defaulted doe loans

[ick]

I've got two defaulted loans ($7000) under DOE that are doing the CA rotation. I've been ignoring them for awhile (maybe 4 years?). I've received notes and calls, but I'm good at ignoring that stuff. And, since I'm also good at recording my calls they don't like to talk to me anyway. I've now received notice they'll collect tax refunds. That's OK since I never receive tax refunds because I'm too lazy to adjust my W2's for my growing (non-childcare-needing) son.

 

The last collector I talked to (summer '05) wanted a downpayment of $1400 to even begin the process. I found that a bit extreme and didn't call them again. I don't remember who it was though. Now, unfortunately, it's with Pioneer. They wanted me to answer financial information by phone, but I wouldn't. They said they wouldn't send it by mail, but they did. The information requested is too much, they want checking account numbers, employer, etc. You know, the whole works. There's no way I'm providing that information to a CA. They must be out of their mind. They've also repeatedly stated they won't handle anything via mail, just by phone. Fine, I see here that's a common practice.

 

So here's my questions -

1. I'd like to setup a payment plan of $200/month. From what I read, that is very reasonable for a $7000 loan (that includes all the fees and costs and interests). If I'm unwilling to provide checking account information, autodebit, down payments, etc., is it likely to be denied? At one point, they said they'd report to DOE that I refused to pay. Good thing I record the calls (and I don't need to give notice). Is a decent amount like that likely to be accepted? I don't want a CA digging into my life, who does?

2. If the payment plan isn't setup and it goes back to DOE, I assume it'll end up in another CA hands. Maybe they'll be better, maybe they'll be worse. That's the jolly fun-filled surprise of the whole "experience", right? Do I have any options available at the DOE level? I read about the Ombudsmen helping in some cases.

3. What if I just make payments to the DOE? I assume the biggest payoff to playing nice with the CA is to remove the "defaulted" status. But, once the loan is paid in full, won't that remove the status, too? Does simply making payments on a defaulted loan have any positive result at all, aside from diminishing payoff?

 

Thanks.

[TxQuiltGirl]

I suggest you do some research here. You are playing with fire, and it's entirely likely that your wages are in danger of garnishment.

 

The DOE will not deal with you at all on this; they will refer you back to the DOE. If the CA sends it back to the DOE, you can bet you're gonna wish you'd taken care of this ... It will have been subrogated and additional fees will be added. If you are in a one-party state, tape to your heart's content; the CA has the latitude to collect the loan.

 

You're going to need to fill out the information forms they've sent to get into a rehab program. This is not like dealing with a CA for credit cards; you don't have a lot of choice. Well you DO have choices but you can bet it's going to hurt you a whole lot more than it hurts them.

 

The Ombudsman at this point will not get involved because you have spent the last four years ignoring the CA and now you aren't really trying to work with them.

 

Again do the research here on this board and you will find many examples.

 

Good luck.

[LynnInMN]

So here's my questions -

1. I'd like to setup a payment plan of $200/month. From what I read, that is very reasonable for a $7000 loan (that includes all the fees and costs and interests). If I'm unwilling to provide checking account information, autodebit, down payments, etc., is it likely to be denied? At one point, they said they'd report to DOE that I refused to pay. Good thing I record the calls (and I don't need to give notice). Is a decent amount like that likely to be accepted? I don't want a CA digging into my life, who does?

 

Have you done any reading of this forum?? The DOE is quite capable of digging into your life. They can get your tax records which includes all your employment information. I am quite surprised you havent found a garnishment on your wages yet!!! $200 is not a bad payment however they will require a financial statement which includes are expenses and income. They may ask for a pay stub to verify. They are not required to offer you any payment plan without this information, since you already agreed to pay the balance in full on demand. When it comes to direct debit, you are fine. You are not dealing with rinky dink collection agencies. These are government vendors. They screw up to many times and they loose the contract.

 

Your $7000 loan balance is probably nowhere near $7k anymore. You have daily accruing interest plus they have added collection costs of up to 25% to your balance.

 

2. If the payment plan isn't setup and it goes back to DOE, I assume it'll end up in another CA hands.

Yup.

 

Maybe they'll be better, maybe they'll be worse. That's the jolly fun-filled surprise of the whole "experience", right? Do I have any options available at the DOE level? Nope.

 

 

I read about the Ombudsmen helping in some cases.

 

The Ombudsman will only assist if you have made a legitimate attempt ...refusing financial statements is not deemed trying to cooperate. The Ombudsman does have access to your previous refusals to pay and unfortunately being contacted in the past and then blowing off the CA is deemed a refuasal to pay.

3. What if I just make payments to the DOE? I assume the biggest payoff to playing nice with the CA is to remove the "defaulted" status.

Nope...CA's dont report so they cannot remove anything. You are technically not out of default until the loan is paid in full.

 

But, once the loan is paid in full, won't that remove the status, too? Does simply making payments on a defaulted loan have any positive result at all, aside from diminishing payoff?

Nope. You might want to search this forum for rehabilitation. Or consolidation. You are aware that interest rates are going up on July 1???

 

Thanks.

[ick]

I suggest you do some research here. You are playing with fire, and it's entirely likely that your wages are in danger of garnishment.

 

The DOE will not deal with you at all on this; they will refer you back to the DOE. If the CA sends it back to the DOE, you can bet you're gonna wish you'd taken care of this ... It will have been subrogated and additional fees will be added. If you are in a one-party state, tape to your heart's content; the CA has the latitude to collect the loan.

 

You're going to need to fill out the information forms they've sent to get into a rehab program. This is not like dealing with a CA for credit cards; you don't have a lot of choice. Well you DO have choices but you can bet it's going to hurt you a whole lot more than it hurts them.

 

The Ombudsman at this point will not get involved because you have spent the last four years ignoring the CA and now you aren't really trying to work with them.

 

Why live in fear of garnishment? They'll get their money one way or another, you know. It's just another method.

 

If the CA sends it back, history has shown it ends up in another CA's hands. And so far both CAs have handled it two different ways.

 

I don't understand the need for the information forms. And, I simply cannot believe they are required.

 

Hmm. I guess it depends on how you define working with them. I consider multiple calls, from me to them, as attempting to reach a solution.

[ick]

Have you done any reading of this forum?? The DOE is quite capable of digging into your life. They can get your tax records which includes all your employment information. I am quite surprised you havent found a garnishment on your wages yet!!! $200 is not a bad payment however they will require a financial statement which includes are expenses and income. They may ask for a pay stub to verify. They are not required to offer you any payment plan without this information, since you already agreed to pay the balance in full on demand. When it comes to direct debit, you are fine. You are not dealing with rinky dink collection agencies. These are government vendors. They screw up to many times and they loose the contract.

 

Your $7000 loan balance is probably nowhere near $7k anymore. You have daily accruing interest plus they have added collection costs of up to 25% to your balance.

 

Yes, I've read the forum. I understand they're capable of getting that information. What I don't understand is why a CA needs to request such information. They should already have the information needed, they shouldn't need anything else. And once you fill out that form for the CA, what keeps them from passing it along to other CAs? What keeps them from using that form to collect on unrelated non-SL non-govt debts? No, the current balance is $7000 and some odd dollars. That includes all my ignoring punishment. That's the current (well, as of last week) payoff.

 

The Ombudsman will only assist if you have made a legitimate attempt ...refusing financial statements is not deemed trying to cooperate. The Ombudsman does have access to your previous refusals to pay and unfortunately being contacted in the past and then blowing off the CA is deemed a refuasal to pay.

 

Alright. I disagree of course, but I understand.

 

Nope...CA's dont report so they cannot remove anything. You are technically not out of default until the loan is paid in full.

 

Ok. But what if I just pick up making payments to the DOE @ 200-400$ per month? Are they going to refuse the payments? And, with most debts it seems that simply making payments stops further collection activity. Will at least making somewhat high and regular payments on it again, will that at least stop further actions (like garnishment)? I get that that SL are special, but I need to know if not ignoring the issue any longer has any positive ramifications.

 

Nope. You might want to search this forum for rehabilitation. Or consolidation. You are aware that interest rates are going up on July 1???

 

Yes, I'm aware. I've already looked at rehabilitation, that's why I'm asking. If I don't rehab with the CA and just make payments to the DOE (thus, stop ignoring the issue), what's the outcome? The default will stay on for the life of the loan, I understand. Anything else an issue, though? Will the DOE even accept the payments?

 

Rehab'ing looks good for fixing up your credit sooner. I'm in no hurry to be rid of the "default" wording. I have no pending soon-to-be future credit wants (ie, I'm not trying to buy a house, car, etc). If it stays on a bit longer because I didn't rehab thru CA, I can accept that.

 

Consolidation seems to be for those after-rehab folks. Can you consolidate defaulted loans?

 

Ideally, in all honesty, I'd like to simply stop ignoring it and make payments to DOE. I think, with some thriftiness, I could pay it off between 12-18 months and just be done with it all.

 

Thank you so much for your help!

[TxQuiltGirl]

You don't GET IT. The DOE WILL NOT DEAL WITH YOU. They will not accept your payments. They will not talk to you.

 

You can do whatever you want to do; it's your financial situation. One more piece of information and then you can handle it however you see fit.

 

History DOES NOT show that if this CA fails to collect, it will end up in the hands of another CA. At some point, and it won't take long believe me, the DOE and/or a CA will begin garnishment proceedings. You've had multiple chances and plenty of time to try to work this out and frankly, it doesn't look like you're even trying.

 

Best of luck to you; it sounds like you're going to need it.

[mercedestipstoes]

Take some good advice from some who also ignored student loans for years. My loan went through six different Dept. of Ed collection agency. All writing - all called to collect....I keep telling them I couldn't afford to pay (I really couldn't) my daughter was young and daycare was taking any money I had just so I could work. I have never received any government assistance for daycare.

 

Anyway........I ignored them thinking I was doing the right thing by keeping that money for my daycare and other bills. I was a fool.

 

I should have paid them something -WHY?

 

1) The stress wondering if they were going to get tired of rotating my account from CA to CA.

 

2) The stress of wondering if my paycheck would be garnished or if I would be sued.

 

3) The stress of wonder if my bank accounts would be levied.

 

4) The stress of the interest rate and daily compounding interest.

 

5) Not being able to return to school and finish degree because I can't get financial aid to due to deliquent status.

 

6) Paying my new school tuition at a tune of $150 per credit plus fees IN CASH. While caring 16 credits. I would have qualified for some Pell grants, Minneosta grants, and daycare care grants but I couldn't get them or apply because I had defaulted on my student loans. SO NO ACCESS TO THE FREE MONEY!!!!

 

7)Not being able to apply for a HUD loans or any other government insured program - I am ready to buy a home and I won't qualify for traditional financing because I don't have 10% or 20% to put down. I need the 3% offered by HUD. With those defaulted student loans - I get the rejection sign.

 

8) My credit report. I only have two items left on my credit report. I BK from 2003 and student loans. My FICO reflect my student loan. MY FICOs at 559, 559, and 557 (something like that). Not stellar!

 

9) It wasn't worth the stress and hassle of not payment my loans when my first due date became available.

 

10) THE KICKER MY ORIGINAL PRINICIPAL AMOUNT HAS TRIPLED due to interest rates, collection fees, and penalties. Now I owe $12,000+

 

Tomorrow I will make my second payment on my rehab loan which is due the 20th of every month. I feel like a fool for not taking care of business early. I thought I was smart -- I was stupid. Not paying those student loans has cost me more money down the line in higher interest rates, stress, being forced to rent and pay for someone elses home, higher car insurance due to credit report, etc...etc.

 

Please call and make rehab arrangments.....I sleep better now because I don't have any stress.

 

I answer my phone all the time now because I know collection agencies are not calling because I don't have unpaid bills.

 

I in 14 months I will be a new home owner....something to look forward too. (12 months for payments - 2 months for Depart of ED. to update credit bureas and close on home).

 

PLEASE PLEASE make payment arrangemetns! Don't get to the point where they will garnish you. You will regret it later.

Edited May 19, 2006 by mercedestipstoes

[NAN101]

Please call and make rehab arrangments.....I sleep better now because I don't have any stress.

 

I answer my phone all the time now because I know collection agencies are not calling because I don't have unpaid bills.

 

I'm with you Mercedes... It IS a great feeling to have that monkey off your back, isn't it? As the saying goes... If I knew then, what I know now," I NEVER would have the the SL go by the wayside. Taking care of them now is a truly empowering feeling, huh?

 

I'm coming up on my sixth rehab payment - I now sleep well at night and like you answer my phone without dread. This is priceless.

 

To the OP - take care of this NOW while you have SOME control over the situation. From the sounds of it, you're going to be back here soon with a screaming post - WHAT DO I DO NOW - THEY'VE GARNISHED MY WAGES AND LEVIED MY BANK ACCOUNTS. The simple answer at that point will be NOTHING YOU CAN DO. This is a federal debt and one way or another they will get paid whether it takes 10 years or 50 years. Do yourself a favor and put this behind you now. Then you, too, will sleep a lot better

[ick]

Not sure why everyone's trying to convince me to "take care of it now". My questions don't involve whether or not to do so. I've asked asking the best route from here.

 

I've been told to just work it out with Pioneer, I may do that. I've asked some additional questions on working it out with Pioneer and/or taking care of it in general.

 

1 - Pioneer/DOE should already have the information needed, they shouldn't need anything else. And once you fill out that form for the CA, what keeps them from passing it along to other CAs? What keeps them from using that form to collect on unrelated non-SL non-govt debts?

 

2 - What if I just pick up making payments to the DOE @ 200-400$ per month? Are they going to refuse the payments? And, with most debts it seems that simply making payments stops further collection activity. Will at least making somewhat high and regular payments on it again, will that at least stop further actions (like garnishment)? I realize SL are special debts.

 

3 - If I don't rehab with the CA and just make payments to the DOE, what's the outcome? Or, what are the possible ramifications of doing question 2...

 

4 - Can you consolidate defaulted loans while still in default status? Or, is it that you can consolidate defaulted loans after rehabilitation is complete?

 

Thanks.

[ick]

You don't GET IT. The DOE WILL NOT DEAL WITH YOU. They will not accept your payments. They will not talk to you.

 

The Send Payment To address on the letter and payment envelope I received from the CA points to DOE address. Surely they must accept some payments? Maybe that's just for full payoff, though.

But, pleading ignorance, if a debtor sends a mundane payment to the address not realizing that it might just be for payoff, I wonder what they do with those...

[NAN101]

But, pleading ignorance, if a debtor sends a mundane payment to the address not realizing that it might just be for payoff, I wonder what they do with those...

 

While I'd assume they'll accept your money, the point you're missing is you're sending money in, BUT not involved in a correctly set up rehab program. You may send you money "pleading ignorance" and they may turn around and levy your bank account at any time.

 

I really wish you luck - Unfortunately, this is not a fight you're going to win on your present terms.

 

I'll say it one last time - looking back, I wish I "got with the program" way back.

 

Good luck to you.

[LynnInMN]

You don't GET IT. The DOE WILL NOT DEAL WITH YOU. They will not accept your payments. They will not talk to you.

 

The Send Payment To address on the letter and payment envelope I received from the CA points to DOE address. Surely they must accept some payments? Maybe that's just for full payoff, though.

But, pleading ignorance, if a debtor sends a mundane payment to the address not realizing that it might just be for payoff, I wonder what they do with those...

 

The DOE will post your payment. However it does not stop them from garnishing you nor does it qualify for rehab. Rehab plans must be approved by the CA...it is written into the HEA.

[ick]

Thanks.

 

One more question, if I may. What keeps the CA from handing over your employer, checking accounts, etc to another CA and/or collecting for other debts on their own? What keeps them from taking that form, buying a debt from another CA, and chasing me down for that too?

[westbrookgirls]

Thanks.

 

One more question, if I may. What keeps the CA from handing over your employer, checking accounts, etc to another CA and/or collecting for other debts on their own? What keeps them from taking that form, buying a debt from another CA, and chasing me down for that too?

 

Just let me say this one thing. These loans have interest rates subsidized by federal tax dollars, so when you sign the promissory notes at the time you apply for the loans, you agree to ALL of their requirements. Not paying these loans back can lead to a slew of financial problems. And the information they are asking for is a small price to pay to get this taken care of. They have every right to ask it of you as they are trying to give you a chance to right a wrong before they put the garnishment and levy whammy on you.

 

Trust me, there is not a term that begins where I work that we don't have at least a dozen students trying to enroll but cannot because they are in default on a previous student loan. I have seen them walk out of my office crying because they can't afford school and can not get any financial assistance.

 

If your information is given to another party in a way that violates your rights, then you can take recourse against the CA. But don't fight the FEDS. You will lose.

 

Bettie

Financial Aid Director

14 years

[grammers]

Not sure why everyone's trying to convince me to "take care of it now". My questions don't involve whether or not to do so. I've asked asking the best route from here.

 

I've been told to just work it out with Pioneer, I may do that. I've asked some additional questions on working it out with Pioneer and/or taking care of it in general.

 

1 - Pioneer/DOE should already have the information needed, they shouldn't need anything else. And once you fill out that form for the CA, what keeps them from passing it along to other CAs? What keeps them from using that form to collect on unrelated non-SL non-govt debts?

The CA needs that info and has a legal right to demand it. As another poster said, they are a government contractor - it's big bucks to them. They aren't going to jeopardize that for some other loan you may owe.

 

Bottom line - you may just have to trust them.

 

2 - What if I just pick up making payments to the DOE @ 200-400$ per month? Are they going to refuse the payments? And, with most debts it seems that simply making payments stops further collection activity. Will at least making somewhat high and regular payments on it again, will that at least stop further actions (like garnishment)? I realize SL are special debts.

 

NO! Don't ignore the knowledge other posters have shared with you. Paying DOE directly will do nothing for you.

 

3 - If I don't rehab with the CA and just make payments to the DOE, what's the outcome? Or, what are the possible ramifications of doing question 2...

 

4 - Can you consolidate defaulted loans while still in default status? Or, is it that you can consolidate defaulted loans after rehabilitation is complete?

 

Thanks.

 

 

If you ask questions, don't ignore the answers. Even if you don't like them.

[ick]

Here's an update to an old post. A lot of the advice and dire warnings didn't play out. Final result is that I was able to handle the problem on my terms (mostly) and I've been out of default for awhile now.

 

I called Pioneer. We negotiated a total $750 initial payment (not $1400) in 2 installments and they accepted my $100 monthly payment. I setup the auto-debit in a checking account that I don't use and just made sure it had the $100 in it by the payment date. It was not necessary to complete their invasive form or provide any further details (income, accounts, employer, etc). They didn't request any further documentation. That was my main issue - I didn't want to work with a CA and I certainly didn't want to provide all that information they requested.

 

Once turned over to DOE again I setup $200 autopayment through my billpay service on my real checking account. It's been fine ever since. Oh, the debt was still just slightly above $7.5k, so the the fees and whatnot weren't even as drastic as suggested. It's now down to 6k or so, probably less.

 

I hope this helps if someone else tries to investigate their options before giving over their life to the CA. Almost everyone told me to lay it all out for the CA (and that I had no rights to keep that information private), but I found that there were indeed real alternatives available. It wasn't difficult at all, I merely had to slightly compromise on my willingness to work with a CA by talking to them 1 time. I do appreciate everyone's advice on the matter, but I must not have been communicating my real issues effectively.

 

Thank you all for your help. Hopefully I'll never be in this situation with these loans again!

[Cynic]

In your situation there was no need for them to ask for all your financial crap IMO. I agree that what you initially offered them was reasonable based on what you owed. The financial crap they were asking for would have only been appropriate if you were claiming that a $70 payment would cause an undue hardship for you. The down payment wasn't necessary either, but since you were able to do it, and it reduced the amount you owed, it probably helped you.

[LynnInMN]

In your situation there was no need for them to ask for all your financial crap IMO. I agree that what you initially offered them was reasonable based on what you owed. The financial crap they were asking for would have only been appropriate if you were claiming that a $70 payment would cause an undue hardship for you. The down payment wasn't necessary either, but since you were able to do it, and it reduced the amount you owed, it probably helped you.

 

 

Cynic....we were REQUIRED by our clients to obtain financial information, including the DOE. Mandatory.

[Cynic]

In your situation there was no need for them to ask for all your financial crap IMO. I agree that what you initially offered them was reasonable based on what you owed. The financial crap they were asking for would have only been appropriate if you were claiming that a $70 payment would cause an undue hardship for you. The down payment wasn't necessary either, but since you were able to do it, and it reduced the amount you owed, it probably helped you.

 

Cynic....we were REQUIRED by our clients to obtain financial information, including the DOE. Mandatory.

 

Sorry I did not bother to read all of OP's rant. I assumed he was asked for POI, PO expenses, etc.

 

Providing the name and address of their employer, and notifying loan holder of any changes, are terms of the p-note. A borrower's refusal to update that info sounds like reasonable grounds for finding them an unacceptable candidate for rehab, at least IMO;)