I have defaulted on a private student loan, about $50,000. The collection agency is threatening to start "involuntary collection" against my co-signers but I have been making monthly payments. The monthly payments are far below what they want me to pay but at least I'm not ignoring them. Can they do this, how long will it take, what are my options?
Please see If I Pay a Small Amount on My Debt, Can I Still be Sent to Collections? to understand why your assumption that paying whatever you want to a creditor will prevent it from initiating collections activity is not based on the law.
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 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.
See the Bills.com resource Student Loan Payment for a more detailed discussion of these issues. If you are disabled and are paying a federal student loan, see the Bills.com resources Student Loan Disability and Federal Student Loan Tuition Waiver. If you work in public service and have federal student loans, read Public Service Loan Forgiveness to learn how to have your student loans waived.
I hope this information helps you Find. Learn & Save.