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Student Loan Default Conflict Resolution

Submitted by thetriplei on Mon, 05/23/2011 - 21:20
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The long story short of my situation is that I had a handful of Federal loans (half subsidized, half unsubsidized) that were consolidated to total about $12,000, and a private loan for about $15,000 through Sallie Mae. Well, they've been put into default and are now in the hands of Allied Interstate (the one from MN not FL).

There's one potential blessing in that I've received a letter that says I can settle the private loan for around $11,000 paid in full by the end of the month. This is a pretty good deal considering it's less than I borrowed. Someone suggested I contact Sallie Mae directly and try to negotiate a deal with them for even less as that 11,000 includes a cut for Allied and Sallie Mae might very well strike a deal directly that would be cheaper for me and in turn mean more for them. So either of these scenarios are actually a positive outcome in respect to that loan.

My bigger concern is the federal loans being defaulted. Sparing you all the details, this whole thing was a total surprise to me cause I signed up for an economic hardship deferral program which was supposed to put all my payments on hold and even have the government still picking up the interest tab for the time being. Them being defaulted on is a concern because Allied called me and I mentioned this program and they claim "there is no such program". I know I've lost out on forbearance and deferment privileges by being in default, but this deferment I'm talking about is not the one I could pay $50 for 6 months at a time, but an automatic one because I don't make enough money. I've also stumbled on something about IBR (income based repayment program) which I don't know if I'll now qualify for either.

Let me also note here that Sallie Mae still has record of my private loan on file, but the federal loans have been shown to be paid in full and out of their system, so they can no longer do ANYTHING with those.

I only work part time and make less than $10,000 a year as far as factoring in for repayment abilities go. The idea for cutting a deal and paying off the loan would require me to have a family member pay it and me just pay them back to get all this off my credit and if I'm gonna be paying interest and whatnot I might as well give it to them. Also, it would eliminate any unavoidable extraneous fees that would be tacked into my loans through the CA.

Please offer me any advice you can as I don't want to make a wrong move. I feel like I have an opportunity to make something positive come from this negative situation and am believing for that to happen.


Oh, I should also add I received a letter a few weeks ago that wage garnishment was going to start if I didn't contest it (though no CA was listed in it). Anyhow, I make about $225 a week gross and about $150 after taxes and deductions. The wage garnishment they have been allowed to take out only comes to $1.72 a paycheck! That's got to mean something with respective to my financial position as a bargaining tool to cut a deal because of how little I'm legally considered to be able to pay..


Submitted by thetriplei on Mon, 05/23/2011 - 21:26

thetriplei

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FYI..all student loans are collected out of Minnesota...that is their student loan division.
Quote:

Someone suggested I contact Sallie Mae directly and try to negotiate a deal with them for even less as that 11,000 includes a cut for Allied and Sallie Mae might very well strike a deal directly that would be cheaper for me and in turn mean more for them. So either of these scenarios are actually a positive outcome in respect to that loan.


Nope, wont happen. Allied is hired under contract by Sallie Mae. This contract includes non involvement by Sallie Mae without cause. Allied gets paid their commission for the period of the contract regardless of where the payment is sent. Thus Sallie Mae stays out of the collection loop....they are paying collector to collect it.

Your federal defaults...IBR or income based repayment is a payment plan you are not eligible for in default. When you default, all deferments and forebearances are gone....there are no payment plans per se you are eligible for. The collection agency may set you up on temporary payments for rehab or heading to consolidation. Were these loans ever consolidated? Unfortuantely you would not be eligible for the consolidation now with the garnishment.

Your income. Why on earth are you paying taxes if you only earn $10k per month? Adjust your withholding to exempt.


Submitted by SOAPLADY on Tue, 05/24/2011 - 05:28

SOAPLADY

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