Private Student Loan Default

Bills.com Team
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By

Highlights


  • Private student loans can be discharged in bankruptcy under narrow circumstances.
  • Private student loan creditors must use the court system to get a garnishment.
  • Bills.com contains many student loan payment resources.
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Learn What Steps A Lender Can Take if You Stop Paying a Private Student Loan.

Private student loans are the same as other unsecured debt, such as credit card debt or medical debt, in all ways but one. If you default on a private student loan (or other unsecured debt), the creditor has a cause of action against you for breach of contract. In other words, the lender has the right to sue a borrower who fails to make their private student loan payments as agreed.

If the lender prevails in court and wins a judgment, the lender, now called a judgment-creditor in legal-speak, can ask the court to have the borrower’s (now called the defendant or judgment-debtor) wages be garnished, a levy placed on the borrower’s financial accounts, or a lien attached to the borrower’s property.

Check the Dept. of Education’s National Student Loan Data System (NSLDS) to see if the loan is federal. State statutes of limitations do not apply to federal loans, and are subject to collection indefinitely. Student loans not backed by federal grants or guarantees do not appear in the NSLDS, and are therefore private. Private student loans are subject to state statutes of limitations.

The only thing that separates a private student loan from any other unsecured debt is that private student loans are currently not dischargeable in a bankruptcy filing, unless the debt creates an undue hardship on the petitioner. (See the Bills.com resource Student Loan Bankruptcy for more about this subject.)

For more information on collection actions for default on student loans, see the Bills.com resource Collections Advice to learn more about wage garnishment, account levy, and lien law. See the Bills.com resource State Statutes of Limitations for information about each state’s debt laws.

eed a student loan? See the Bills.com resource Student Loans resource page. Problem with a student loan? Learn more about Student Loan Consolidation.

See the following Bills.com resources to learn more about resolving student loan debt and avoiding private student loan default:

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219 Comments

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  • 35x35
    Mar, 2013
    Casey
    I have a few questions. I finalized my bankruptcy today and it is complete. (I filed chapter 7) I have been trying to work with these private student loan people for a while now, even while I was going through my bankruptcy, I have been paying $300 a month for just my three private loans, so I don't get garnished. I also have four federal loans that are currently getting consolidated to get them out of default, so I have been paying $250 a month for those. How long do I need to keep paying the private loans before they get out of default? Am I going to have to wait until the interest is paid off before it is in good standing? Luckily, the federal loans are getting taken care of and out of default...they are a lot less forgiving, but am I taking the correct steps right now. Is there anything else I can do to help my situation? I know $550 per month doesn't seem like a lot of money compared to some others having far worse issues, but even $550 is not feasible for me with a kid on the way and being the head of household. Will they renegotiate my rate for my private loan when I have the child? That was an original question to base their payment plan on. Should I give them a shout when the child is born and renegotiate?
    0 Votes

    • 35x35
      Mar, 2013
      Bill
      One of the problems with private student loans is the private student lenders are not constrained by Dept. of Education rules for consolidation, default, rehabilitation, deferment, and so on. For example, private student lenders may offer deferment and consolidation, or may not. Therefore, it is impossible for someone like me to make a blanket statement about how many payments you need to make before your private student loans are no longer delinquent. You have two ways to learn the answers to your questions about your private student loans:
      • Review your private student loan contract(s)
      • Ask each of your lenders about their policies

      If it seems like the private student lenders are not giving you straight answers to your questions, consult with your bankruptcy lawyer. He or she will read your loan contracts, and will advise you about your rights and liabilities.

      1 Votes

  • 35x35
    Mar, 2013
    Brittani
    I currently made half of my private student loan to Sallie Mae. I think I can make half payment for a month or two. I will be starting school as a non-degree seeking student where these credits will go towards my graduate degree. I wonder if I can apply for deferment when my course starts April 29. Also will making these payments keep me from defaulting?
    0 Votes

    • 35x35
      Mar, 2013
      Bill
      I recommend speaking with Sallie Mae and your school's financial aid office directly. It is not clear to me whether your non-degree seeking status could affect obtaining a deferment.

      To answer your second question, making less than your required payment exposes you to default.
      1 Votes

  • 35x35
    Feb, 2013
    Pam
    I cosigned some private student loans for my son. He also forged my name to a couple of loans. He defaulted on the loans and I started getting phone calls. He then declared bankruptcy (Chapter 13) which included those loans. He also listed me as a creditor. He will not talk to me and I don't know what exactly is going on but I do know the credit collection agency is no longer calling me. If the student loans were included in the bankruptcy, can they come after me for the payment?
    0 Votes

    • 35x35
      Feb, 2013
      Bill
      Pam, your responsibility for loans on which you were a co-signer are not removed when the other person on the loan removes his responsibility via bankruptcy. (It is very hard to include a student loan in bankruptcy. Have you seen the paperwork that states that the bankruptcy court has removed his obligation to pay? Just because he included them in his filing, does not mean that the court decided to discharge his need to pay.)

      A creditor could come after you for payment, in this case. I recommend that you pull a credit report and see how long it has been since the last payment was made, so you can see when the statute of limitations for debt will apply.
      0 Votes

  • 35x35
    Dec, 2012
    Masol
    Are you able to receive fasfa student loans if you have a private defaulted loan/ not federal.
    0 Votes

    • 35x35
      Dec, 2012
      Bill
      To get the most accurate and current information, I contacted the Dept. of Education. Here is what they said.

      A "student may not receive any federal student aid if he or she is in default on any U.S. Department of Education loan. A defaulted nonfederal loan does not automatically prevent a student from receiving aid."

      "Nevertheless, a school may consider a student's credit rating as a factor in determining a borrower's willingness to repay. Therefore, a school may deny a Federal Perkins Loan to a student who has an adverse credit history."

      "A borrower's credit history does not affect his or her eligibility to borrow a Stafford Loan under the William D. Ford Federal Direct Loan (Direct Loan) Program."

      "A graduate or professional-degree student is not eligible to borrow a Direct PLUS Loan if the student is determined, based on criteria established by federal regulations, to have an adverse credit history. (A student with an adverse credit history may still be able to receive the loan: The student either must obtain an endorser with no adverse credit history or document to the U.S. Department of Education's satisfaction that extenuating circumstances exist.)"

      For more information about your status, I recommend that you look at their staying eligible page. Also, check with your financial aid office at your school.
      0 Votes

  • 35x35
    Oct, 2012
    Kim
    I recently received a letter that my private student loan (Chase) is in default. I am a single mom to one child, who has a part time job and barely makes enough to get by. My uncle who is married and is not currently in a job due to severe illness is the cosigner of my loan. I would like to know if they can go after his & his wife home and bank accounts if I am being sued by the Chase for defaulting on my student loan. i spoke with the person who is on the case of my default loan but he was being very rude while asking him if there is any way I could make smaller monthly payments but he insisted that I have to payoff the loan plus interest in full and I can't afford it. My main concern is will they come after my uncle who is my cosigner and try to take his home, social security and bank account or will they come directly at me if they sue or take me to court. What should I do?
    0 Votes

    • 35x35
      Oct, 2012
      Bill
      Your uncle assumed full financial responsibility when he co-signed for your loan. He is subject to collection efforts, just as you are, when the loan is in default. If he were sued and judgment were obtained against him, exactly what the creditor could do to collect from him is likely governed by the state collection laws in his state. It is possible, however, that another state's laws would apply, depending on the language in the loan contract.

      In most states, a judgment debtor's bank accounts can be attached, a lien filed against him that affects property he owns, and his wages can be garnished. Social Security income is protected from garnishment for a private student loan debt (but not a federal student loan debt). Though there could be a lien filed that would affect his home, it is highly unlikely that his home would be at risk of seizure to pay the debt.

      I recommend that your uncle consult with an attorney, to see what he faces in a worst-case scenario.
      0 Votes

  • 35x35
    Oct, 2012
    Morgan
    I am facing a divorce with a 1-year-old child to support. I currently do not work, but will hopefully have a job soon. My private student loan debt is around $90,000, but I have no other debt. My payments total more than $600/month (Sallie Mae $200 and American Education Services [AES] $412) and the lenders are unwilling to work with me to lower/suspend payments. If I am unable to afford my private student loan payments and default can they legally garnish my wages to a point where I cannot support myself or my child (i.e., food, clothing, shelter)?
    0 Votes

    • 35x35
      Oct, 2012
      Bill
      Start by reviewing the Bills.com article Garnishment on Student Loans to understand this issue from a high level.

      One or both private lenders have the right to file a breach of contract lawsuit against you if you fail to make the payments you agreed to. If your defense to a lawsuit (or lawsuits) is not persuasive, then the court will find in favor of the lenders and award one or both judgments against you. With a judgment in hand, a creditor can garnish your wages, levy your bank accounts, and put liens on real property you own. A wage garnishment must follow federal and state laws. In most states, a judgment-creditor can garnish up to 25% of your wages. In some states, if the wage garnishment is too onerous, you can file a motion with a court reduce the amount. Other states do not allow their judges to exercise any discretion on the amount garnished.

      My advice? First, read the Bills.com resource I mentioned. Second, contact your county bar association and ask for the name of the organizations in your area that provide no-cost legal services to people with no or low income. Make an appointment with that organization and bring all of your documents regarding the student loans, and any other debts you may have, to your meeting. Ask the lawyer you meet if chapter 13 bankruptcy will provide you with any payment relief. Generally speaking, one cannot discharge student loans in bankruptcy, but a chapter 13 might give you temporary relief by setting payments at an amount you can afford.
      0 Votes

  • 35x35
    Sep, 2012
    Aces
    I applied for a Sallie Mae private loan and i had to take a leave of absence and when i got back the school was gone. I refused to repay the loan under these conditions and have defaulted. What options do i have?
    0 Votes

    • 35x35
      Sep, 2012
      Bill
      While there are programs for discharging some federal student loans due to a school closing, I am not aware of any similar program for private student loans.

      I believe that your options are to work out some repayment plan or risk collection activity by the lender that could lead to a wage garnishment.
      1 Votes

  • 35x35
    Aug, 2012
    A
    Hello,I have about 105,000 in student loans 30k of which are private and the rest are federal. The federal loans are in the IBR program-which I currently have a $0 payment on, but the private loans are combining for over $300 a month, and I have NO DISCRETIONARY income at the end of the month due to a mortgage and a son. I originally went to school for business but ended up changing to become an elementary teacher. A major change like this has had a huge financial impact on my life. My wife and I file separate so that her income (as a full time teacher) is not counted. I am still substituting while looking for a full time job. The lenders will not let me defer or have forebearances on any of hte loans. What can I do if I cannot afford to pay them? Can they come after my house as well?
    0 Votes

    • 35x35
      Aug, 2012
      Bill
      If you default on the loans, then the lenders can sue you. If they sue you and obtain a judgment, they can collect from you consistent with the collection laws in your state. You could face a wage garnishment, bank levy, or lien. A lien would affect your home. If you tried to sell it, you would have to pay off the lien-holder. However, I don't believe that they could force the sale of your home.

      All you can do is to try to work out a payment with them or negotiate a lump-sum settlement (if you can come up with the funds to pay them a lump-sum).
      0 Votes

  • 35x35
    Aug, 2012
    Jessica
    I typed up a comment last night but have more questions to add. Combined, my husband and I have $275,000 in student loans. My husband has $78,000 in private loans and the rest in federal (about $20,000 of it has a cosigner). I have almost $97,000 in private loans and the rest in federal (about $20,000 of it has a cosigner). We are living with my parents because we can't afford to live on our own. Our federal loans are on the income based payment plan an we currently pay $0 on those. We also have credit card payments. We can't afford to pay the student loans and credit card payments. Which is "best" to do? Default on private loans and continue paying credit cards? Continue paying private loans and stop paying credit cards (and probably file bankruptcy for the credit cards)? If we were to default on our private loans, is there a way for us to only pay the loans that have cosigners? We also might have some inheritance money coming in about 6 months to a year (about $30-50,000). Would we be able to negotiate to pay off my husband's or my private loans with that money? Would that be better to do? or is it better to stop paying our credit cards until then (but not file bankruptcy) and use the inheritance to pay off the credit cards?
    0 Votes

    • 35x35
      Aug, 2012
      Bill
      I think that you should speak with both a bankruptcy attorney and a firm that negotiates debt settlements. Regarding settlement firms, some are now successfully negotiating reduced-dollar settlements on private student loan debt. The only firm that I can recommend for this kind of work, currently, is Freedom Debt Relief. (Editor's disclosure: Freedom Debt Relief is a sister company to Bills.com)

      It seems prudent to not mention any potential inheritance to anyone. For one, it may or may not happen. Two, you when you mention it, it will influence your creditors to want more from you. Ideally, you could start negotiations with creditors, before any inheritance is realized, so you could show your full financial cards without those funds, then pay for the settlement once the funds are in your hands.

      How to prioritize your credit card debts compared to your student loans depends, in part, on who your creditors are and your state's collection laws. For instance, you will have more leverage, if you reside in a state that doesn't allow for wage garnishment.
      0 Votes

    • 35x35
      Sep, 2012
      Jessica
      Thank you very much for your help. We have decided to file bankruptcy for our credit card debt. Sallie Mae said that we can't put my husband's private loans in forbearance anymore ($570 a month on the interest only plan). That amount, plus the $402 we pay on my private loans each month (also on the interest only plan) makes it so we can't also afford to pay our credit card payments. We have met with a bankruptcy attorney and will file once we've saved up the $2,000 needed. We will not be getting the inheritance money (long story). My private loans can be on the interest only plan for 2 more years and my husband's private loans are on the interest only plan for about 4 years. After that...I don't know what happens. Are there any other options to lower our private loan payments at that point? Once the interest only plan ends, my monthly payments will be about $1,200 and my husband's will be even more than that...so somewhere around $2,600 a month just for our private loans. We will hopefully still qualify for the $0 payment for our federal loans under the income based repayment plan at that point.
      0 Votes

    • 35x35
      Sep, 2012
      Bill
      We do not have good news for you regarding private loans. We know of one proposed bill in Congress to address private student loan debt, which we discuss in the Bills.com article Private Student Loan Forgiveness. If private student loan payments are crushing you, your best but by no means good option is to file chapter 13 bankruptcy, which will force your creditors to accept payments you can afford for 7 years.
      0 Votes

    • 35x35
      Oct, 2012
      Jessica
      Hi, it's me again. I have some more questions. We now owe another $70 a month (for my husband's federal loans) and I'm guessing we'll owe about that on my federal loans in a few months as well. They told us that the amount we're already paying on our private loans isn't factored into the amount we have to pay for our federal loans under the IBR plan. We're already paying $570 on my husband's private loans and about $400 on my private loans. The interest only plan ends for my private loans in a little less than 2 years and then the private loan payments jump to $1200. My husband's interest only plan ends in about 4 years and then his private loan payments will be at least $1400. That will be $2600 in just private loan payments plus whatever our payment is for our federal loans under the IBR plan depending on what our income is at the time...so possibly close to $3,000 a month. There is no way that we will be able to pay that. We are currently living with my parents but can only stay for a few more months. We have to figure out what we're going to do. We won't be able to afford our student loan payments. We currently live in Texas but will likely be transferred to another state within the next year for my husband's job. If they garnish our wages, will they garnish a percentage for federal loans and for private loans (for example, if they can take $500 a month, does that mean $500 total or $500 for private AND $500 for federal?). Also, my parents cosigned on one of my husband's private loans (about $20,000) and one of my private loans (also about $20,000). Is there a way for us to only pay the monthly payment for those 2 loans so that my parents don't get in trouble too? or is it best to just default on all the loans and just give my parents money each month when they get a bill in the mail? We don't want to default but have no other choice at this point.
      0 Votes

    • 35x35
      Oct, 2012
      Bill
      First, we're glad you returned, and hope you keep filling us in on your progress. Second, you and your spouse are not alone in dealing with crushing student loan debt, which leads me back to my first point. How you deal with your situation will be repeated thousands of times across the country. Given the contentious behavior in Washington DC, it seems doubtful we will see any helpful solutions from our elected officials on private student loan debt, which totals about $150 billion. Therefore, the solutions will have to come from lenders and borrowers working out these issues on their own.

      Regarding your questions, you can pick and choose which private loans to repay. I think repaying the loans co-signed by your parents is a smart plan. Doing so preserves their credit scores. Prioritize the remaining loans on their interest rates, paying the highest-rate loans first.

      As we mentioned in an earlier reply, consult with a lawyer about a chapter 13 bankruptcy. This will not discharge your student loans, but will force your lenders to accept a payment plan you can afford for 5 years. At the end of 5 years, who knows where we will be? At that point, private lenders may be accepting lump-sum pay-offs of student loans, or Congress may get its act together and either allow a discharge of student loan debts (allowed before 1984), or create another solution.

      In the meantime, the CFPB proposed disclosure rules to make it clearer to students whether their loans are private or federal, and what the payments will be upon graduation.
      0 Votes

  • 35x35
    Feb, 2012
    Tammy
    Unfortunately, I have to file Chapter 7 this month. I went through a divorce, lost my job and then back to court on child custody issues. I have a $11,000 private loan- (Teri). That I have defaulted on. I received a collections letter in mid Jan. and I noticed on my credit report today- that on this loan it states -- Claim filed with government -- and also states --- Transferred to recovery.

    I was going to file my taxes this week and I have a refund. But I am afraid to file because I may lose my refund to the defaulted private education loan. Also on my account with AES it states the loan status is -- CLAIM PAID -- not sure what that means... Should I wait to file my taxes? Thanks for your help.
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      A TERI loan is a private student loan. Private student loan lenders do not have access to your tax return. Still, I think you should speak with your bankruptcy attorney, to see if he or she advises you to file your return before you file for bankruptcy or during.
      0 Votes

  • 35x35
    Feb, 2012
    Jimi
    I am in the market for an apartment and I have some money saved up for the first month's rent, deposit and moving expenses ect. I have both US dept. of ed loans & a sallie mae loan in default and am about to start paying them to get back on track but was worried that they can take (place a lien) the money out of my account that I desperately need to move out of a bad roommate situation. Do you think it would be wise to empty my account just in case this can happen?
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      Under the motto "better safe than sorry," take the money out of your account. This will protect you against a worst case scenario.
      1 Votes

  • 35x35
    Feb, 2012
    Kayla
    Hi, i am really confused, i have a large student loan threw chase bank. I had to drop out of school over a year ago and am just now finding a good job where i could afford to make payments too them. My parents were the cosigner on the loan an they ended up filing bankruptcy and this loan was put on the bankruptcy i have forms showing where they have been getting a small percentage each month. An i have not received any notices about the loan being defaulted. Still Saturday when i tried to call and change my address threw chase student loans, they told me that my loan has been sent to National recover, what does this mean im really scared they are gonna start garnishing wages.
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      Your first step is to determine how much money you owe, what the payment terms are, and how much the arrears are. If you are in default, then the collection agency can seek a court judgment against you which can lead to wage garnishments, bank levies, and liens on your personal property. For more information read the Bills.com article about collection laws. I recommend that you speak with the collection agency in order to reach a settlement regarding your debt.
      0 Votes

  • 35x35
    Feb, 2012
    Justin
    I have a friend who is a veterinarian and has $250K worth of private student loan debt in Colorado. What are the options for renegotiating a $4K a month payment that is crippling? What are the consequences for defaulting?
    1 Votes

    • 35x35
      Feb, 2012
      Bill
      I see three options:
      1. Contact the lender to learn what, if any, payment plans or options the lender offers.
      2. Consult with a lawyer about a chapter 13 bankruptcy. This will not cancel the debt, but may result in a payment plan for 5 years that the borrower can afford.
      3. Continue to repay the loans as agreed.

      You asked about consequences. See the Bills.com resource Collections Advice to learn more about wage garnishment, account levy, and lien law.

      0 Votes

  • 35x35
    Feb, 2012
    Anthony
    I just received a call from National Recoveries about a student loan that was taken out over 20years ago. There is nothing showing my credit report, actually this is the first I have heard of this loan. The student loan is a Guaranteed Student loan with Fleet Bank being the original issuer. NRI states that the US Dept of Ed is the creditor now. My question is if this is a private student loan or a federal student loan since it was issued by a private bank.
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      Prior to 2010 or so, private banks issued and serviced federal student loans. I recommend that you go the the Dept of Education's contact page to find out more information. National Recoveries is one of the collection agencies working with the Dept. of Education.
      3 Votes

  • 35x35
    Feb, 2012
    Elizabeth
    Hi! I have private student loans through Sallie Mae and though I'm not getting any threatening calls from collection agencies and debt collection lawers, Sallie Mae is calling not only me but my in-laws, my mom, and my dad looking to speak with me. The harassing phone calls are becoming a burden and I am quickly running out of forbearance allowances through Sallie Mae. I live in PA and have tried repeatedly to work with Sallie Mae and get them to accept the fact that I can only afford a monthly payment of $150.00 maximum (instead of the $800.00 monthly paymet), and they keep telling me that there is nothing they can do. I read on other websites about getting my loans discharged through bankrupty because present loan payment amounts are undoubtedly causing undue hardships. Is it truly possible that I can get my private loans discharged or even reduced to $150.00 a month over a 30-year period? If so, what steps do I need to take? I would like to get this taken care of as soon as possible. Thanks so much!
    1 Votes

    • 35x35
      Feb, 2012
      Bill
      Consult with a bankruptcy lawyer to learn if you qualify for a hardship discharge of your student loan. See the Bills.com resource Discharge a Student Loan for a discussion of this issue. Ask any follow-up questions on that page.
      0 Votes

    • 35x35
      Sep, 2012
      Melissa
      What was the outcome of your situation? I am in a similar boat with student loan between 800-900 per month which I just cannot make.
      1 Votes

  • 35x35
    Feb, 2012
    Marcia
    Help! I have defaulted on a private parent plus loan (i am the student), and while I have looked for gainful employment I have only been able to find temporary work. My main concern is that they may garnish my mother's wages. I spoke to the supervisor of the National Recovery Group for my lender but he was aggressive and told me he had already made the decision to not offer me a payment plan even before I asked for one. He told me that he personally wrote the "settlement opportunity" letters that are mailed out and he is the one calling all of the shots now. My debt is for $16,609. It's been defaulted for a year. What can I do to salvage my mother's credit and repay this loan? I would not like to have to put up with someone's terrible attitude and unwillingness to assist me. The supervisor has threatened to pursue further legal action within the next two days if I do not reply. Thank you in advance
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      Readers, how have you resolved situations like Marcia's with National Recovery Group?
      7 Votes

  • 35x35
    Jan, 2012
    Larry
    HI- I have a 10 year old loan through Sallie Mae. The educational program (Microsoft Systems Engineer)that i enrolled to study in was cancelled 6 weeks into the program by the university. They offered another program but I was not able to attend due to my work schedule. The only reason I enrolled in the program was because of the scheduling of the courses with my work life. I did not receive a degree. After 10 years i have a collector now calling me and demanding repayment for a loan on a colle program that i never received education for because the school cancelled the program. Do I have to repay back this loan? If not how should i proceed with this legally? Thank Larry
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      The first steps that you should take are:
      • Validate the debt with the collection agency
      • Determine the exact type of loan that you took

      Sallie Mae originated and serviced both federal and private student loans. If the loan was a federal student loan, then it is possible that the school should have refunded the funds. Read the Dept of Education's page about Common Disputes Involving Defaulted Student Loans.

      0 Votes

  • 35x35
    Jan, 2012
    Kay
    Hello all, I have 4 private loans, totaling to $31,000 on default. I am going back and forth with the collection agency but all they seem to do is threaten me and tell me that my wages will be garnished and that my property will be in danger if I delay paying. We did try to settle for a lump sum of $12,000, a down payment of $7,000 and for 18 months paying $485. I REALLY cannot afford this at all and what I would like to know is if I do not respond to the collection agency calls, have a lawyer send a cease and desist order, is there a strong chance that Sallie Mae will turn around and take me to court? And if so, if i have a property, is it advisable to remove my name from the title of the property? Also, i am married as well, will Sallie Mae come after my wife's assets? Thank you for the time in reading this.
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      You do not want to reach a settlement that you cannot afford. Explain your situation to the creditor and attempt to negotiate a longer repayment period, that will be affordable. If you do not reach a settlement, then the creditor, Sallie Mae, will most likely seek a court judgment. This could lead to wage garnishments, bank levies, and liens on your personal property. I recommend that you look at the Bills.com page about collection laws. If there were co-signers on the loan, they will be at risk too. As regards your wife's liability, that would depend on the state you live in and laws regarding community property. Before you change title on property, I recommend that you speak with a lawyer.
      0 Votes

  • 35x35
    Jan, 2012
    Matthew
    I've been dropped out of school for the past 2 years and have been unemployed on and off throughout that period. At least one of my private loans through Sallie Mae has defaulted and I'm getting the frequent phone calls on a daily basis and such. I re-enrolled back into school yesterday and called Sallie Mae to make them aware of this and they said regardless of my student status they are sending my account to collections if I don't pay up. I was under the impression from my financial adviser at school that since I've re-enrolled, my loan payments will be deferred until I graduate or am no longer in school. Can Sallie Mae still take legal action on me?
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      I am not familiar with a blanket rule that allows a loan deferment on a private student loan due to re-enrollment. Read the loan contract to see if a clause allows or requires deferment. Sallie Mae can attempt to collect on the loan by obtaining a court judgment. If you are sued, consult with a lawyer immediately.
      0 Votes

  • 35x35
    Jan, 2012
    Jerry
    Hello, I recently discovered an old Sallie Mae private student loan from about 10 years ago that was charged off over 4 years ago and does not appear on my credit report. It reappeared after Citi sold or transferred a separate loan to Sallie Mae. when i logged in to make a payment, the old Sallie Mae loan appeared along with the Citi loan past due for 999 days and full amount due of over 6k. I recently received a letter from the collection agency for this old loan offering a settlement. I have the funds to pay however I am afraid it will re-appear on my credit report. Is it worth paying an old debt that has passed the California Statute of limitations? If I pay it will it re-appear on my credit report, if so is there any way around this? I'm not so concerned with the cash as I am with the my FICO score.
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      The 7½-year clock for delinquent debt appearing on a credit report starts at the date of first delinquency, and not any other date. Unscrupulous collection agents will re-age a debt but without the consumer's permission to do so, this is a violation of the FCRA.

      You mentioned California. Read the Bills.com resource California Statute of Limitations for a discussion of what the California statute of limitations for debt means and does not mean to you.

      You did not ask about this issue, but you may want to consider negotiating a lump-sum settlement for less than the balance due.
      0 Votes

  • 35x35
    Jan, 2012
    Justin
    I have a recently looked at my student loan debt with Sallie Mae, and it is scary sight to say the least. I currently owe $261,562 on both Federal and Private Loans with varying interest rates. My Federal Loans have been on deferment but that is going to stop in 14 days. I have gone into default on one of my private loans after I couldn't make the $2000 payment and I ran out of the option of paying that $100 delay fee to hold off payment another few months. I am currently working as an attorney now after being out of work almost three years waiting to get my law license. My salary is low, less than $50k a year. There is no way I can afford what they are asking me to pay, and my credit is already completely shot. I told them I could make a $200/$300 a month payment if they could consolidate all the loans, but they said that isn't an option. Being that I have over a quarter million in debt, at my current salary it seems like insurmountable task to ever get on track with payment. I live in Florida so they can't garnish wages, but what other suggestions do you have for me in order to right the ship with my debt? It appears that at least one of my private loans well go to judgement. I just don't see the point of paying unless I win the lotto or start making over $100k a year. Any help is much appreciated.
    2 Votes

    • 35x35
      Jan, 2012
      Bill
      Consider a chapter 13 bankruptcy. This will not discharge your $261,562 student loan debt, but will:
      • Set a reasonable monthly debt payment
      • Determine the priority of the creditors
      • Stop any action(s) against you

      A chapter 13 lasts 3 to 5 years, after which time the remaining balance is not forgiven unless the court determines it is a hardship. Therefore, a chapter 13 is not a permanent solution, but will give you up to 5 years of breathing room during which you can focus on your career and build your income.

      0 Votes

  • 35x35
    Jan, 2012
    patrick
    I have recently defaulted on 4 of my 5 private loans from Teri loan. I have been contacted by the law firm who is handling the debt collection and it seems they are using the usual tactics that others on bills.com are encountering. My favorite suggestion was they tried to get my father, the co-signer, to take out another loan to pay them but he couldn't get a loan big enough to cover the amount with his available credit. Regardless they pushed this idea on us. I know my options are limited and this seems like a hail Mary but were student loans turned into CDOs like mortgages? Is it possible my promissory note has been cut into many parts and sold off and now untraceable? Am I looking for a pot of gold at the end of the rainbow? And more realistically is there anything I can be doing to help my credit score so if by chance I ever get a car loan again I don't have to pay 19% financing?
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      I am not aware of any student loan debtors who avoided repayment by demonstrating non-traceability due to its status as a collateralized debt obligation. In my opinion, you are, indeed, chasing rainbows.

      The way you can improve your credit score aside from getting your student loans out of default, is to keep open at least three active tradelines, to pay them on time each month, and to keep your credit utilization below 30% of the available credit line. Paying a car loan as agreed will help your credit score, too.
      0 Votes

    • 35x35
      Jan, 2012
      patrick
      Thanks for the sobering answer Bill and shattering my dreams. And thanks for the credit score tips.
      0 Votes

  • 35x35
    Jan, 2012
    Rachel
    Hi, I had gotten a private student loan years ago and couldn't pay anything on it. The last time I spoke to anyone about the loan it was a lawyers office and they wanted my to pay a lump sum and the debt would be gone but at the time I had no money and no job. I haven't heard anything about it since. I got a job now which had asked if I had any student loans because they will take the payment out of my check to get it paid. I told them about mine but nothing has ever came up about it and they said they have not found one. I recently saw my credit report and on the loan it says its an educational loan the status: claim filed with government for insured portion of balance on loan, and the remarks: Closed; transferred to recovery. What does this mean? Can they take my income taxes this year?
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      If the loan is private, no, neither your federal or state income tax return is available for offset or garnishment. If the loan is federal, then your tax return is at risk for an offset. Review your loan documents carefully to learn if the loans are private or federal.
      0 Votes

  • 35x35
    Jan, 2012
    lisa
    Hoping someone can give me some advice... I have a total of 100k in student loan debt. 64k is private loans thru citi assit. The rest are federal. I have job opportunity in Europe and also working on my European citizenship which will be granted soon. I want to pay my bills and plan to but unlike my federal loans who will work with me and reduce payments and make it realistic payments my private loans thru citi will not. No deferment no hardship no arrangments othr than pay 860 a month or else....the big probem here, is my job opportunity only will be paying me 800 USD a month.. which is plenty to live there. I do not plan on coming back to the US once I leave. Should I try and file bankrucpy once I offically take the poition since my income is low? Or should I say forget it and not pay them? I've spoken to people week after week trying to get smaller payents and they say they do not do that... and since they are private they do not qualify for obamas plan... help.. any advice is great.
    2 Votes

    • 35x35
      Jan, 2012
      Bill
      Your student loans are most likely not eligible for bankruptcy. See the Bills.com article student loan bankruptcy for more information.

      It sounds unlikely that your creditors will pursue a law suit against you in Europe, although that is possible. Given the amount of income you have it seems that you risk is small. However, if your private student loans were given to you together with a co-signer, then that person will be a risk for collections.
      0 Votes

    • 35x35
      Feb, 2012
      Matt
      Hello, Same situation as everyone above. Filed Chapter 7, was sent to collections on $39K that we owe..making monthly payments to the collections agency now. 2 questions: 1) Does a defaulted loan continue to collect interest? 2) After 7 years, will this fall off of my credit report? Thank you for your help.
      0 Votes

    • 35x35
      Feb, 2012
      Bill
      1) Did you include the $39,000 debt you mentioned in your chapter 7? 2) Was your chapter 7 filing successful, which resulted in a discharge of your debts? If the answers to my two questions are "yes," then I do not understand your questions.

      Ignoring the bankruptcy part of your message, yes, a defaulted loan may continue to be charged interest. If the $39,000 debt was common consumer debt, such as credit card, payday loan, or medical debt, then this derogatory will be removed from your credit report 7½ years after the date of first delinquency.
      0 Votes

    • 35x35
      Feb, 2012
      Matthew
      Hey Bill, thank you for your quick response. Yes, we filed a Chapter 7 bankruptcy and was discharged of our debt. The Sallie Mae loan was listed as a unsecured non-priority debt. I was under the assumption that because it was a Sallie Mae (educational) unsecured loan that we would have to repay it. Is that the case?
      0 Votes

    • 35x35
      Feb, 2012
      Bill
      My apologies. I did not realized the debt in question was a student loan. Unless your lawyer argued successfully that the student loan was an undue hardship, you still have liability for the loan. My earlier response regarding the interest fees still applies.
      0 Votes

  • 35x35
    Jan, 2012
    M
    Hello, I've got a bit of an issue. I went to ITT Technical Institute graduated June 2011 and went back to get my Bachelors in September. After about 3 weeks of going for my Bachelors I decided I did not like that classes, and did not like the times we had to go (hours were from 6 pm to midnight, no daytime classes available) and dropped out. 2 weeks after dropping out I was contacted by General Revenue Corporation (October 2011) that I owed $5,693.00 to ITT. I was told by the school that I would not have to pay until 6 months after leaving school.I told the gentleman at GRC this and he said no that I signed a contract saying (these are his words) "As soon as you step foot outside of ITT you will pay" I requested validation and it is now January 2012 and I still have not received a copy of this validation. I have called 3 separate times requesting a copy of this contract including today I called, and I still have not received a copy. And even the day after requesting they would still call me requesting money. I've read that it is illegal for a debt collector to call for 30 days after requesting validation, is this true? If so what steps can I take against them? Also today I checked my mail and saw a letter from GRC saying "Because you failed to respond to our previous communications regarding this matter, please be advised that we have begun an analysis of your: 1) Assets 2) Credit History 3) Current Employment Status" Can you explain to me why they are looking at my assets and credit history? And what can they do with my Assets? I'm 19 (signed for ITT a month after turning 17) I don't own anything, I live with my mother, I have no savings because of medical bills since I have been having recurring kidney infections, and I will have to start paying my Sallie Mae loans which is about $33,000 dollars around April.
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      If the collection agency can not validate the debt then see the Bills.com debt do it yourself article, particularly the section about failure to verify debt. You can follow through with a cease-and-desist contact letter. A collection agency will do research about a borrower to determine what type of assets they have. This will help determine what type of collection strategy they will use. I recommend that you look through your contracts with ITT, and sit down with their administrative offices to determine if you owe 100% of the tuition and fees, given that you dropped your classes so early in the semester or quarter, or are eligible for deferment or forbearance plans.
      0 Votes

    • 35x35
      Jan, 2012
      Jenny
      I am an attorney in Florida and am interested in some of the information you may be able to provide as a result of your recent experience with ITT. If you would not mind discussing your situation, please email me at fightfraud2012@yahoo.com. Thank you.
      0 Votes

  • 35x35
    Dec, 2011
    Helen
    Daughter borrowed private loan which I co-signed for. Last Nov 2010, she didn't pay. When I found out, it was March 2011. I called the intial loan company and ask to catch up payments. I was given a total including penalty and back payments. All was paid and kept payments on-time through December of this year($1800). This company sent statements every month indicating balance and all was well. In Nov 2011, daughter was sent letter from law firm saying her loan was in default and they wnnted $17000 in 30 days($12000 was payoff). I called initial company and they reported all was well. Then the next day, login rights were taken and company referred me to the legal firm. When I talked to "Rep4" at the legal firm, she stated the loan hadn't been paid since Nov 2010. I said it was caught up and sent statements and proof of payments. Now company will not respond but is stating we owe around $15500 (they removed the %1800 paid for the catch up payments sent). I told them to let me know how to resove this. Give a total payoff (other than $15500) or monthly bill, etc. They will not return calls or emails. Your company is the expert, what would you do? What can I do? Thanks
    0 Votes

    • 35x35
      Dec, 2011
      Bill
      It is unfortunate you did not name names in your message. It would not change my answer, I am curious to know which private student lender made such a dunderheaded error.

      My first reaction is to advise you to level the playing field and hire a lawyer to fire-off a letter on a law firm's stationary to explain your position and include copies of the evidence. My second reaction is to advise you to hold that suggestion in abeyance, and track down the name of the president of the private student lender and send him or her a letter explaining your predicament. If that does not work, then follow my first suggestion.

      A private student loan is in default 120 days after first delinquency. You and your daughter went right up to that line and may have crossed it. Once a loan is in default, the lender has the right to call the loan, which is what is happening here. This action makes no financial sense because you caught up immediately. However, as we are all witnessing with horror in the mortgage world, lenders sometimes make boneheaded decisions. A lawyer will help you understand what rights you have under your state law.
      0 Votes

  • 35x35
    Dec, 2011
    Jay
    Hi, I'm in something of a pickle. I'm unemployed and have been for just shy of a year. I have a couple of student loans - one with Sallie Mae the other with the Fed. I have no money, no job, no nothing. I'm living with my folks right now. My credit is as low is it can possibly be. Sallie Mae calls me at least five times a day as well as my mom (co-signer). What's worse is a semester before I graduated, Sallie Mae pulled the rug out from underneath me and denied me financial aid my last semester because my co-signer's debt to income ratio was too high. Desparate to graduate, I made a Faustian deal with my school and they loaned me about $2,000. Of course the contract I signed with the school states that I won't get my diploma OR my transcripts until the $2,000 is paid off. And of course, there's intrest on the loan. I had a part time job for a bit after I graduated and made some payments towards the $2,000 with the school but the job was temporary. I haven't been able to make a payment since. Of course the intrest from the school's loan to me brought the amount I owe beyond the small amount I was able to pay (fortunately, it can't go over the $2,000) so we're back up to owing the school $2,000. I have no diploma or transcripts so I can't get a job. I'm completely stuck. Now Sallie Mae is hounding my mom 5+ times a day. My dad just lost his job. I don't know how much longer my mom will keep hers. Sallie Mae just threatened to try to garnish my mom's wages. What can I do?????????????
    0 Votes

    • 35x35
      Dec, 2011
      Bill
      The first step you should take is to speak to your lender and try to negotiate a payment plan. In all likelihood the lender will begin to take legal action against you and your mother, including wage garnishment and bank levies. If your mother has a job, then her wages will be subject to wage garnishment.

      Look into loan consolidation if you have multiple loans of the same type.
      0 Votes

  • 35x35
    Dec, 2011
    Marata
    I currently live abroad making a teacher's salary equivalent to about $10,000 a year. After 2-3 months of not paying my Citibank private loan (I was making other CC payments) I tried making a payment. I was curious as to why the payment did not go through like it had always before, and after contacting Citibank a few times with no response, my dad finally got a letter in the mail. Since he was the co-signer, he is now obligated to pay the $10k loan, (now up to 12k) with this new collection agency. Between his financial troubles (dont ask!) and my low salary, what options do I have? I have $1500 saved up and with the next couple paychecks I may come up with a total of $2000-2500. With that amount, would I or my dad have a chance in settling this thing in one lump sum if I explain this situation? as of now, I have requested a 'debt validation' delaying my payment for at least another 30 days. thanks hk
    0 Votes

    • 35x35
      Dec, 2011
      Bill
      I recommend that you attempt to negotiate a settlement, or a payment plan that will allow you to meet your obligations. You must weigh the consequences of a court judgment against you and your dad, that may result in wage garnishments, bank levies, or liens on your personal property. It may be wise to offer a payment plan that allows you to utilize your savings as an additional cushion to meet the new monthly payment.
      0 Votes

  • 35x35
    Nov, 2011
    Pelham
    Hello, I have been making payments to a collection agency for about a year on a Wachovia Student Loan that I defaulted on. Do private student loans qualify for any tax credits or deductions or is that limited to federal student loans?
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      I can't give you tax advice, but will share some thoughts with you. You very well may be eligible to deduct the amount of interest you paid on your student loans. For tax year 2010, you were permitted to deduct up to $2,500 in interest you paid, if you met certain conditions.

      You don't need to file an itemized return to get credit for this deduction. You can claim the deduction, even if you don't file a long-form return.

      The deduction is claimed as an adjustment to your income, so you do not need to itemize your deductions on Schedule A Form 1040. You can claim the deduction if all of the following apply:
      1. You paid interest on a qualified student loan in the tax year in question
      2. You are legally obligated to pay interest on a qualified student loan
      3. You do not file your return as "married filing separately"
      4. Your modified adjusted gross income does not exceed an amount which is specified annually
      5. If you file a joint return, your spouse cannot be claimed as a dependent on anyone else's return

      Check with a tax professional to see if your loan qualifies for exercising the deduction and to make sure that you meet the other requirements listed above.

      0 Votes

  • 35x35
    Nov, 2011
    Tim
    I defaulted on a private student load that goes back to 2007 and was never able to make payment on it. It was transferred to a collection agency and last I heard from them was in 2010 and they were willing to offer a "lucrative" settlement and lowering the balance. At the time I was living abroad and we did not reach a settlement and I and never heard back from them since then. I recently moved to NY and after checking my credit report I see that there is a government claim on this loan. What does that mean? Should I be anticipating law suits, wage garnishment, etc.? How is this going to affect me and for how long can they come after me? Thank you.
    0 Votes

    • 35x35
      Nov, 2011
      Bill
      I am not sure what you mean by a government claim on the loan. There are private student loans and federal student loans. Some of the federal loans are done through private lenders. Please read about private student loans and statute of limitations. Federal student loans do not have a statute of limitation.

      If you have an outstanding debt then you could expect legal action taken against you, including bank levies, wage garnishments and liens on your property. Bills.com has some good information about the collection process.
      0 Votes

  • 35x35
    Nov, 2011
    Milan
    Your student loan debt jeopardizes your futures. Paying more is not a better education. UC Berkeley(# 70 Forbes) tuition increases exceed the national average rate of increases. Chancellor Birgeneau has molded Cal. into the most expensive public university. UC President Yudof, Cal. Chancellor Birgeneau($450,000 salary) dismissed many much needed cost-cutting options. They did not consider freezing vacant faculty positions, increasing class size, requiring faculty to teach more classes, doubling the time between sabbaticals, cutting & freezing pay & benefits for chancellors & reforming pensions & the health benefits. They said such faculty reforms 'would not be healthy for UC.' Exodus of faculty, administrators? Who can afford them and where would they go? We agree it is far from the ideal situation, but it is in the best interests of the university system & the state to stop cost increases. UC cannot expect to do business as usual: raising tuition; granting pay raises & huge bonuses during a weak economy that has sapped state revenues & individual Californians' income. There is no question the necessary realignments with economic reality are painful. Regent Chairwoman Lansing can bridge the public trust gap with reassurances that salaries & costs reflect California's economic reality. The sky above UC will not fall. Opinions? Email the UC Board of Regents marsha.kelman@ucop.edu
    1 Votes

  • 35x35
    Nov, 2011
    Megan
    Hi Bill, I wanted to know if you can offer any advice regarding a private student loan through Sallie Mae. I currently have about $30,000 in federal loans and over $50,000 in private loans. My federal loans have been consolidated and are currently in deferment. The monthly repayment amount is under $150 for this loan which is do-able. My private loans from Sallie Mae have been consolidated through Sallie Mae and are around $55,000 now (original loan amounts $28,000 and $2,000= $30,000). In the past two years I have paid Sallie Mae around $9,000 in interest only payments, but I have recently defaulted on my loan. I normally do not have much money left over after each pay period once I pay my bills and have no savings to speak of. I needed to repair my car a few months ago and my insurance would not cover it. In order to fix my car I had to stop making payments on my private loan. So now I am about six months behind on payments. I wanted to ask your advice regarding the consequences of defaulting on my private student loan. I feel that due to my outrageous interest rate with Sallie Mae I might never be able to repay the loan amount. So, I have decided to focus my energy on paying off my federal loan, for which the monthly payments on are less than one-third of my interest only payments to Sallie Mae and, from my understanding, have more severe default consequences. Due to the troubling financial times, my father who is my co-signer on the private loan, has lost most of his business and is in economical hardship. With the exception of his and my mother's 401Ks, pensions and social security, they have no savings to speak of. Their house was refinanced a few years ago before the housing crisis, so they owe more on it than it is worth (about $300,000). Both of their cars are also about eight to ten years old and have very low resale values. I do not own any property and have no interest in buying property in the near future. I understand that there is a 4 year statute of limitations on private loans in the State of California, retirement accounts (pension, SS, and 401K) are exempt from creditors, and my parents do not own enough of their home so it would qualify as exempt. My parents are 1099 employees so they do not have an employer to garnish their wages and at this point they are barely making ends meet. So to get to the point… What would/could happen to me and my co-signer if I default on my private loan? Does the 25% threshold of disposable income that can be garnished take into account my federal student loan payments, average utility bills, transportation cost, and rent, or can %25 of all of my wages after taxes and health care deductions be taken (sadly at this point, if they exclude my health care insurance and my rent from my disposable income, the 25% wage garnishment is pretty much what I pay in interest only payments)? Regards
    0 Votes

  • 35x35
    Oct, 2011
    Mike
    Hi, 10 years ago I got a private student loan from salliemae, along with some federal loans. When I went to consolidate them they all went but the private one, and now I have collectors calling me like there's no tomorrow. I contacted salliemae and they informed me that the loan was not backed by the Feds, no payment have ever been made on it and that there was never a judgement made on the loan, also that it was charged off. That being said, I live in NY and the SOL is 7 years, would this fall into that SOL?
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      Private student loans are subject to state statutes of limitations. You do not mention when you made the last payment on the loan in question, so I cannot comment further.
      0 Votes

  • 35x35
    Oct, 2011
    Michele
    I just received notification from a collection agency that my private student loan company gave my account to them for default because I haven't made full payments for several months. I was out of forbearance options, have made timely payments since repayment started until this year, and have continued to make payments whenever possible; however, they still sent it to collections. The agency said I have three days to try to get a loan to pay off the $140,000 or they will review the account with my lender over the next step. My question is: If I contact my lender directly, or even if I talk to them through the collection agency, have you seen private lenders offer options to essentially rehab the loan to get it out of default and get it back into repayment status? I can't get the loan to pay off the whole thing and it's only a few thousand behind.
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      While I have heard of lenders allowing a loan to be rehabilitated when in default, different lenders behave differently. Therefore, any anecdotal evidence that I have is not very useful to you in your situation.

      I think you have no real options other than speaking with the lender or collector and trying to work out a solution. If your offer to catch up is not accepted or you don't have the means to meet an offer that is made to you, you may need to consult with a bankruptcy attorney, to see what kind of repayment terms could be worked out under the supervision of the bankruptcy court and how the size of your payment in BK compares to the maximum amount a creditor could garnish from your pay in your state.
      0 Votes

  • 35x35
    Sep, 2011
    Terrance
    Do private school loans fall off your credit score
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      Private student loans are treated no differently from any other consumer loan. See the Bills.com resource Student Loans on Credit Report to learn more.
      0 Votes

  • 35x35
    Sep, 2011
    Erin
    I have been unemployed for some time now as I was laid off due to the economy. I have been searching for a job, and depleted the max unemployment pay allowed. I was given deferment on my private student loans for a few months, but they say I am not allowed to have any more. I just lost my home, and I do not have any money to pay for the student loans. Are there any other options? When I explain my situation to the call reps, they could care less and say I have to pay. The amount of private student loans is around $30,000.
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      The options for private student loan borrowers in default are limited, as are the options for the lenders. If the lender does not have a deferment option, then delinquent borrowers can only sit and watch as their credit score decreases.
      1 Votes

  • 35x35
    Sep, 2011
    Glenski
    Hi, I just received a court summons for a defaulted student loan. It says that they will garnish my wages, wait until I have a job to garnish my wages, etc. My question: What does this all mean for me in the future? (If this actually happens I mean, I haven't gone to court yet) I understand what this action and a lower credit score means for my ability to buy a house/ car, but I've never planned to do those sort of things anyway. What I'm really concerned about is how this will affect my career. I've found a job teaching english abroad that would pay enough for me to pay off all my debts in a shorter amount of time. Does wage garnishment prevent me from choosing where I work and what I do? Also does a court judgement like this go on a criminal record? Sorry if these sound like silly questions, but I am seriously uninformed...
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      The US court system is split into two categories — civil and criminal — generally speaking. We all have an idea of what types of cases appear in a criminal court. Civil cases are a little murkier because they are not the subject of popular movies, television shows, and books. Civil cases concern disputes between two or more parties over contracts or duties.

      If a consumer fails to pay a credit card bill, a medical debt, a car loan, payday loan, or a mortgage, the lender may bring the case to a civil court. Civil cases do not appear on a criminal record, but may appear in a consumer credit report.

      Federal law prohibits an employer from terminating the employment of a person who has one garnishment filed against them. Some states expand that protection to outlaw an employer from firing an employee who has more than one wage garnishment.

      Some employers conduct a credit check on prospective employees for certain jobs that require a high amount of financial trust. Bank tellers, comptrollers, and so forth come to mind. Most jobs do not need that kind of trust. A credit check is unnecessary for most of us and most employers.
      0 Votes

    • 35x35
      Oct, 2011
      Quentin
      How can they say they will garnish you when they haven't gotten the judgement yet? They have to get a judgement first. You also should show up in court to contest the loans and raie any defense. Also keep in mind The garnishment is at judges discretion and up to 25 % of take home pay. That takes place at a separate hearing after Judgement is awarded to the plaintiff. You have a better chance of getting the whole case thrown out if you just show up and raise a defense and show you did not benefit from the private student loans.
      0 Votes

  • 35x35
    Sep, 2011
    Elizabeth
    Hi Bill, Thanks a lot for having this website for us scared graduates to come to. My question is regarding the bill in congress. Do you think that we are any where near getting private student loans back to being able to be discharged in bankruptcy?
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      I wish I were able to read the tea leaves accurately. As usual, there are powerful interests that want to keep things as they are, where it is extremely difficult to discharge student loan debt via bankruptcy. Were I a betting man, I would not put my money on a legislative remedy being enacted, when I observe Congress unable to agree on much of anything. It is still worth monitoring, as one never knows how the political winds will shift.
      1 Votes

  • 35x35
    Aug, 2011
    Madison
    I received a letter in the mail from a law firm regarding my defaulted student loans. It says that I need to contact them within 30 days to handle the matter. Is negotiating the debt settlement with a law firm any different from any other creditor attempting to collect debt?
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      In your situation, it is not the fact that your debt is student loan debt, not that the debt is in the hands of a law firm, that is the key issue.

      To be sued for a debt, the law firm needs to be located in your state or hire an attorney in your state. There are law firms that function much the same as a collection agency, when collecting debts. If you are contacted by an out-of-state law firm, in general, the issue is less pressing and you can try to negotiate a settlement.

      With student loan debt, because the debt cannot usually be discharged in a bankruptcy, you have less leverage to negotatiate a settlement. That does not mean it is impossible, however. For instance, if you did not have ganishable income and few assets, but your family would give you the money to make a settlement, the creditor may find that compelling.
      0 Votes

  • 35x35
    Aug, 2011
    Don
    It is my understanding that a "private" student loan is not a government loan. It is a "bank" issued loan. I owe about $100K in private student loans through a couple different banks and Sallie Mae. If I end up defaulting on these, technically nobody can garnish my wages or raid my bank account correct? I thought they could only do that if it was a federal loan.
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      The process is different for collecting on federal and private student loans, but, if you default on a private student loan, it can definitely lead to you being sued, a judgment entered against you, and the judgment enforced by a wage garnishment, a bank levy, and liens on property.
      0 Votes

  • 35x35
    Jul, 2011
    TG
    I currently defaulted on a private student loan. i am open to matriculate into medical school next fall. i was initially told by the collection agent that i had the option to rehabilitate the loan but i just found out there is no rehabilitation for private loans. is it possible to get the loan out of default or current in the next 12-24 months by making monthly payments and be able to get loans for med school?
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      I think it will depend on what you can work out with your private loan lender. They may have a process for removing the loan from default status.
      0 Votes

  • 35x35
    Jul, 2011
    Courtne
    I am currently defaulted on 3 different private student loans, the collection agent says that the lender is no longer willing to work with me. He has offered a settlement. I have some money saved in a savings account but the using it would wipe me out. But they're saying they won't accept any amount for a monthly payment and that if I don't agree to the settlement offer it's in the governments hands and they could come after me for the little I have. Should I settle? And if I do settle what does this mean?
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      There is no fixed amount for a settlement. A settlement involves a negotiation between the debtor and the creditor or a collection agent the collection agent has hired or to whom the creditor sold the debt.

      Though it may deplete your savings, if you don't reach an agreement, it could lead to your wages being garnished. The collection agency needs to sue you and obtain a judgment against you, before your wages could be garnished. How much you could be garnished and what assets a judgment creditor can come after, depends on the collection and exemption laws in your state.

      I am not sure what the collection agent means by "it's in the government's hands," if you don't settle the debt. The government does not have anything to with collecting on your loan, aside from the fact that a suit would take place under the government's auspices and collection laws are governed by the state.
      0 Votes

  • 35x35
    Jul, 2011
    Tiffany
    I live in the state of Illinois and recently defaulted on a private student loan totaling about 26k.because of my student loans, my credit is shot. the lender is telling me I have to either pay the amount in full or get sued by them and have them garnish my wages. I recently got married and have the means to pay them the original amount due every month but they are not willing to accept anything but full payment. what are the consequences to my credit of having my wages garnished and whats the maximum percentage they can take?
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      My understanding is that the maximum garnishment in Illinois is 25% of your wages.

      If a creditor sues you and wins, it will obtain a judgment, the judgment will appear on your credit report, in the public records area of your report. This will harm your score.

      Is it the actual lender or a collection agency that is threatening you? Keep in mind that a debt collector can't harass you. For instance, it is a violation of the Fair Debt Collections Practices Act to threaten a debtor with an action that is not intended to be carried out.
      0 Votes

  • 35x35
    Jul, 2011
    Nai
    Hello Bill, I had a student loan go into default and trasferred to a CA 6 years ago. I put it in deferment, they 'lost' the papers, of which I did not make copies, and did not make payments for 6 mos. Anyway, I have been on a reasonable payment plan for at least a year now paying on time. However on my credit report I see 2 items: 1 - the defaulted loan. 2 - the exact same loan with the CA showing in collections. Is there something I can do to show update teh current status of that loan? Is that the accurate way to report a defaulted loan?
    0 Votes

  • 35x35
    Jul, 2011
    Jay
    I defaulted on a Citiassist Private Student Loan due to unemployment. However, I established a payment plan with the law firm that handles the account and have made consistent monthly payments on the account since November 2010. Recently, I enrolled in law school and classes will commence this August 2011. I was told by a law school financial aid officer that I have the right to obtain the original ink-copy of the promissory note from the law firm and if they are unable to furnish it, I am not required to continue making payments. She also said that the the terms of the original agreement are still valid (including in-school educational forbearance options.) The law firm mailed me a dark, grainy photocopy that was completely illegible! This seems highly suspicious. What steps should I take to resolve this? Am I still eligible for a forbearance? What options, if any, do I have now as a full-time student with no income and a defaulted private student loan?
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      As a person planning to become an attorney, you may appreciate this answer: Go speak with an attorney.

      Take a copy of the promissory note you received and ask your attorney if it meets the requirements of proving you owe the debt or not. If it does, find out if the attorney agrees with the financial aid officer's opinion that forbearance is an available option for you.
      0 Votes

  • 35x35
    Jul, 2011
    Violet
    I took out a private student loan in 2004. In 2007, I lost my job and stopped making payments on it. It was transferred to a collection agency, which I started making payments to, I declared bankruptcy in April 2009, the collection agency no longer withdrew any money from my account. In August 2009, I was discharge from my bankruptcy. I received letter from all my outstanding student loans after the discharge and I have been making payments on them as I agreed. However, I never received anything from the private student loan and was not contacted by them until 6/27/2011, in which a sheriff came to my door and handed me a notice for a law suit. I have 20 days to respond, and at this point, I really do not know what I can do. It says that I cannot contact them over the phone, and I do not have a lump sum that I can give to them. Is there any way that I can work this out? Or is there any suggestions you can give me?
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      Given the short time frame you are facing, I recommend that you speak with an attorney ASAP. Perhaps an attorney could negotiate a payment plan and prevent the matter from going to court.
      0 Votes

  • 35x35
    Jun, 2011
    Melis
    I have private loans from Citibank in default. I tried to make an arrangement for installments but the lady told me to i have to pay the full 44,000. I live overseas, and not a US citizen. She told me that i have until friday, two days from now, to sort out my finances. I asked her if is there any other way that i can pay this loan monthly. She said no. She told me to get money from lenders and pay the loan, but with my salary am making no bank will give me $44,00 especially where i live. I am already paying loans (in the form of bank credit) here in my home country since i left US. I took bank loan in my home country to be able to to pay the tuition and get my degree. I can only pay so much! i have the intent to pay my loan until the last penny, but i cannot pay it like the way they ask. I need advice for how to negotiate with the collector agency and resolve the situation. Thanks many for your help and time.
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      See the Bills.com resource Debt Settlement Advice to learn tactics and tricks to negotiating debt.
      0 Votes

    • 35x35
      Aug, 2011
      doc
      Dear Melis, If you're not US citizen or a green card holder who receives income from a US company, just forget about the loan. Live your life in full. I have almost 200K in Citiassist and I'm also a foreigner. Just don't listen to any lady or anyone who tries to intimidate you. There's NO way they can domesticate your loan. This default will not affect anything in your life - you even won't have any problem getting a US visa in the future. Very Best, Alex
      0 Votes

    • 35x35
      Aug, 2011
      Bill
      Your blanket statement that a US judgment-debt can't be domesticated to a foreign country is false and dangerous. The odds vary based on the country and the size of the debt, but it is most certainly possible for the debt to be domesticated in the foreign country and for collections to ensue.

      I agree that visa problems are unlikely to ensue for any debt outside of delinquent child support.
      0 Votes

  • 35x35
    Jun, 2011
    Crystal
    I have a private student loan that is in default, will this keep me from getting financial aid if I want to go back to school
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      The answer to your question depends on the type of student loan you seek:
      • Federal Student Loan: The applicant's credit score is irrelevant. The student's need is the determining factor.
      • Private Student Loan: The applicant's credit score is highly relevant. A low score may prevent the student from being approved for a private student loan.

      Go to the Dept. of Education Student Aid Web site to learn more about federal student loans.

      0 Votes

  • 35x35
    Jun, 2011
    In-Deep
    I have an accelerated Default on a Private Student loan. After contacting the lender "Wells Fargo" They are accepting only a settlement for half the amount ($8000) or monthly payments over 4 years for ($334) for the full amount ($16000). They tell me I have no other options and the loan will not be out of default until I repay in full or settle. Seems to me that I could just continue making payments as usual over 12 months to get it out of default as it has not gone to collections yet, but they will not accept that. Also my loan has been bought out several times and The only letter I got from "Wells Fargo" was the notice of default, not even a monthly bill from them once. Not that I've been trying to make payments or anything, but It seems like they might be pushing me over here. If I had the $8000 I would gladly pay but I'm on UI beny's and am starting school again in August. So i'm not making any money, Last year I made $11,900. I'm not worried about being sued, but Is there any thing I can do here? Is the lender doing any thing illegal? Can they really refuse a payment from me!?
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      Look to your original loan contract to see if the creditor is exceeding the rights you and the original lender agreed to. If so, then you may have a cause of action against the creditor.
      0 Votes

  • 35x35
    May, 2011
    Marc
    Hello, my private student loan with chase has gone into default. It is now with the National Recovery Agency and they said the only thing they can do is settle the debt for $38,000. I don't know what to do because neither my parents or me have that type of money. I told them I would be able to make some sort of monthly payments, but they said they weren't able to help me with that. I don't know what to do anymore.
    0 Votes

    • 35x35
      May, 2011
      Bill
      There are many people facing the same circumstances you face. Unfortunately, there are not a lot of options. If the collection agency is not willing to work out a monthly payment with you and you can't come up with what the what is demanded to settle the debt, it is possible for the collection agency to sue you. If that happens and a judgment is entered against you, your wages and bank accounts could be garnished. How much of your wages can be garnished depends on the collection laws in your state. Review the chart on the collection laws page to see how much of your wages are exempt from collection.
      0 Votes

  • 35x35
    May, 2011
    Benjamin
    I am in a sticky situation. My fiance has over 100K in private student loans her parents have taken out, with the last 30K from a forgery on their part. I have encouraged her to sue for the 30k, and we have begun that process. We live in Texas, and I am unsure of how to handle our finances after we get married. Can these creditors come in to my bank accounts and take the money or can they only get hers (after we marry with seperate bank accounts)? We are just very worried, we have our own student loans that we are paying off and we intend to not pay anything for her parents debts. Thanks for any help you can give.
    0 Votes

    • 35x35
      May, 2011
      Bill
      Consult with a Texas lawyer who has family law experience. The answer to a $100,000 question deserves research and analysis by a lawyer licensed to practice in Texas, which I am not. Ask the Texas lawyer if bankruptcy will remove liability for the $100,000 debt. Regarding suing the parents, I agree with that tactic. Student loans are meant to benefit the student, and there is no justification I can imagine for redirecting $100,000 in student loans on something other than a person's education.
      0 Votes

  • 35x35
    Apr, 2011
    Craig
    Bill, I have a private student loan and while I defualted I am and have been paying a collection agency $225 a month. I am almost done. My question is: Is there a 1098-E form that I should be receiving from the collection agency so I can take my interest deduction on my tax return? The collection agency indicates that my payment of $225 per month does not touch on interest. That makes no sense to me. My $2700 over the year should have some interest or at least a deduction for tax purposes, shouldn't it?
    0 Votes

    • 35x35
      Apr, 2011
      Bill
      If you agreed to settle your private student loan for less than the balance owed, I agree with the collection agent and do not believe a 1098-E applies in this situation. However, if your collection agent is adding interest to the balance, or if the amount you are paying is for the full balance due, then I believe you should receive a 1098-E. Consult with a tax attorney, who will research the case law on this issue, and can advise you precisely.
      0 Votes

  • 35x35
    Mar, 2011
    Joe
    I have $48k in private school loans through Access Group that recently went into default and are now being served through Diversified Collection Services. Over the phone, DCS has indicated that I can settle for 80% of the original amount if I pay by March 31 (which I cannot afford to do) or pay a good faith amount (20%, 35%, 50% of the remaining balance) and amortize the balance over several years. I was told that I could pay down the remaining balance faster with no penalty. Can you please offer some guidance? I called Dave Ramsey and he told me to not pay a good faith amount and tell DCS that I would send them a check for $2K every month. I am the only signing on these loans, but I wonder if this will have an impact on my spouse's FICO scores. Thanks
    0 Votes

    • 35x35
      Mar, 2011
      Bill
      It is difficult to make a meaningful observation without knowing more about your financial circumstances. Making a $2,000 monthly payment sounds like a good idea — if you can afford it. However, if you were not paying your student loan before, can you afford $2,000 a month now? The real question is what can you afford realistically ?

      If your spouse is not a co-signer, his or her FICO score will not be impacted by any delinquency on this account. If you live in a jurisdiction where community property laws apply, then if a creditor sues you and your spouse and wins, then your spouse's credit score will be harmed.
      0 Votes

  • 35x35
    Feb, 2011
    Chris
    My private student loan has been written off as a bad debt and placed with a collection agency. The collection agency has asked that I make a lump sum payment to settle for less than the full amount and they are pressuring me to make the payment over the phone. I'm not sure about this and have tried to work with the original creditor to make a payment with them but I am told they cannot help and that I need to work with the third party agency. The creditor says they no longer hold the note to my loan, that the third party agency holds it, while the third party agency states they do not have the note. They also want me to sign an agreement releasing them and the original creditor from any liability. How do I go about re-paying, and who should I pay?
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      The second-to-last sentence in your message gives me pause. Why on earth would a collection agent require a release from liability for a settlement agreement? This is a giant, waving, red flag that something is amiss. Consult with an attorney, and bring all of the documents relating to the debt and the proposed settlement agreement to your meeting. Yes a lawyer's time is expensive, but is far cheaper than signing a contract for a non-settlement for less than the balance of the loan, only to discover the collection agent was unscrupulous, misled you, and sold the balance of the debt to another collection agent. I am not saying your collection agent is unscrupulous, but honest collection agents do not ask consumers to waive their rights.
      0 Votes

    • 35x35
      Feb, 2011
      Chris
      Would the following be alarming as well? Except as modified in this Settlement Agreement, the provisions of the Note remain in full force and effect. I thought a Settlement Agreement would satisfy the debt, therefore voiding the the original Note, so why would the provisions remain in full force and effect??? Thank you for your response!
      0 Votes

    • 35x35
      Feb, 2011
      Bill
      Impossible to say without reading the entire settlement agreement. Taken out of context, a snippet from almost any contract can be alarming. That is why I recommended consulting with a lawyer in my earlier response. He or she will be able to read all of the documents involved, and can advise you accordingly.
      0 Votes

  • 35x35
    Feb, 2011
    Nicole
    I have gone into default with Citi-assit private loan... and i just filed my taxes....can my refund be taken?
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      I am not aware of a way for a private student loan lender to get a levy on a government tax refund. To get a levy against you, the creditor typically needs to sue you and then obtain a judgment against you. A judgment from a private student loan lender would be enforced by a wage garnishment, a bank levy, and possibly by filing a lien against you, depending on the protections that exist in your state laws. See the Bills.com Collection Laws & Exemptions page to learn more about exemptions in your jurisdiction.

      If it is a federal student loan, one that is guaranteed by the federal government, then being delinquent can lead to your tax return being diverted to pay the debt. Even if you had just gone into default on a federal student loan, I believe that your refund from this year would be safe, because you would have received your refund before collection efforts will have progressed as far as coming after your tax refund. It is next year's refund that would be at risk, if you did not straighten things out.
      0 Votes

  • 35x35
    Feb, 2011
    Linds
    I have both private and federal loans though Sallie Mae. On the 7th of last month they called and said I had to pay x amount of money or I would defualt. So I did. Then in the middle of last month I get a notice saying if you don't pay by January 30th you will defualt. So, again I paid them over the phone on the 28th. Now a collection agency is calling. I called Sallie Mae and asked why I went into default and was told that they only applied the payment on the 28th to one of my loans, and therefore I had 4 loans defualt. I told the lady that I wasn't told the payment would only be applied to one loan, and was told I just had to pay $220 to bring my account current, and she replied with "I am not the rep you talked to, so call the agency who has your loans because I can't help you." Help please!!!!!
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      I confess I am on two minds about your message. On the one hand, it strikes me as unfair that Sallie Mae would notify you that two of your loans were delinquent, you showed a willingness to bring your account current, and then Sallie Mae sold a different delinquent collection account to a collection agent. On the other hand, I have to point out that you are responsible to keep your student loan payments current. Sallie Mae's Web site should indicate the status of your loans if you chose the paperless option, or your monthly statements will show the same information.

      What do you do? It is likely the collection agent bought the account for pennies on the dollar. Negotiate a lump-sum payment to settle the account, or negotiate a new payment plan.
      0 Votes

    • 35x35
      Mar, 2011
      Jessica
      I been in great standing with Sallie Mae since 2007 until August 2010. I got married, relocated, and lost my job. The first thing I did was call Sallie Mae to let them know. I honestly received about 6 calls a day and picked up EVERY SINGLE TIME and explained my situation EVERY SINGLE TIME. I was told to pay a 3 month foreberance fee of $150 (which I was able to borrow and pay). A month later I received a call from them saying I have defaulted. I explained how I was told it was a 3 month forebearence and I just paid the fee. Basically they didn't take my word for it. And of course I was told if i pay another $150 they will (i did not have the money to do it at that time). the following month i was told to pay my monthly payment of $142 for February and call any day in March and ask for a 3 month forebearance and pay the $150 I will be current and I won't have to pay until June. well in March I called with the $150 to pay for a forbearence in order to get caught up and back on track (which I will be able to pay my monthly payment now having a pt job) the rep told me the other rep misunderstood and that PRIVATE loans does not qualify for forbearence. I explained to him this is the 3rd time i was told i am able to hold my loans for 3 months by paying the fee and why are you guys doing this to me...he then told me, if i made 3 consecutive payments in a row, my account will go back to current and my reg payments will start. Keep in mind my payments are $142 a month, I was in default for $562 and already made total of $442 which could've been applied and i would've been current. And he rushed me off the phone and steadd cutting me off. Am I able to take action for this? I was lied to and mislead. And it's only been 4 days since I paid them $142 and they are still calling me! I am debating on giving them another dime right now. What can I do about this? I rather them sue me at this point because this is ridiculous
      0 Votes

    • 35x35
      Mar, 2011
      Bill
      You should seek a free consultation with an attorney, as you are not being treated fairly or consistently. The attorney will advise you whether you have a cause of action against the lender and lay out the steps you can take to make proper arrangements to repay the debt and to receive a fair accounting of how the fees you paid to obtain the forbearance were applied.

      It is good practice to keep detailed notes when dealing with this kind of issue. Note the date, time, with whom you speak (getting an ID#, if possible), and what you are told. The more detailed and contemporaneous your notes are, the more valuable they are. Also, when you are being treated rudely or improperly by a customer service representative, request to speak with a supervisor.
      0 Votes

  • 35x35
    Feb, 2011
    Kyle
    My girlfriend has over 150K private student loans from Access Group. She also has credit card debt and other debt. She only makes 17K a year as a tutor. Access Group knows of her situation and she has tried to negotiate, but their minimum monthly payment is more than she can afford. The only forbearance program Access Group provides is a maximum of 6 months, and the last time she applied for forbearance, it was not granted. There is no reason to believe that her income will rise significantly in the next few years. So, even if she did get the 6 month forbearance it would not help in the long term. My question is: Is it better for her to just default now in order to get the loan into a government rehabilitation program that will allow more affordable monthly payments? Is there any reason to continue to try to make unaffordable monthly payments when there is no reason to expect her income to rise in the future, and she may be forced into default eventually anyway?
    0 Votes

    • 35x35
      Feb, 2011
      Bill
      Are you certain that she would receive a more affordable payment were she to default on her payments? If so, and she could afford the revised payment, that is one option.

      She may want to speak with a bankruptcy attorney. It is difficult, but not impossible, to discharge a student loan debt through a bankruptcy. Given the size of her debts, she should look into that possibility.

      Also, she should look into what are called 'income contingent payment plans. Income contingent payment plans examine her monthly income and how much she owes in total student loan debt. Each year, her income is re-examined, to see if she can afford to increase her payment. Payment terms on an income contingent payment plan can be extended to 25 years. Any balance that remains after 25 years is forgiven. Any debt that is forgiven will result in a 1099 being issued for forgiveness of debt, which can result in an income tax obligation.

      The only good reason I can think of to continue to make unaffordable payments would be if the harm that could be caused by a creditor's collection efforts post-default would be worse than the unaffordable payment currently being made.
      0 Votes

    • 35x35
      Feb, 2011
      Craig
      I live in PA and I defaulted on a private student loan in November 2009. I was contacted by the collection agency MRS associates and they demanded payment (about 20k). I did not have the money so I gave them as much money as I could (about 4k) for fear of being sued. Ever since then I have been making monthly payments of $200. I am still in school so I will not be able to pay more than $200 a month for quite some time (I defaulted while in school because I took 2 years off and then went back to school). At the time I thought I was paying my loans to ACS on time but turns out I was only paying my federal loans and never made payments on my Private loan and that's how it went into default status. Anyway, can I be sued while I am still making monthly payments? If so, is there a time frame in which I can be sued all while continuing to make $200 a month payments?
      0 Votes

    • 35x35
      Feb, 2011
      Bill
      Let us say for the sake of argument you signed a contract whereby your loan's monthly payment was $100. After a few months of paying $100, you decide to start paying $5. The creditor has the right to sue you for breach of contract because you send less than the agreed payment.

      My question for you is, "What amount did you agree to pay each month in the original or subsequent contracts?" If when you sent the creditor the $4,000 it agreed in writing to accept $200 as a monthly payment, then I think it is reasonable to assume your chances of being sued are zero. On the other hand, if you agreed to pay $400, and there was no modification of that contract, then there is a chance you may be sued for breach of contract.
      0 Votes

  • 35x35
    Jan, 2011
    Brian
    I had defaulted on my private student loans back in 2002. I had tried to set up a payment plan with the credit agency in Nov of 2004 but could not continue the payments as they were looking for large down payments and the monthly payments were too high. I had not checked my credit in several years and have recently tried to find my student loan debt to start trying to make payments on it. when i pulled my credit report, they student loans no longer exist. the primary lender shows that they were paid in full or sold to another lender, but the credit agencies that took over the loans are no longer on my credit report. I have no idea who the collection agencies were that were handling the loans. How can i find out where my lonas are at this time, or if they even exist anymore? the loans were in NY where i believe the statue of limitations is 6 yrs.
    0 Votes

    • 35x35
      Jan, 2011
      Bill
      A credit report is a document with limited scope and almost negligible legal significance. For example, there are countless loans between friends, family, and small businesses that are never reported to the credit reporting agencies. The fact that a debt appears on a credit report does not mean the debt is owed. The opposite is also true.

      A delinquent consumer debt, which is a called a derogatory in the credit report trade, can appear on a credit report for 7½ years from the date of first delinquency. That rule is a federal law. After that time, the debt must be removed from the credit report. However, that does not mean the statute of limitations has expired on the debt. The statute of limitations is set by each state, and these vary from three to 15 years depending on the debt and the debtor's state of residence. Therefore, just because the debt, which is called a collection account in the trade, does not appear on a credit report does not mean the statute of limitations has run on the debt.

      Regarding your questions, if the debt no longer appears on your credit report, I do know know of any way to learn which collection agent owns your collection account. Collection accounts seem to be bought, sold, and traded like baseball cards, and coincidentally have almost the same value. Eventually, a collection agent may choose to contact you about the debt. Be sure to validate the debt because the collection account is almost certainly a bare account.
      0 Votes

    • 35x35
      Jan, 2011
      Tia
      I have a question: I'm currently trying to avoid defaulting on a private student loan in the future. Right now, my private student loan from Chase is in deferment. However, the deferment ends next month. I spoke with Chase recently. I was trying to obtain a second grace period extension (or deferment) from them. I obtained my first one in October. However, when I talked to Chase I made a huge mistaken: I answered some questions wrong, and ended up being denied a second deferment over the phone. In fact, the person told me to call Chase again after I receive my first repayment request from them, so that I can see what other options I have. But, why should I let myself get into that situation? I cannot afford to repay them. I'm unemployed, and my monthly income is very low. What "other options" can they possibly have for me after they have started to bill me? And, what should I do about this situation?
      0 Votes

    • 35x35
      Jan, 2011
      Bill
      Tia, there are not a lot of good options, given the circumstances you describe. I don't know what Chase will propose, when you contact them after you receive the repayment request, but I don't see the harm in speaking with them. If your sole source of income is unemployment, then you don't have to worry about a garnishment on that form of income, as it is protected. It is possible for collections to lead to a bank levy, if you are unable to work anything out. It could lead to a wage levy, if you start working.

      Currently, it is very difficult to discharge private student loan debt in bankruptcy, due to changes that were made in the bankruptcy law back in 2005. There were efforts last year to change the law, making it easier to include private student loan debt in a bankruptcy Chapter 7. The efforts to pass the law did not succeed, but it could be something that happens in the future.
      0 Votes

  • 35x35
    Dec, 2010
    James
    After graduating in 1999, my father and I made an agreement. I would pay the big federal student loans back (in excess of 35,000) and my father would pay the private Hinson Hazelwood student loan back (about 13,000). My loans are in perfect status. In 2007 my father developed cancer that quickly developed into stage 4. Since 2007 he has defaulted on just about all of his debt. Unfortunately for me, this also included my private student loan he promised to pay. I can't blame anyone. I should have thought about this loan but it just never crossed my mind. Prior to the cancer he had made 50+ consistent payments and had almost paid it off. With all the correspondence going to my father in Florida, I never realized that the loan had went into collections and a judgement. Becasue I'm a Jr., they served my father with the order to appear in court. We have the same name so I assume they thought he was me. In reviewing my credit report, I noticed the account was in collections and immediately contacted the loan place and set up payment arrangements. Here's my problem. I was 6 months into building a home when this hit my credit report. The mortgage lender said they can't approve an FHA loan with a student loan in default. Is this an issue with just this particular lender or will I not be able to close on the home that my family has spent 6 months building? Without this on my credit, my credit was a little above a 700 which isn't too bad. Can mortgage lenders get around this? Even the student loan collections manager said he'd give me a good reference so that I could get my home. Please tell me there is a way to close on my home.
    0 Votes

    • 35x35
      Dec, 2010
      Bill
      There are no perfect borrowers. Write a letter "to whom it may concern" expressing all that you did above and include facts such as dates, amounts, and names. You want to express the message that the delinquent account was due to events beyond your control, and once alerted to the situation you started taking steps to resolve it. Your mortgage underwriter has some flexibility in approving or denying your mortgage. Your mortgage will be approved if your letter is convincing.
      0 Votes

  • 35x35
    Dec, 2010
    Stephanie
    I took out a private student loan 4 years ago with my mother as a co-signer. We have exhausted all options in postponing payments (deferment & forebearance). Because of financial harship both my mother and I can not afford the monthly payment. I understand we can be taken to court..what is the worst possible outcome & how soon can it take affect??
    0 Votes

    • 35x35
      Dec, 2010
      The "worst possible outcome" varies by state because each state offers different statutes and case laws protecting and creating liability for consumers. See the Bills.com resource Collections Advice to learn the general rules.
      0 Votes

  • 35x35
    Dec, 2010
    Lindsay
    HI. Due to unemployment I have now been turned over to collections for private sallie mae loans. The collection company says that they bought the debt for 60 days and now that time is up and legal action is to be taken.I am unable to come up with a downpayment that satisfies them. In Kentucky what could happen? If I am head of household can they garnish my wages? HOw about my taxes? I have 3 young children I raise alone and am very worried about how this will affect us. I also have a cosigner on the account that is unwilling to respond to any attempts I try to work something out or to any of the collection attempts and the collectors have told me that there is no contact from the cosigner. Is he not also faced with the same debt collections? Thank you
    0 Votes

    • 35x35
      Dec, 2010
      See the Kentucky Legal Aid Society's Kentucky Wage Garnishment page to learn more about your rights and liabilities regarding wage garnishment. Regarding your co-signer, if the collection agent can find him or her, you can bet the collection agent is attempting to collect the debt from that co-signer, too.
      0 Votes

  • 35x35
    Oct, 2010
    Lorenzo
    Hello, and thanks for all this useful info. Pardon my very basic question, but I just need to clarify something. I took out numerous federal Stafford loans several years ago, which I then consolidated with Sallie Mae. Does that mean my loan is now private rather than federal? Meaning, if I default, I'll be looking at consequences for defaulting on a private loan rather than federal loans. Right? If it is a private loan, can they get their hands in my bank account? And finally, I live permanently outside the US -- what does default mean in terms of foreign property and bank accounts? I can't find any info on that. Thank you in advance -- your help is much appreciated!
    0 Votes

    • 35x35
      Oct, 2010
      Bill
      Sallie Mae stopped consolidating federal student loans in 2008. Generally speaking, people consolidating federal student loans did so to lock in at a fixed rate. The credit crisis in 2008 caused investors to flee from student loans and Congress simultaneously removed incentives for lenders like Sallie Mae to participate in federal loan consolidation. It is likely but not certain your consolidated loan is private. Review your loan contract to be certain. If the language is unclear, take your consolidation contract to a lawyer who will decipher it for you. Or, call Sallie Mae and ask a customer service representative to explain the terms of your loan.

      Regarding residency and a judgment, yes it is possible for Sallie Mae to pursue you overseas. Read the Bills.com resource Domesticate a Judgment Overseas to learn more about the process and likelihood of a US creditor domesticating a judgment outside of the US.
      0 Votes

  • 35x35
    Oct, 2010
    lynn
    My 26 year old son has a private student loan with sallie mae which will go into defaut any day now. I have been helping him with the payment over the last year inwhich he was in a repayment program with a reduced rate.But we missed a few payment about 3 within a 10 month period. Sallie Mae took him off the rate reduced plan now the payment went up to 170.00 a month.He also has 4 federal loans with sallie mae.My son told me to let the private loan just default.And he would do a re hab program for the federal loans.We live in the state of Texas the loans were in Arizona at a private school. What do you think because my son does not have a clue. He has a learning disability and is very imature.I am retired and cannot afford to pay this bill. He works for min. wage and lives with whom ever will let him stay.What should I do because I have been the one talking with sallie mae What should I do. Can I make reasonable arangements with the ca when it gets to that point or what?
    0 Votes

  • 35x35
    Oct, 2010
    Amber
    I live in Florida and I have a private loan with Sallie Mae and it is about to default; will Sallie Mae take my income tax if it goes to collections? I know if you are head of house hold in FL they can not garnish my wages, which I am. Thank you!!!!
    0 Votes

    • 35x35
      Oct, 2010
      Bill
      If you were asking about a federal student loan, the answer would be yes. Your loan is private, and unless the private student lender has a judgment that allows it to levy the contents of your bank accounts, the answer to your question is no.
      0 Votes

  • 35x35
    Oct, 2010
    Kelli
    I, too, am having issues with Citibank Student Loans. I filed a Chapter 7 bankruptcy in May (insurance refused to cover some medical bills) and had it recently discharged in September. My lawyer included my Student Loans - I went to make my first payment since bankruptcy and was told that I was in default. I have NEVER missed a payment and have always paid in full and on-time. My other student loan (Sallie Mae) did not place me in default and I was able to resume my payments as normal. I'm not sure what to do since I am a candidate for a Police Academy and cannot have ANY delinquent debts (hence the reason for the bankruptcy). Any insight would be greatly appreciated.
    0 Votes

    • 35x35
      Oct, 2010
      Bill
      Kelli: Go up the chain of command at Citi regarding this matter. Explain your situation to each manager and manager's manager until you find someone who says something more meaningful than, "There is nothing I/we can do." Yes, there is something they can do, and it is them finding a checkbox on your account that states "default" and changing it back to "current." Take careful notes of each conversation, and write down the name of each person you speak to and their telephone extension number. When you do find the manager's manager who finally helps you, send them a polite thank you letter that reviews the action they promised to take. If you get nowhere being polite, then involve your bankruptcy attorney.
      0 Votes

  • 35x35
    Oct, 2010
    DawnKo
    Thank you very much for your prompt reply. I apologize for being vague on who is contacting me. Your inference is correct, as Citi sold my loan to a collection agent, I did not include the loan in my bankruptcy since I was currently in school, and I was referring to the collection agent that is contacting me. I am just disappointed and overwhelmed to receive notification from a collection agency that my loan has defaulted and that I may need to negotiate a payment plan; especially since I am currently a full time graduate student, working part time, and that it was my understanding the loan would continue to be in deferment status until I complete school in December 2011. Thank you again for your feedback. I really appreciate it.
    0 Votes

    • 35x35
      Oct, 2010
      Bill
      Dawn: If Citi sold your account to a collection agent, it is possible although unlikely that Citi could buy it back. A collection account is just that -- it is not something someone consumes and can never be returned. As I suggested to Kelli, go up the chain of command and see if a manager's manager can buy your account from the collection agent. If that's impossible -- the horse is out of the barn -- then you need to do the best you can with the new owner of your collection account. See an answer I wrote for a fellow reader who has similar circumstances: Private Student Loan Settlement.
      0 Votes

  • 35x35
    Oct, 2010
    Dawn
    Hi Bill, I have a similar situation from a previous post; I was contacted by a collection agency telling me I defaulted on one of my private student loans (Citibank/CitiAssist) and demanding payment immediately. I also contacted Citibank and they said I defaulted on the loan because I filed for Chapter 7 Bankruptcy. At the time of filing bankrutpcy I was not behind in my payments to Citibank or in default and still in graduate school. I have another year od school remaining and they are demanding I pay 15,000. Since my case was discharged last year, can I just provide them with my attorneys number? Is there anything I can do since I have been in school this entire time? Citibank will not speak with me regarding this matter and continues to request I speak with the creditor. I really appreciate any advice on this matter. Thank you!
    0 Votes

    • 35x35
      Oct, 2010
      Bill
      I am guessing -- note that word choice -- that Citi wrote-off your student loan and sold or assigned it to a collection agent. My assumption would explain why Citi refuses to speak with you and instead refers you to a third party. I am also guessing that you did not include your student loan in the bankruptcy and claim you were suffering an undue hardship. It is unclear to me who the "they" are that demands $15,000 of you. Is it your school or the collection agent? If it is the collection agent, then negotiate a payment plan. If it is your school, then I have nothing helpful to say.
      0 Votes

  • 35x35
    Sep, 2010
    Bill
    After 10 years the debt no longer appears on the credit report. What happens after this time frame is dependent on the laws of your state, in terms of the lender's ability to collect on the debt. Most debts have a timeframe in which they must be collected or else they expire due to a statute of limitations. The length of time until a debt expires varies from state to state. To learn more about your state’s laws collection of debts, I encourage you to visit the Bills.com State Consumer Protection Laws and Exemptions page. Also, remember that the statute of limitations starts from the date of the last payment to the creditor. If a debtor makes a payment on an expired debt, it is possible to bring that debt back to life and to re-start the statute of limitations afresh.
    0 Votes

  • 35x35
    Aug, 2010
    Mike
    I've got some questions about a private loan. I'm confused about what you said earlier, regarding the default staying on my credit report for 10 years. What happens after ten years, it's off my credit report but I still owe the money and can be garnished? I was under the assumption that if I defaulted the default would be on my credit report forever.
    0 Votes

  • 35x35
    Aug, 2010
    Bill
    I suggest you take three actions. First, have a heart-to-heart with your co-signer about what you are doing to pay the debt. Disclose all of your finances and how you spend every dime of your income. Make the budgeting process collaborative because like it or not your co-signer is just as liable for the debt as you. Your co-signer may not be happy with the result, but at least there will be understanding. Second, go to the Bills.com resource Consumer protection laws, exemptions, and statutes of limitations by state and find your co-signer's state of residence. Study the laws for that state so you can help the co-signer understand his or her rights and liabilities under state law. Finally, explain to your co-signer the last people to accept legal advice from are collection agents. The information collection agents tell debtors is usually incomplete or wrong, and is always self serving.
    0 Votes

  • 35x35
    Aug, 2010
    Mike
    hello i graduated last june and my private loans are delinquent since i haven't been able to make payments since my 6 month grace period ran out at the end of december. I've been harrassed by collectors but i barely started working and only part-time and they've contacted my father who co-signed for my loans and they told him if i don't pay the amount in full by the end of the month they'll move towards seizing the house. Is this legal? and what's the difference between a default and a delinquent loan if any?
    0 Votes

  • 35x35
    Aug, 2010
    Bill
    I suggest that you call the lender and explain your situation, seeing if you can obtain any flexibility in payment terms. In general, it is better to try and work in concert with a lender than to cease making payments without notice. You certainly do put yourself at risk of a wage garnishment, when you default on a student loan. Please see the Bills.com resource Collections Advice to learn more about your rights and liabilities.
    0 Votes

  • 35x35
    Aug, 2010
    Bri
    I have a private student loan through American Education Services. The total balance is about $63,000 with my monthly payment totaling $481.50. I am having a really hard time financially and cannot afford the payments. I have exhausted all alternative repayment options (low pay, no-pay, etc) and am now considering discontinuing my payments effective 9/1/10. What should I know before doing this? Is there a garnishment option in place? If I am sued for the balance, how do the courts typically determine one's ability to pay?
    0 Votes

  • 35x35
    Jul, 2010
    Bill
    Communicate with your creditor and negotiate a payment plan that will bring you current with your payments. Because private student loans are offered by different banks, each lender has a different policy for remediating a delinquency. Regarding consolidating private student loans, I am aware of lenders that do so. However, I have no experience with them, nor have I working with clients who have, so I have no basis to form an opinion. This is not to say they are good or bad -- I simply have no opinion about them.
    0 Votes

  • 35x35
    Jul, 2010
    Joshua
    If I have defaulted on a private student loan, what is the best way to rehab it back into normal status? Is this possible? Can you consolidate defaulted private student loans?
    0 Votes

  • 35x35
    Jun, 2010
    Bill
    I do not have unique insights on methods of preventing or resolving a default on private student loans. See the Bills.com resource Default on Private Student Loan for an extensive discussion with readers on this subject.
    0 Votes

  • 35x35
    Jun, 2010
    John
    I live in Michigan and I have private student loans of approximately 200k that are coming due November, 2010. I am currently seeking work now that I have graduated (May 2010), but I know I will not be able to afford the minimum payments. What options do I have available? What are the consequences I'm facing if I can't afford the payments? I know if I default there is a chance of getting sued, but could they also throw me in jail? And if I have a judgment against me, but still can't pay it, then what happens?
    0 Votes

  • 35x35
    Apr, 2010
    Bill
    Federal student loans are need-based, and the Dept. of Education bases denials on current federal loans outstanding, the default status of current federal student loans, the school the student is attending, and additional minor factors. Regarding your negotiation with the private student lender, see the Bills.com resource Debt Negotiation and Settlement Advice.
    0 Votes

  • 35x35
    Apr, 2010
    Bill
    Jason: I am not aware of any statute of limitations on either private or federal student loans.

    Readers: See the update to my message dated 03/29/2010 regarding the statute of limitations on private student loans.
    0 Votes

  • 35x35
    Apr, 2010
    Jason
    I defaulted on a private student loan I took out in 1999 that unfortunately for me wasn't explained well at the time. It was for 5 years yet I was in a 7 year program. I explained this later (6 years) to them but I was basically told too bad. Now it's 2010 and I'm thinking well I'm in the clear cause it's been more than 7 years (2004), yet it has affected my credit and that of my cosigner severely this many years later. What if anything can I do? Hasn't the statute of limitations ended for placing it on our collective credits?
    0 Votes

  • 35x35
    Apr, 2010
    Samantha
    i attended school in 2006 but i only went for 2 months. I made the mistake of not looking into what kind of grants that could be offered to families with low income. and the financial adviser knew that i was eligible but never "OFFERED" me any grants. however she manage to slap 2 federal loans on me and 2 private loans. and yet im still facing hardship. now 2010 i just consolidated my federal loans and now my private loans which are from the harassing money making giant Sallie Mae is sueing me over the 2 private loans which it is and i mean nearly impossible to negotiate with these people or to find help because no one will consolidate or help with private loans!!!! please somebody anybody help me with this big concern do you have any advice for me on what i can do for my private loans. i want to go back to school but fear what will happen if i do. will they give me more loans and i hope not? will i still be able to get grants?<-- i know the answer to that question. and will i ever get help for my private loans that are past default and ready for lawsuit??? please help!!
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    I am not aware of any statute of limitations on either private or federal student loans.

    Update: After conducting further research, I have not found any statute or court case that establishes there is no statute of limitations for private student loans. Accordingly, the state law set in the contract, or the residence of the borrower if none is mentioned in the contract, determines the statute of limitations for private student loans.
    0 Votes

  • 35x35
    Mar, 2010
    Adania
    Is there a statute of limitations on private student loans?
    0 Votes

  • 35x35
    Mar, 2010
    Mr
    welcome to Loan Service we offer loan to those on bad credit ,student looking for financial help and to companies with a very low interest rate and without collateral
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    If you do not know if your student loan is federal, then I do not know either. If the loan is federal, then your federal tax return is in jeopardy. If it is a private loan, then your federal tax return is safe, unless there is a court order to the contrary. I am confused by separate statements in your message. If the communique is from a collection agent, then it is unlikely that there is a judgment against you. If the message is from a collection agent and includes a court order, then there may be a judgment against you. Open a negotiation with the collection agent. Make a lump-sum settlement offer. Start at 10 cents on a dollar on the original amount and take it from there.
    0 Votes

  • 35x35
    Mar, 2010
    Chantel
    I had a student loan that a friends mother cosigned with me back in 1993 for truck driving school. I completly forgot all about it after I graduated. Now I just received my first letter in the mail that I now owe a collection agency 12,000.00 by April 1st. The original loan was only for alittle over 4,000.00. I dont believe this was a federal loan because I had a cosigner. Can my federal income tax be taken. In the memo part of the statement it said that is a A/R loan and no deferrment, cancellations, or forebarement is available. And that this is a judgement awarded to me, to pay interest and principal.
    0 Votes

  • 35x35
    Mar, 2010
    Vivian
    My husband co-signed on a private student loan for his brother a couple of years ago. His brother has not been the responsible person he promised he'd be. We made the first 5 payments, and always kept in touch with the lender. My brother in law has the $ to make the payments, but for whatever reason, has let the loan go into default. I got a call from the collections company who is taking care of the loan now, and they said we have 2 days to make payment arrangements or pay the full amount before they review and investigate assets. My brother in law has been notified, but I'm worried that he won't voluntarily take care of this problem. Once the collection's company starts the review, which types of assets can they come after, and will they go after my bother in law's assets first since he's the primary borrower? I'm very devastated, and unsure of what to do specially since we only have a couple of days to figure it out. The loan amount is $33k and they are willing to settle for 80% taking it down to $27k. we don't have that money! Please help. Thank you!
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    I want you to consult with your attorney on this matter because the facts in your case are complicated by your repaying the loan after the divorce. Listen to the legal advice offered by your attorney. He or she will interview you, ask follow-up questions, review your documents, and research California case law on your issues and your particular facts. Do not listen to the legal advice offered by a person with a vested interested in collecting money from you.
    0 Votes

  • 35x35
    Mar, 2010
    Brooke
    Does this law count for a private student loan? I cosigned the loan, according to the loan company they view that as a guarantee from me. So does that now make me responsible or can that california law still exclude me?
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    Brooke: Your message is a perfect example of why people should not believe legal advice from collections agents. The legal advice provided by collections agents is oftentimes misleading or just plain wrong, and is always self-serving. Here, California law is extremely clear on this matter -- upon divorce student loan debt is the liability of the student and not the student's spouse. Consult with the attorney who represented you in the divorce. I am concerned that you may have created a liability for yourself by starting to pay the debt after the divorce. However, this is a matter for your attorney to research.
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    Kristy: If your student loans are federal, review the Income-Based Repayment (IBR) program, and see the Dept. of Education's IBR calculator to determine if that program results in a lower payment. If your loans are private, continue to provide the creditor information about your financial situation so that it realizes that a $250 payment is reasonable, and that in your case a $900 payment is not.
    0 Votes

  • 35x35
    Mar, 2010
    Brooke
    I'm in California, co-signed on a private student loan for my then husband. We are now divorced, the divorce decree outlines him being responsible for the loan, I sent the decree to the loan company and it supposedly doesn't hold water with them. He of course now doesn't pay on the loan, so I am always scrambling to make a payment to keep it from negatively effecting my credit. I contacted the company to see if I can get my name off and because there was a forebearance, I don't qualify. I asked if there was a way for me to pay half and get my name off, they said no. How do I get my name off? If I can't make any payments at all and let it go, what will the consquences be for me and my credit? Will they sue just him or me too?
    0 Votes

  • 35x35
    Mar, 2010
    Kristy
    Thank you so much for the info. Well in the mean time, any ideas on how to get Sallie Mae to take a low payment as sufficient? Or just the best way to handle this situation? They want $900 a month and i can pay more like $250. Obviously everything is exhausted with them, they provide no more options. There's only one place left to consolidate Private loans with and that's Wells Fargo and the estimated payment is $900 as well. Its not fair that they have restrictions allowed on Bankruptcy but then they won't grant Income contingent for private loans but only for federal.
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    You may file for bankruptcy if a debt is current, in collection, or even if there is a judgment filed against you. So the answer to your question is, "yes." A non-lawyer can file for bankruptcy on their own, but I do not recommend it. The cost of a bankruptcy filing varies, and that is something to negotiate with an attorney. If your issues are simple and creditors few, the process can be completed in less than six months. However, the bankruptcy courts have been inundated with cases lately, and the process may take longer for a simple case. A case where you are claiming hardship on a student loan may take longer because I would guess -- note my word choice -- that the trustee will scrutinize your hardship claim carefully. The time-to-completion is really irrelevant because of the automatic stay that is in place that protects the debtor.
    0 Votes

  • 35x35
    Mar, 2010
    Kristy
    Thanks, I have done research and i feel i fall under the exception with Hardship. I also understand that if you go to court with the bankruptcy and it's denied, the judge might at least organize a payment plan that works with your budget. Which is what i need, if anything. So my question is can i go about with the bankruptcy paper work after it goes into default and into collections? It goes there at the end of the month. Also any idea how long the process would be and how much it cost to do the bankruptcy? Thanks
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    You may not be able to discharge your student loans in bankruptcy unless you can show a hardship. See the Bills.com article Student Loan Bankruptcy to learn more, as wells as the Student Loan Borrower Assistance Project Student Loans & Bankruptcy page.
    0 Votes

  • 35x35
    Mar, 2010
    Kristy
    Hi, I have been struggling to repay my Sallie mae private loans of $180,000.00 for 5 years. And they will not take any amount of payment as sufficiant. 900 or even 500 a month is too much. So it's about to default and they'll add on 20% wich is snout 43k. I'm looking into filling for bankruptcy based on the "due to hardship". My question is can I still fe br once it defaults and goes to collections??
    0 Votes

  • 35x35
    Mar, 2010
    Bill
    The time to negotiate how the derogatory comment will appear on your credit report was at the time you made the settlement agreement. After the fact I have not seen any creditors willing to change what is reported to the credit reporting agencies.
    0 Votes

  • 35x35
    Mar, 2010
    Christine
    I defaulted on a private student loan but the company offered me a "settlement". I paid them 17,000 dollars over three consecutive months and in turn, they didn't charge me their 6,000 dollar collection agency fee. However, because I "settled" they said that the "default" status will have to stay on my credit report. Is that legal? I'm having a hard time finding anything else on the internet!
    0 Votes

  • 35x35
    Feb, 2010
    Bill
    When you write, "I started using this company..." what do you mean and which company are you referring to? Obviously, what the creditor told you was self-contradictory -- you said you defaulted and the creditor said it will not negotiate, but then offered to settle for $37,000. The offer to settle sure sounds like negotiation. Regarding your question, that is not a fair one for me to answer. Some creditors act quickly and others will sit on their rights until the statute of limitations is about to expire. Predicting any one creditor's behavior is folly.
    0 Votes

  • 35x35
    Feb, 2010
    Chrissy
    Hi. I defaulted on a private loan for 40k in November and it went up to about 49k. I started using this company for them to negotiate. My mom is the co-signer she called the collection agency and they said there isn't no negotiating on private student loan once it's been defaulted. Is that true? They said we can settle for about 37k in which we don't have. How long does it take for them to sue?
    0 Votes

  • 35x35
    Feb, 2010
    Bill
    Look into a getting a loan from your 401(k).
    0 Votes

  • 35x35
    Feb, 2010
    Seth
    I have a defaulted student loan. I kept putting it off and they offered a forbearance. I submitted the paperwork and everything was accepted. In the midst of all this I come to find out there are "2" loans, then there are "3" loans. The forbarance only covered one of them till 2011 and one until three days from now. I receive a call from the inhouse CA from my lender stating the will settle for a great price, however still unreasonable to my wallet. When I try to ask about my forbarance I never get a straight answer as to what happened. This is seriously driving me crazy. Basically I am ready to let them "sue" me. I blurted out that I can do a hardship withdrawl from my 401k, but that would leave me oweing the IRS god knows what the following year. My conclusion is to offer monthly payments. I refuse to drain my 401k(and owe the IRS) to not even close out this loan. Any suggestions... if any of this made sense.
    0 Votes

  • 35x35
    Feb, 2010
    Bill
    A student who defaults on a private student loan is not ineligible automatically for a federal student loan. Federal student loans are need-based, and the Dept. of Education bases denials on current federal loans outstanding, the default status of current federal student loans, the school the student is attending, and additional minor factors.
    0 Votes

  • 35x35
    Feb, 2010
    Michael
    If you have a private student loan in default are you ineligible for a Stafford Loan?
    0 Votes

  • 35x35
    Feb, 2010
    Bill
    Andrea: You have nothing to lose by applying. However, I believe the default on the private student loan you co-signed on will doom your application for a federal student loan.

    Update: My original answer here was incorrect. As I mention in a later answer, a student who defaults on a private student loan is not ineligible automatically for a federal student loan.
    0 Votes

  • 35x35
    Feb, 2010
    Bill
    Michael: If the collection agent is not reporting accurate information to the consumer credit reporting agencies, then it is in violation of the FCRA, the Fair Credit Reporting Act. You may have a cause of action (a legal reason to file a lawsuit) if the collection agent persists in reporting incorrect information.
    0 Votes

  • 35x35
    Feb, 2010
    Bill
    Robert: A termination-upon-bankruptcy contract clause is not valid under the federal bankruptcy code, generally speaking. Consult with your bankruptcy attorney on this matter, and ask him or her if the creditor's action created an cause of action for you against the creditor.

    Update: After writing and posting the above, I conducted further research on this subject. Universal default or termination of bankruptcy may be allowed for private student loans, according to one secondary source I found.
    0 Votes

  • 35x35
    Feb, 2010
    Andrea
    I co-signed a private student loan for my brother 7 years ago. My mother also co-signed a private student loan with the same company for him. We just found out they are both in default. They are willing to settle the total $39,000 of the two loans for $25,000 divided into 3 payments. I don't know if my brother can come up with this money, I can't for sure. I was planning on returning to school and applying for federal student loans for myself. Will my brother's defaulted private student loans affect my federal loan eligibility?
    0 Votes

  • 35x35
    Feb, 2010
    Michael
    I have a private student loan that went into default. Will this prevent me from getting a federal Stafford loan? The CA says they will not remove the default status, like they do with federal loans, until it is settled completely, is this true or are they bullying me.
    0 Votes

  • 35x35
    Feb, 2010
    Robert
    I was just contacted by a collection agency telling me I defaulted on one of my private student loans (Citibank/CitiAssist) and demanding payment immediately. I contacted Citibank and they said I defaulted on the loan because I filed for Chapter 7 Bankruptcy. At the time of filing bankrutpcy I was not behind in my payments to Citibank or in default. I was planning on continuing to repay them via the terms of our agreement. Now the insurer of my loan want $11K immediately. How can Citibank move me into a "Deflaut Status" after I filed for bankruptcy? Aren't ipso facto bankruptcy clauses in executory contracts not valid? HELP!
    0 Votes

  • 35x35
    Jan, 2010
    Bill
    If you have a federal student loan, the answer to your question is "yes," the government can do so administratively. This means they can garnish your federal income tax return without a court hearing and court order. If you have a private student loan, the answer is "no," there is no administrative means for the creditor to do so. I am not aware of any means for a court to do so, either.
    0 Votes

  • 35x35
    Jan, 2010
    Nicole
    I have a private student loan that goes into default on 1/29/2010 and i just file my taxes will they be able to put a freeze on the tax refund for this year
    0 Votes

  • 35x35
    Jan, 2010
    Michelle
    I have a private student loan that is in default - I called Sallie Mae directly (who I have the loan through) and they offered to settle the debt for $2500 (I owe $6000) and even offered to let me make it in 3 payments over the next 3 months. It's a good deal but unfortunately - we can't afford those type of payments. I guess my point is - with this economy - some places are settling on private student loans.
    0 Votes

  • 35x35
    Dec, 2009
    Bill
    I have several concerns about the promises made here. First, I have yet to see a student loan resolved or negotiated for less than the original balance. This is because of the special status Congress has given student loans whereby they cannot be discharged in bankruptcy except under very narrow circumstances. Accordingly, student loan creditors have no incentive to negotiate for a lower payment to prevent the debtor from declaring bankruptcy. Second, the company in question is not a member of TASC or IAPDA. Membership in these organizations means the company adheres to rules of ethics concerning disclosure of terms and certain standards of customer service. I am not suggesting you avoid this company, but I think you should investigate all of their claims carefully. My guess -- note my word choice -- is that this company does not resolve, settle, or negotiate the debt for a lower balance but instead refinances the student loan with longer terms to lower the monthly payment. Readers: If you have any experience with this company please let us know about them below.
    0 Votes

  • 35x35
    Dec, 2009
    Sam
    I also have a private student loan in default and it has been turned over to a CA. I owe them around $7,000 which I just found out today. The CA contacted me and demand the amount to be paid in full within the next hour because it has passed 120 days and no payment plan could be negotiated. Im still a full time student with no job so I cant pay the full amount right away. They say they will just process it to my co-signer if I cant pay it in full. I saw this website call www. mydefaultedloans . c o m and contacted them and they say they could help me settle it for around $4000 and they can help me set up a payment plan of around a hundred a month. Does anyone know of this site and is it too good to be true? They say they will charge a fee of $750 and I must pay $250 first before they will contact the CA. Im still debating if this is a scam or not. Thanks for any helpPlease help
    0 Votes

  • 35x35
    Dec, 2009
    Bill
    Charles, I do not have any new or innovative ideas for you beyond what I told Jason and Amanda above on November 17. If you do not have the money to pay what the creditor demands, all you can do is convince the creditor that the maximum you can send them is the most they will get for now. The creditor does not want to sue you to collect on the debt. That is expensive, and if you really do not have the money they are left in exactly the same position they are in now. Negotiation is your best strategy.
    0 Votes

  • 35x35
    Dec, 2009
    charles
    I received a call yesterday that i have private student loan in default. They said the only way to keep from going to court is to pay it in full or put a large down payment(around 3000) and make monthly payments.Is there any other way i can take care of this without the down payment like rehabilitation like you can do with a loan through FSA. Thanks for any help
    0 Votes

  • 35x35
    Nov, 2009
    Bill
    Jason and Amanda: Your questions arrived at the same time and have the same issues so I will answer both of your questions here: A private student loan is not dischargeable in bankruptcy unless the petitioner files an undue hardship petition. Perhaps as a result of the special status student loans have, creditors and their collections agents are reluctant to negotiate settlements on student loans for less than the balances due. Read Collections Advice to understand your rights in the collections process. I also recommend you read Debt Negotiation and Settlement Advice. Your best course of action is to continue to try to work out a payment plan with the creditor, and communicate to them that as your personal financial picture improves you will become current on your payments.
    0 Votes

  • 35x35
    Nov, 2009
    Jason
    I just found out I have student loans in default. I am not working at the moment. I talk to the lawyers who now have my loans and they gave me two choices, pay the full amount or pay a good faith amount. Both of which I don't have and can not do. Do you have any suggestion for me on what I can do?
    0 Votes

  • 35x35
    Nov, 2009
    Amanda
    I have defaulted on a private school loan. The problem is I never received any type of statements, bills, notices, or anything stating that these loans were due to be making payments on. Now they are in default and the company wants $30,000.00 or down payment in the thousands with monthly payments of hundreds. I have been making what they call good faith payments. I work part time due to budget cuts and my co-signers are going through collections and currently have judgments against them. I want to make payments to them but they wont accept what I can pay (which I really cant afford anyway, Im borrowing that payment) as a payment and I cant get a loan? They want the tomorrow or they said they will be taking me to court. What can I do?
    0 Votes

  • 35x35
    Sep, 2009
    Bill
    To my knowledge, the only way a private student loan can be discharged in bankruptcy is if the borrower files an undue hardship petition. My guess (note my word selection) is that the bankruptcy is not yet settled, and the private student loan creditor is respecting the automatic stay that is in effect on the bankruptcy filer's accounts. I recommend you contact the co-signer and ask him or her if he or she is filing an undue hardship petition. If so, ask if the petition been accepted and ordered by the court.
    0 Votes

  • 35x35
    Sep, 2009
    Zara
    I have a private student loan which went into default last year because the co-borrower filed for bankruptcy. I tried calling the lender to see if something could be worked out but was told there is nothing I could do. There are no collection calls or anything. Should I expect them to call in seven (or ten) years? Or should I assume that the debt has been somehow cancelled?
    0 Votes

  • 35x35
    Sep, 2009
    Bill
    Contact the lender and explain your circumstances. They may offer a deferment option while you get back on your feet again.
    0 Votes

  • 35x35
    Sep, 2009
    Betty
    I have a private loan and have managed to eek out my monthly payments. I have been unemployed for over 1 year but have used my UI to pay my monthly payments. I am now out of money and UI benefits and cannot pay my private loan. What can I do? If I default, what are the consequences?
    0 Votes

  • 35x35
    Aug, 2009
    Bill
    I do not understand what you mean when you write, "I was notified after 10 years by the college I owed no money." Does this mean you paid off the debt in its entirety? If not, do you mean the college wrote-off the debt because you did not keep up with your payments? To learn more, see the page Private Loan Collections, which is available at the Student Loan Borrower Assistance Project.
    0 Votes

  • 35x35
    Aug, 2009
    Fred
    I have a private student loan received in 1993, I was notified after 10 years by the college I owed no money. I am now being hounded by a collection agency for this debt. Should I call the CA? Is this recovery technique legitimate?
    0 Votes

  • 35x35
    May, 2009
    Bill
    It will be on your credit report for 7-10 years.
    0 Votes

  • 35x35
    May, 2009
    Natasha
    I have currently defaulted on a private loan and want to know even if paid off will this be on my credit forever? If not, how long would this be on my credit?
    0 Votes

  • 35x35
    Nov, 2008
    Bill
    That is a tough spot to be in, I cannot think of a particular service. You will need to get your student loan at least to a current status. Once that happens, your credit will recover and then you can look a a consolidation option or a replacement loan.
    0 Votes

  • 35x35
    Nov, 2008
    Torry
    I currently have a student loan that is in default that I am trying to take care of. Because of this loan it is hard to get loan from the bank. Is there any other options for me?
    0 Votes