Consolidation/Garnishment

Since she stopped making the payments over and above the garnishment, she no longer is eligible for the rehab. She should have asked for a manager or supervisor back then to get the ball re-rolling. Calling the default resolution area is futile now....she woiuld have to start back at payment 1 all over again.

They are claiming that there was no rehab agreement, period.

The person who she was dealing with no longer works there, and the company claims no record of the rehab plan, which is why she ceased paying the additional.

How can they penalize her for not adhering to an agreement that they claim doesn't exist? Thats why we want to bring FSA into it.

Should also be noted that when she called to touch base last time, the woman who is now handling her loans was:
1) Claiming there was no record of the first rehab agreement and,
2) Claiming that to *start* rehab, a $2k 'downpayment' would be neccessary.
3) Claiming that the $800 'downpayment' and the $200 payments my fiancee was making were just 'voluntary' payments.

It feels like a shake down, hope that clarifies the situation.

IF she has maintained her payments, FSA could have stepped in to make the rehab work. But since she stopped her payments, they cannot do anything. The higher educastion act requires the 9 on time consequitive payments.

FYI...the HIgher Education Act does NOT require a down payment as a condition of a rehab. They can ask but they cannot require it to enter a rehab program.

At the time she spoke to them, she was still current on the payments.

They claimed that no rehab agreement existed.

That is why she stopped the additionals -- according to them she was just sending them money voluntarily, not for the purpose of rehab.

The person she had been dealing with was no longer employed there.

I'm not sure how to better clarify this. It isn't an issue of -- she stopped paying an agreed upon rehab structure -- The company holding the debt unilaterally said that no rehab agreement was in effect, that no note had been made on her file to any way indicate that a rehab agreement was in effect.

Does that help clarify?

I understand what you are saying...however she is in default on a federal loan and she stopped paying. Nothing can be done now to change the fact that she will have to start the rehab process all over again. She could have taken steps to get the lack of documentation corrected then...and continue on with the rehab program..

Technically there is no such thing as a rehab agreement. She was simply making the qualifying payments to have her loan rehabed...the actual rehab happens when the she has completed the 9 payments and the new loan has funded.

Ok, since the corp holding it claimed she wasn't making payments towards rehab when she was last time, why would we expect them to honor it if she begins again?

The reason we wanted to contact FSA is simply so that a third part can verify that she will begin rehab. The nervousness comes from having the holding corp lying once already. If that was what they claimed, why was there any reason to believe that if she had continued they would have honored it? I would expect them to say "You've made X payments towards rehab, you have Y left", not "You aren't working toward rehab right now".

If she decides to begin rehab again, what is the proper way to do it, and what should she tell them to 1) not have them aggressively demand a downpayment and 2) provide written documentation that she is, in fact, working towards rehab. We have little reason to accept anything that the say verbally at this point, which I think you can understand.

Lets say she starts again, makes 9 payments on time, and then they say "sorry, there was no rehab agreement". That is the situation we are worried about and want to avoid, and we have no reason to think it wouldn't go down that way given how they have represented things thus far.

As an aside, what steps could she have taken to correct the lack of documentation, given that they were saying she was not in the process of working towards rehab? It isn't like we can compel them to do anything. We just want to know how to have our butts covered, and not to have 9 months of pretty severe financial hardship only to get screwed at the end.

Thanks, by the way, for the advice and time you are putting into this. It is relatively confusing for us and we feel relatively helpless given the last round of taking with the holding corp.