500 down payment to start the rehab. I had to make 9 payments of $320 dollars to get it out of default. After I completed that Edfund consolidated my loans with ACS and now my payments are $360 per month!

On top of this, I was contacted later about even more student loans that I owed on top of what I was already paying. I thought that all of my existing loans were included in the first situation. This new CA "ACT" were threatening me with wage garnishment over $23k until I sent them in a all of my income and expense info so they could determine a payment plan based on my disposable income. For some reason I thought they would be reasonable and the payments would be manageable since I already pay 360.00 on 50k. They want me to pay $705 per month or else they will garnish my wages!! I cannot afford that at all! All together I am to pay $1065.00 per month on student loans! That is more than my house and car payment combined!

Can the Direct Loan Program help me get this payment down to an affordable one?

CK... standard rehab payment of a $23k default is approx $230 per month. You are entitled to "reasonable and affordable payments". If they they refuse, and your budget including your other student loans wont allow it, simply tell them you will file a complaintwith the student loan ombudsman. They are going against the Higher Education Act.

I had 3 loans totaling a little over $7,000 I took out in 1987. When NCO began garnishing my pay in 2007 (yes, 20 years later), it was now on a total of $23,000 with payments at about $510 a month.

Student loans have no SOL so they can pretty well garnish you from here until eternity....including social security.

I am in the same situation. I have about 6,000 in student loans from around 2004. They are in defualt and I dont know if I am getting my taxes back this year or not. I got my state check and the IRS site says that my refund is schedualed for deposit on the 6th, but the EDFund website says that they have a claim...what ever that means. I have payments set up for 57.00/mo and some change. They accepted payment arrangments for 120 payments of that directly off my debit card. So if anyone can tell me, does that mean that since they accpeted my payments they are going to lift the claim on my taxes? I am due with third baby in then next three weeks and husband is out of work. We have been making it by the skin of our teeth till now. We really need the money to make it the rest of the way till he gets back to work and checks comming back in later this month.

Thanks for any information!

:)

Edfund wont accept payments of 120 months....you might have have been set up for rehab but your loan wont stay with edfund long term

getting your taxes back depends on when you entered into repayment on the default and the individual guarantor.

$57 also seems low for a $6000 balance but I guess that depends on your interest rate. You had a variable rate loan so you should be at 6.8% so for a 10 year term your payment would be $69.02 according to the calculators.

I have the conformation from EdFund and the statement showing my payments. Mine will be paid off in 1/27/2011. They set have it all on my account with Edfund. The payments are 56 and some change. It said it was a stafford loan. 2 of them actually, combined together. total on both is 6,000 some. The amount of the payment was set by thier calculators...not me. They set it. Why would they set it all up like that and send me comformation of it if they were not going to stick to it as well?

What I am saying is that it wont stay with edfund....it will be transfered. While you are in default and are making payments to edfund , it will report negatively. It sounds like they have set it up for rehab.

I dont care who they sell it to. Just as long as it gets taken care of. lol. I need my tax money. :) Why would they schedual payments that far out then? That doesnt make any sense. If they were only going to keep it for a set time, then whats the point of entering into a repayment agreement with me for longer term... This whole thing is confusing to me. ish. :)

when did you enter into repayment?

I finally found on the edfund website to setup payments and update my info this morning. I e-mailed them earlier this week and the person e-mailed me back that all I had to do was go in and update my info and set up payments. My student loans have been sold so many times that everytime I tracked one company down to set up payments it had already been sold to another one. and so on and so on. I am glad that I finally caught up to it. I was getting anoyed with it. lol. I never recived anything stating that my taxes were beeing offset or anything about it at all. The only reason I know that this is going on is that I was looking around for a online college to enrolle in and they said that I still owed student loans and directed me to the national data base, then I found out my loans were with EdFund. Then I was able to handle things with them. :) Thanks for your input. It is appreciated.

If you just entered repayment, I would be very surprised if you got your taxes back. Edfund was one of our more picky clients when I was collecting.

Well, when they take your taxes, do they take your state too? cause I got my state check like over a week ago. I am so glad that I found somone that I can ask stuff like this. I have been looking for weeks. lol.

As for student loans, if you talk politely with the authorities, they will always waive a certain component of the interest. Take advantage of that. I suggest you then make a few payments without committing to any regular payment schedule in the beginning. Once you have made a few payments like this then perhaps you can go in for a fixed payback pattern.

Bad advise . They will not waive interest unless you are settling the account immediately . When in default, you do not have the option of making a few payments without committing to a payment schedule...when in default your balance is due in full. The guarantors who own these accounts and the CA's that work them want a short term resolution for the account to be paid in full or taken out out of default either by rehab or consolidation.

Thank you for the feedback and for correcting me. Yes you are right actually that this is more applicable in a one time settlement. But I was going by the case of a contact of mine who actually did do it this way by first making a significant payment, then he just kept writing saying that he needed more time and more time.

But thank you very for throwing light on this matter, as the case of this friend is perhaps more a one off than the norm for sure.

ive got a question my student loan just went in default about 6 months ago i only owe about 1300. will they still take my tax refund? all of it?

More than likely. Keep in mind they will have added collection fees and your interest is accruing daily.

My wife has about 20k in stafford loan principal outstanding from 12 years ago. Due to financial circumstances her loans went into default and she hasn't worked in the last 8 years since starting a family. We always intend to one day start paying it back. The question is since she doesn't have any income would she be able to get into a loan rehab. Obviously any payments would be coming from my income but worry that I would become liable for the loans themselves. Can this happen? Any thoughts are much appreciated!

Well that $20k principal will now have acrued and capitalized interest plus collection costs of at least 18% so the balance will be around $40K at least I suspect. You are not liable for the loans but they do affect your family. She can either do rehab or go straight to consolidation which may be the better option depending on your income.

If they garnish my wages does that money go towards paying my loan or do they take it all?

Of course it goes to paying your loan. It is applied to the collection fees first, then past due interest and then principal.

if your already getting your wage garnished do they take your tax returns too?

Since you are not paying voluntarily, they can seize your returns as well.

My Husband is in a similar situation only it was his ex. not his parents and he does not have any of the paperwork to even know how many or for what amount the original loans added up to as he basically signed off on the paperwork she filled out for them back when they both attended college. His struggle is to first find out what's out there in his name and then attempt to work out something. I tried way back when we were first married about 7-8 years ago I was able to get 2 or 3 (can't remember) worked out and out of default but became so frustrted by the lack of getting any further than that I eventually gave up. He has been out of school for over 15 years I can't even imagine what the bottom line is on whatever was left.

Soap Lady....you wrote that they can garnish your Social Security but not your disability....is that true?

They can garnish ANY government payout including SSDI.

need help!!!

so i was sitting here thinking i need to get my credit in check. so i research my student loan collection agency and call them to see how much i still owe after paying them for over two years @ atleast 400 a month or more because they garnish my paycheck and im a commision sales rep. anywho i have paid 10k so far and owe them 20k or can settle out for 14k. i remember back when i wasnt working direct loan rep called me and i messed up my payment options with them. is there any program out there that will buy my loan and i can pay them back instead of doing this garnishment nonsense. i know its my fault i owe this money but i want to start a family and get married and dont want to go into it in debt.

You are ineligible for consolidation while in garnishment. What you would have to do is rehab which would require payments be made over and above the garnishemnt for 9 months. Your loan would then come out of default. You will still be in debt but your loan would be current.

uhh dumb question but, when u are finished paying them off do they let u know or do you have to call them?

You should be checking up on a regular basis as to how much you still owe. Interest continues to accrue so the beginning garnishment order is not the final figure.

Soap Lady...your information for others has been very helpful reading for me as I try to navigate through my own student loan mess. I have a loan that has been in default since 2002. I wont go into a long story but the short version is that I do not have the information on my loan. My mother completed all the paperwork and I was unaware of the terms, company, etc. I didn't even know that the loan was in my name until a couple of years ago; my mom originally told me I was the co-signor and she was the signor when I was 18 and attending college. I would like to work on this debt so that I can finish school but am running into road blocks everywhere I turn. She contacted the original company, American Education Services, and they said that since the loan was default I had to contact someone else (that I assume is a CA for them or someone that bought my debt). When contacting that company I was given a different company's information to contact. I contacted the third company and was given a law firm to contact. When speaking to the law firm I was told that nothing less then $1,200 a month would be accepted on this $50,000 debt. When they were informed that I can not afford that but would like to get this debt taken care of and worked out I was told to make payments as I can since a Repayment Agreement under $1,200 is not an option for them. I am quite frustrated...I am harrassing them to pay a debt instead of them harrassing me but getting no help in starting payment. If I pay monthly without a Repayment Agreement I assume that will not help me get out of default or help me become eligible for assistance when going back to school. I am a one income household with a newborn, toddler, a disabled husband, and I financially help my disabled/elderly mother. I've taken on a second pt job to use for my student loan payments....which I could afford about $300-$350 a month (my entire 2nd job's income). I am beyond frustration and would really prefer to deal with the loan originator or anyone that's willing to set up a decent payment plan with me. I would at least like a probationary payment plan until I am eligible to finish my degree...after that I could make a substantial montly payment after pursuing better employment. I gross $2,130/mo. for my current employment and have no extra money on this income...does anyone have any HELP, SUGGESTIONS, IDEAS????? I'm desperate...I've been killing myself working a 2nd job for a month and do not even know who/where to send payments to because noone will work out a Repayment Agreemnt with me!!!! ,

Are these federal or private loans? Did you actually sign the prom notes?

Quote:

You signed the documents. Right above your signature is disclosure, usually in bold print....THIS IS A PROMISORRY NOTE...I WILL NOT SIGN THIS NOTE UNLESS I HAVE READ AND UNDERSTAND IT.

Really, it doesnt matter who is the signor or cosignor. Both of you will get sued....or have been sued. Have you checked your credit report lately?

Try logging into NSLDS to find out if you have any federal loans out there. Have your tax returns been taken?

Soap lady. I am trying to get up to date on some student loans i owe on. I have 2 seperate companies and they have taken my taxes this last year. Each company sounds completely different so i'm wondering which to believe. I owe $5429.18 to one which has said that i would have to put 800 down and 50 a month but i was able to talk them down to 200 down and 50 a month. The other told me that she was going to put me in some program where i put a small amount down and in 30 to 45 days would be cleared and would have 3 years to not have to worry about making playments. I've written down everything both companies have said and i'm just wondering why they are saying such different things. The second companies plan just sounds to good to be true so i havent said yes or no to it. The first one was very rude to me despite the fact that i contacted them to settle my loans and the women was horrible. I told her i wanted to work my debts and was looking into all my options including consolidation and she went off being all mean and crazy, since you seem to really know what you are talking about can you please give me some advice. I owe a total of 7300 and some total in federal student loans. I have a private student loan for ALOT more but it was my mistake to open that with my dad who said he needed to take some more out and would make the payments. he has up until recently when his health got worse and i got the first statement last month in the mail I owe 23,000 on that one but i dont know how private student loans work. Can they garnish like the federal ones. I know student loans cant be cleared in a bankruptcy, but i just dont know if the private student loan has the same rights as federal when it comes to re-payment collection attempts.
i know this is alot of info but any advice will help alot thank you.

Sounds like loan #1 is trying to rehab you and loan #2 is going for consolidation. the choice is really yours to make. Whichever way you choose, you probably want to do or start it quickly. What company 2 said is not quite true....you are eligible for up to 3 years of deferment....you have to file for them yearly.

Private loans use the courts for garnishment....thus the garnshment goes by state instead of federal garnishment guidelines which makes the garnishment amount higher.

Here is my thing though. I dont work i have been a stay at home mom for the last 5 years. I will go based on my husbands income. I just wonder what the private loan can do to me, thats whats scaring me because i know we wont be able to afford the 225 payment that the private loan has been getting from my dad. Also the second company said that i can add the other loan to the program they are putting me in but the first company wont give me my account number and info for me to give the second company they keep telling me that the second companies program isnt good and that it will only hurt me in the long run. It just stinks. My sister just did a bankruptcy and discharged her student loans I know she had to jump some hoops and do Undo Harship but i hear those odds are really small. What i guess i'm getting to is i took these out really young and made payments for awhile but then had three kids in four years and fell behind what do you think are my best options. we are very much below the poverty line for a family of 5. I wanted to go back to school (and pay for it out of pocket no more loans for me) to get a good paying job that will actually make working worth it. Since all of our kids are under 5 childcare makes a minimum wage job worthless. Is consolidation really horrible i just dont know. I only considered that option because three years of only paying the interest will make it so i can afford to pay for myself to go back to school and get a degree to get a job. Thanks again for your responses it really helps i have been searching the web for days trying to get some info .

Hi my name is tory and i work for a company called college lending solutions, first off let my start off by saying im sorry for the problems that you have been going thru,secondly here at college lending solutions we are able to get you out of default with in 4 to 6 weeks stopping wage garnishments and tax off sets this will also show on your credit in good status, you will be able to go back to school and qaulify for in school deferment, also when dealing with the collection agency's you are being charge 18.5% in default and penaltys fees, so every dime that you give them will go directly into their pocket while nothing will ever go to your principle and all the while you will still be in default. We have a lender thats willing to give you a second and provide you with a brand new federaly back student loan to pay off your defaulted student loans, you'll still have the original loan amount with out all the collection angency's fees, all we do is take you from being in default to out of default. Well i really hope that this info was helpfull and you know a little bit more about whats available for you , also if you have any questions i can be reached at CONTACT INFORMATION REMOVED PER TOS