Is this true?

[IAmMyKidzMom]

I found the following statement on this website and was wondering if it is true?

 

"You Can Pay Student Loans in Installments

If you are behind on student loans, you can apply for what every collection agency hates: "reasonable and affordable payments" under the 1992 Higher Education Act. If you can document financial hardship, a collection agency must accept as little as $10 per month for at least six months. As long as you make the payments, you are eligible for Title IV Student Aid, and you can continue the payments unless your circumstances change."

 

The website is:

 

http://www.creditwrench.greatnow.com/Tenne...n_agencies.html

 

If it is true, would starting to pay this restart the 7 year REPORTING SOL (I know there's no SOL on when they can sue).

 

Thanks!

Edited July 6, 2005 by IAmMyKidzMom

[TxQuiltGirl]

It's not exactly true, and frankly if I were you, I'd avoid the creditwrench site at all costs; he is less than truthful about a LOT of things.

 

Now, on to the question you asked. It is true that student loans are paid in installments, and that a CA has to accept "reasonable and affordable" payments from you. However, the part about "as little as $10 a month" is not necessarily true. And it's also not true that as long as you make the payments you are eligible for Title IV bene's.

 

What you really want to do is set up a rehab program with the CA who currently has your loans. I think I read that you owe as much as $43k on these loans, so they are going to want more than $10/month from you to rehab them. In fact, on my $6k loan, my rehab payments were $70/month. But you can get lower payments than what you would normally pay during rehab if you can prove that paying more would create a hardship for your family. You would have to fill out expense sheets, detailing your family's income and expenses.

 

There have been many people here who have faced far greater SL debt than you have, and have made it through rehab. You can do this too! You just need to take your head out of the sand and make that first phone call. The CA will probably pressure you for a down payment to start rehab, but it's not necessary. You need to be very firm when you tell them what you can afford, but remember they are going to try to negotiate your payments up. Be reasonable, don't expect to pay $10/month, but don't agree to $500/month if that's going to put your family into financial hardship.

 

I know you're scared; I was too. But living life "under the radar" like you're doing will get you nowhere, and you need to face up to the monster in your closet. Work out a payment plan with the CA and then go back to work if you have to so you can make the payments.

 

Good luck, and stay away from that creditwrench site; it's full of misinformation and lies!

Edited July 6, 2005 by TxQuiltGirl

[ziggypop]

If you do a search on this forum for "rehab" you can get a TON of information about it. There are a lot of us who have been through it. Quilty's advice is right on target. First off, when you call, tell them that you are interested in rehabilitating your loan -- they're required to allow you to do that, but they aren't required to bring it up first. Yes, they'll probably start with asking you to pay the full amount (or some "limited time only" offer of some still impossibly high amount as a settlement!). Tell them no. Then they'll probably ask you if you could borrow it from a bank or family or something. Again, tell them no. Then, like Quilty said, they'll probably say they have "programs available," but they need a "goodwill downpayment" to show your willingness to pay. Again, tell them that isn't required for rehabilitation and you aren't able to do that. Unlike most other creditors, this is one time when you're probably going to have to be on the phone and you're probably going to have to give them financial information. They'll look over your financial information and give you an offer. Figure out what you are comfortably able to pay (and remember, it has to be reasonable and affordable for both you and the lender, not just the lender). Make sure it's an amount you can deal with for at least 12-13 months for rehab. Like we've told you before, you are not going to have to pay these back in one lump sum. They really do understand that (even though they'll ask for it anyway). Stick to your guns and it will work out fine. If you get stuck with them on any of these points (they won't allow you to rehab, they require a downpayment, anything), contact the ombudsman's office. They can help you resolve issues like these and from everything I've heard people here say about that office, they can be VERY helpful.

 

Rehab payments are not reported to the CRAs. Your 7-year reporting period for your default is already in progress, regardless of if you later bring it current -- the default will still fall off 7 years from when it happened; anything positive later would remain.

 

I'll echo what Quilty said that you HAVE to contact the CA on this ASAP. Believe me, I am the QUEEN of procrastination and worry, so I know what you're feeling right now. I went through it just a couple of years ago. The conversations can be uncomfortable, especially for those of us who like to avoid issues like that, but you will come out of this on the other side feeling much better about yourself and be able to focus more on doing whatever you need to for your family, rather than worrying about whether or not an action will make them come after you for your loans. Both you and your family deserve better than that and your kids deserve a happy mom without a cloud of worry over her head (which I know you would prefer and you deserve, too!)!!! We're here to help you with whatever information you need.

 

Good luck!!

[citygirl8]

...I think I read that you owe as much as $43k on these loans, so they are going to want more than $10/month from you to rehab them. In fact, on my $6k loan, my rehab payments were $70/month. But you can get lower payments than what you would normally pay during rehab if you can prove that paying more would create a hardship for your family. You would have to fill out expense sheets, detailing your family's income and expenses.

 

...Be reasonable, don't expect to pay $10/month, but don't agree to $500/month if that's going to put your family into financial hardship...

<{POST_SNAPBACK}>

As another example, my loan total is about $67k -- but the CA is fond of telling me it's over $100k because of all the penalties & fees. I'm single, but live in an expensive city (my rent is about 1/2 my monthly income) and have some medical expenses. I pay $218/month.

 

You should be aware that when you contact the CA they will give you some outrageously huge amount that you owe -- way more than the $43k that you borrowed and have accrued interest on. One great thing about the rehab program is that after the 12 months not only do they make your credit perfect, they also remove all the fees and penalities. It really is a second chance.