Advice About a Student Loan in Default

I am a single mother who was out of work for a while and the cosigners to my student loan paid about $2,000 during that time. I am now working and sent out a payment to them, but they wanted me to sign a confession of judgment.

I refused to and now they have been calling and threatening to take me to court to sue me and even went as far as saying they are going to take my tax refunds. The loan is not fully paid off yet, so I didn't think that could sue me for the full amount, just for the amount they have paid, is this true?

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Also, I haven't returned their phone calls, because in the past they have left me messages and one was threatening to come and beat me up with a baseball bat if I didn't pay them the money. What if anything can I do about this. I intend to make sure I pay them the amount for the loan each month now that I am working again.

By Stacy

December 17, 20090 found this helpful

Save all the calls they made to you. Call a lawyer to see what they say about it, good luck.

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December 17, 20090 found this helpful

I have a very close friend who has gone to heck & back with a student loan. My girlfriend is also disabled & she was totally surprised that they could garnish her social security disability check which she lives on (she receives only $800 per month to pay bills & buy food & gas) The only advise I can give you is to work out some kind of agreement with these guys because if you ignore them or the longer you wait to deal with them the more fines & interest they charge.

My friend was loaned $10,000 when going to school & now, no matter how hard she tries, she will never in her life be able to repay this loan (because it has snowballed). & because the loan is guaranteed by the government, they can garnish your disability or paycheck & take up to 1/3 of it. Her loan has been sold to at least 5 (or more) different loan agencies since she borrowed the money & each of them has added more fees & of course the interest has increased quite substantially.

---> Call legal Aid or pay $50 or $100 to go in one time to talk to a lawyer about your problem. This will be well worth the money it costs! If you can't afford a lawyer, then call one of those free credit counselors or e-mail them with your question. Get good legal advise! Even if you have to pay $50 or $100 to see a lawyer. You need someone who is working for YOU, who will answer your questions. Before you go in to the appointment with a lawyer, look in your local phone book & call around to different Lawyers in your area asking them if they have dealt with student loan problems before & ask what they'd charge to meet with you one time to answer your questions... Many times the first meeting with a lawyer is free. If the lawyer or legal secretary you talk to does not handle this type of work, ask them to please refer you to someone who does!

* Also, if someone is hassling you & they (think or) know you have a lawyer working for you, they will stop hassling you & you will receive immediate respect. Or you can just say "Contact my lawyer".

Do not wait! Take care of this today Call around to lawyers in your area.

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December 18, 20090 found this helpful

Are these cosigners members of the mafia or what? Or someone who once passed, mistakenly, for a friend or

family? I would [really] send in your problem to Suzy Orman. It's a great problem and she has discussed student loans in the past.

What is a confession of judgment? You might also want to call your local district attorney and get any pertinent information re the threat aspect.

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December 19, 20090 found this helpful

First of all the fact that you are not communicative about you financial issues to your co-signers causes bad and harsh feelings. That does not excuse their threats in any way. There are laws about how people must conduct themselves in trying to collect a debt. That a side you still have to pay your debt. I would try to set up an agreeable payment plan to pay back what they paid for you and never miss a payment again. If they take you to court for the amount that they paid for you they can claim all of their expenses etc etc. Have them draw up a promissory note of which you will sign with an amortization schedule of payments and interest and you keep a copy. Lesson learned here? Never ask anyone to guarantee your loans for you and never do it for anyone else. It only causes problems.

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December 20, 20090 found this helpful

I recently saw on Suze Orman that you can pay off your student loan with a credit card if you have that much limit. If you have to file bankruptcy or need to just pay the minimum you are free from the government. Student loans cannot be included in bankruptcy and you are never rid of them until they are paid, but credit cards can be.

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December 20, 20090 found this helpful

If anyone leaves threatening messages on your answering machine you should report that to the police. The police are your friends! They will help you with this problem.

Of course, if you owe anyone money be it a personal loan or a loan from a bank, you must pay it back even if you can only make very small payments on that loan. Make small payments of ten or twenty dollars a month until it is finished if you have to do that. Pay as much as you can every month. But do it.

This may be worth a visit to a lawyer's office. There is never a charge for the first visit to a lawyer's office. So dont hesitate to do that. You need an advocate who "knows" or is willing to find out what needs to be done. YOur safety is at risk here and you cannot leave your child or children without a mother. You must take care of this ASAP.

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December 21, 20090 found this helpful

Who did you borrow the money from, a loan shark? If they paid $2000 for you, it just may cost them more than that to sue you. Make the original loan payment and then an extra payment to them but tell them that any threats to you or your belongings will be told to the police. And as far as I understand, they knew what they were getting into when they cosigned for you and if they signed their name to a document, then there is not much they can do about it. If you don't pay, they do and that's all there is to it.

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December 17, 2009 Flag
0 found this helpful

I recently purchased a business (last August 06) and had emergency surgery in November. I had complications until February of this year. In April, I was contacted by a collection agency regarding a defaulted student loan that I took out in 1980s. It was the first I had heard of it. Time has a way of veiling such things.

They said that I could make payments every month for 8-12 months and then reconsolidate. I have to have another surgery and am trying to save any money so that I can do so. Does anyone have any ideas?


Valerie from Chico, CA

Answers:

Advice About a Student Loan in Default

First, all the bad news:
The government can seize any tax refund you may be anticipating, until your loan is out of default status.
The meter never stops running on a student loan, until its all paid off. There is no statute of limitations on a federal debt, so no one can wait for the debt to disappear, because it won't.
The interest accrues on the original amount borrowed, not the current amount. So if you borrowed $25,000, and have it paid down to $3000, you are being charged on the original $25,000.

I used to help people with student loans, but that was a few years ago, so some of my information may be outdated. Personally, if it were me, I would call the government to verify the debt, and then start working with the collection agency to get it paid back. Good or bad, the U.S. government has passed laws that ensure that student loans get paid back.

If you are in the position to settle, you may be able to ask for a lump sum settlement. They may be able to knock off 40-50 percent of the debt, if you can pay off the remaining amount in two or three payments. If you can't settle, then rehabilitation or consolidation may be the best options. (I can't remember the difference right now between the two programs.) Once you get your loan back in good standing, you may be able to qualify for a hardship program or a forbearance.

The main thing is:
Always talk to your lender, or the company that's managing the debt for them because the government will never forget that you owe them money.


Good luck and hope this helps.
(08/24/2007)

By azDana

Advice About a Student Loan in Default

My first thought was why haven't you heard about this before now? Are you sure that you took out the loan and didn't repay it? I would ask them for proof (the promissory note) before I did anything unless you are sure you borrowed the money and didn't repay it.

Here is information about Student Loans:

studentaid.ed.gov

And here is information about defaulting on student loans:

ed.gov

and

ed.gov

You may be able to get some help with this especially, because right now you are having medical problems.

Take good care of yourself.
Susan
(08/24/2007)

By ThriftyFun

Advice About a Student Loan in Default

My daughter has a large student loan that she is unable to pay for the last few years, because she was taking care of me and my sick husband (now deceased). She was able to file for several deferments, called forbearance, each good for a year. The interest still accrues, but she is not "in default". You may be able to do the same. (08/24/2007)

By kathyka1302

Advice About a Student Loan in Default

If it was a government loan you had, then this may be a scam. The government would be coming after you if you really are in default, not a collection agency. If it was a private loan, there is a time limit beyond which collection agencies cannot come after you. Check to see what that is in your state. (08/24/2007)

By sheilamay

Advice About a Student Loan in Default

My daughter and son in law re-mortgaged their house, to include the student loans. Interest was less and they were able to spread out the amount owed over a longer time period. (08/27/2007)

Advice About a Student Loan in Default

Go to:

studentloanjustice.org. There are thousands of people who are getting taken advantage of by the student loan lenders. (01/18/2009)

By Nicholas V.

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