Divorce and Consolidated Loans!?!

[perplexed]

Hello,

 

I am extremely angry right now so please be patient with me. Here is the problem in a nutshell:

 

1. Previously consolidated federal student loans with spouse.

2. Legally divorced spouse due to spouse adultery.

3. Divorce settlement court order requires loan unconsolidation with 50/50 reapportionment of liability to each party.

4. Ex-Husband defaults on repaying his portion of loan and me and my new husband get dingged on OUR credit reports even though our repaymnet history is clean.

5. Our loan servicer will not unconsolidate loan per divorce court order and says federal law prohibits it so buzz off and suck it up.

 

So, even though we've been divorced for over 10 years now, and we have a court order stating unconsolidation of loan, I am still paying for the ex-creep's behavior and my new family is suffering for it.

 

My question is this - What is the specific law and section governing this rediculous, unfair, and unjust treatment and how do we get it changed?

[LynnInMN]

Unfortunately this was all written into the contract you signed. All the information sheets I ever saw on spousal consolidation stated that if you divorced, you had to deal with it.

 

The laws have been changed....they no longer permit spousal consolidation since July 1 of last year.

 

Civil actions have never been enforceable by a third party. You have to enforce it by hauling your ex back into court and sueing him.

 

Sorry.

[Cynic]

Lynn is absolutely correct.

 

Here are the 2 paragraphs right above you and your spouses signatures on the old pre-July '06 FFELP consolidation promissory note:

 

"If I am applying jointly with my spouse, I understand and agree that I am and will continue to be held jointly and severally liable for the entire amount of the debt represented by the Federal Consolidation Loan without regard to the amounts of our individual loan obligations that are consolidated and without regard to any change that may occur in our marital status. I understand this means that I may be required to pay the entire amount due if my spouse is unable or refuses to pay.

I understand that this is a Promissory Note. I will not sign this Note before reading the entire Note even if I am otherwise advised. I am entitled to an exact copy of this Note and the Borrower’s Rights and Responsibilities Statement. My signature certifies I have read, understand, and agree to the terms and conditions of this Note, including the Borrower Certification and Authorization and the Borrower’s Rights and Responsibilities Statement."

 

Although spouses are no longer legally allowed to consolidate their student loans together, spouses who did so while it was allowed are still held responsible for the promise they made on that Note I quoted above.

As Lynn mentioned you can take action against the ex-spouse who has failed to repay what the lower divorce court ordered them to pay, but nothing a lower court orders will change the terms of the Higher Education Act or your original promissory note, which were made by the Federal government.

Edited March 20, 2007 by Cynic

[Cynic]

I believe I did locate the exact law. Here you go:

 

For FFELP loans (meaning the holder of the loan is someone other then DE):

 

Code of Federal Regulations Title 34 part 682 section 206

 

"(3) A Federal Consolidation loan may be made to two eligible spouses

provided both borrowers agree to be jointly and severally liable for

repayment of the loan as co-makers."

 

(Authority: 20 U.S.C. 1077, 1078, 1078-1, 1078-2, 1078-3, 1079, 1080,

1082, 1083, 1085)

 

http://a257.g.akamaitech.net/7/257/2422/08...4cfr682.206.htm

Edited March 20, 2007 by Cynic

[skyeanne]

I agree with you completely. It is an unjust law. My husband is in a similar situation right now and it is disgusting. The fact that he is tied to his ex forever is disturbing to me after what she did to him. It is hard for me to see the emotional roller coaster that it sets us on every time she is late on a payment. It doesn't even show up on her credit because she isn't the primary so we are the only ones suffering. Threatening with further court action has been helpful, but I can't take this anymore. There is no reason why they cannot accommodate. They prey on the young and foolish. This clause wasn't even mentioned to my husband, he just trustingly signed. Needless to say it is a mistake that he won't make again, but one he will pay for the rest of his life.

 

I think the law should be amended! Who would we contact? Maybe I am naive, but I am holding out hope that if enough people approach the right people with their story something could happen.

[LynnInMN]

I agree with you completely. It is an unjust law. My husband is in a similar situation right now and it is disgusting. The fact that he is tied to his ex forever is disturbing to me after what she did to him. It is hard for me to see the emotional roller coaster that it sets us on every time she is late on a payment. It doesn't even show up on her credit because she isn't the primary so we are the only ones suffering.

 

 

There is no such thing as a primary on a spousal consolidation....the loan appears on both parties credit reports. Parties are joint in this consolidation.

 

Threatening with further court action has been helpful, but I can't take this anymore.

THey don't need court action. Both parties are subject already to admin wage garnishment and tax offset.

 

There is no reason why they cannot accommodate. They prey on the young and foolish. This clause wasn't even mentioned to my husband, he just trustingly signed.

It was in the loan disclosure statement. It was made very clear on this document. Right above the signature line it states "This is a promissory note...I have have read and understand the terms of this note" Nobody preys on young and foolish. He APPLIED for this loan, nobody forced it on him. Young and foolish?? Come on...he had already done some post secondary education, had married. Common sense would dictate that you READ a prom note before you sign it.

 

 

Needless to say it is a mistake that he won't make again, but one he will pay for the rest of his life.

 

I think the law should be amended! Who would we contact? Maybe I am naive, but I am holding out hope that if enough people approach the right people with their story something could happen.

 

The law was already changed last year. They no longer offer spousal consolidation. However those already consolidated will just have to deal with it...they are not going to change it.

[cotterpin]

Actually, there IS something you can do if your spouse defaults on their part of a debt that a divorce court orders: sue them and obtain a judgement.

 

Yes, while it's true that the creditor (be it a student loan, credit card etc) is not bound by the orders of a divorce court, it is still binding and you can sue for enforcement via civil court. A judgement, depending upon your state, can allow you to garnish wages, etc. You can also sell the judgement off to a collection agency should you wish.

 

It's like this for any debt, NOT JUST Student loans!! Any debt you incur as a couple in both names remains the responsibility of both parties until it is either paid off or refinanced.

 

and, Lynn, for the record, I'm in my 30's and still wouldn't have the slightest clue what "jointly and severally" means if it weren't for CB, And as for "asking questions" I heard many asked but no one in the student loan office at my last school could really explain it. But I guess since you're perfect that you've never made mistakes, right?

[direred]

and, Lynn, for the record, I'm in my 30's and still wouldn't have the slightest clue what "jointly and severally" means if it weren't for CB[...]

When you work in a field, sometimes it's easy to forget that not everyone knows the basics of it.

 

I sometimes get frustrated with people who ask HTML questions, you know?

 

Unfortunately, the most-used class I took as an undergrad was business law. It was painful, but it was worth it.

[Cynic]

Lynn, for the record, I'm in my 30's and still wouldn't have the slightest clue what "jointly and severally" means if it weren't for CB, And as for "asking questions" I heard many asked but no one in the student loan office at my last school could really explain it. But I guess since you're perfect that you've never made mistakes, right?

 

Lynn never said she was perfect. Since you keep harping on how no one at your school ever explained anything about your student aid to your satisfaction, including things as basic as the fact that your financial aid included one or more loans, I have to question why in the universe you would sign anything with bold and obvious sentances like

"I UNDERSTAND THIS IS A FEDERAL LOAN THAT MUST BE REPAID"

 

as the very last sentence, boldface, all caps, right above your signature, if you felt confused.

 

Back to the matter at hand, the whole joint and severe liability without regard for individual loan obligations or changes in maritial status is followed with

 

"I understand this means that I may be required to pay the entire amount due if my spouse is unable or refuses to pay."

 

Not exactly delicate, subtle, confusing, or misleading to a layman that actually takes the time to read.

[LynnInMN]

and, Lynn, for the record, I'm in my 30's and still wouldn't have the slightest clue what "jointly and severally" means if it weren't for CB[...]

 

 

Unfortunately, the most-used class I took as an undergrad was business law. It was painful, but it was worth it.

 

Heck I had business law in high school. In 11th grade I could have explained "jointly and severally"...basic contract law.

[cotterpin]

Lynn never said she was perfect. Since you keep harping on how no one at your school ever explained anything about your student aid to your satisfaction, including things<snipped>

 

My comment to Lynn is regarding a history of posts, not just this one thread.

 

And WTF are you talking about that "I keep harping on"??? For pointing out that when I stood in the student loan office, the people working there were unable to answer questions that I heard being asked?? I've taken out two separate loans for being in school, one being recent. My SL papers are irrelevant, but my first one didn't have big, bold writing on it. I didn't default on my loans, nor were they ever paid late either, but thanks for assuming I had.

 

If you and Lynn are going to continually insult and be rude to our posters, implying that they are "morons who can't read" then the mods ARE going to be in here setting things straight, up to and including warnings.

 

Heck I had business law in high school. In 11th grade I could have explained "jointly and severally"...basic contract law.

 

Well, aren't you just perfect! You must be just THAT much smarter than everyone else, huh? Or maybe you were more educated than most of us.

 

Why is it that every time I read one of your posts, I can picture you with a snide little collector's smirk on your face?

 

Not everyone who posts is attempting to shirk responsibility, you know. If you'd ever venture out of the SL forum into the credit forum for things OTHER than your own issues, you'd see that the issue of divorce court ordered debt division is an issue all around and the majority of people who have dealt with it don't understand that it's not binding on creditors. I guess all divorced people must be stupid, too, huh?

 

You need to remember that not everyone is as educated as you, maybe they're not as business savvy or maybe they just really aren't the brightest bulb on the tree. Hell, some people wouldn't know what common sense was if it smacked them upside the head. And, as direred pointed out but you seemingly glazed over,

When you work in a field, sometimes it's easy to forget that not everyone knows the basics of it.

It doesn't matter what the case is, our posters don't deserve the harsh treatment they get on a routine basis in this particular forum. This is why you've garnered the attention of the moderating team once again.

 

It really, truly is a shame you can't put your former collector's experience to good use BENEFITING people.

[Cynic]

And WTF are you talking about that "I keep harping on"??? For pointing out that when I stood in the student loan office, the people working there were unable to answer questions that I heard being asked?? I've taken out two separate loans for being in school, one being recent. My SL papers are irrelevant, The fact that you signed them if you didn't understand them is very relevant, since you certified under penalty of perjury that you did understand them by signing. but my first one didn't have big, bold writing on it. Since you've already stated that the contracts (at least the ones you signed) are "irrelevant" your allegation that all documents created by the Office of Managing and Budget and the older common docs created by the Ad Hoc Committee do and don't contain certain statements in BIG BOLD LETTERS doesn't deserve a response, but just for the sake of argument I would like to know if all 1040Es except the ones you signed could potentially be different from yours too:P I didn't default on my loans, nor were they ever paid late either, but thanks for assuming I had. I never made that assumption, nor stated anything to that effect

 

If you and Lynn are going to continually insult and be rude to our posters, implying that they are "morons who can't read" then the mods ARE going to be in here setting things straight, up to and including warnings...

 

No, most people that took out a loan for Higher Education had to be able to read or the loan may not be legally valid and their school may have made false and fraudulent certifications, which could be subject to penalties including liability for repaying the loans they falsely certified plus additional fines and penalties and/ or imprisonment.

 

I do believe you would mercilessly hold financial institutions liable for negligence in following laws applicable to them, whether damage was caused or not. I also think a school official that signed off on docs they didn't understand would be negligent in your opinion, and you wouldn't be sternly reprimending all posters damaged by their negligence for pointing out that they may be somewhat responsible for the damages their signature caused. I don't see you ever chastising consumers for not being empathetic to the frivolous excuses the school, lender, or CA might make. Why the double standard?

 

It really, truly is a shame you can't put your former collector's experience to good use BENEFITING people.

 

Both Lynn and I do give advice that benefits people. Ever heard of tough love?

 

That's what we do when we bluntly respond to excuses that are meritless according to the promissory note they signed (including "governing law, HEA 1965 et seq), and also tell them what they can do to better their situation.

Edited July 13, 2007 by Cynic

[Cynic]

Please be kind enough to refrain. That's all.

Edited July 13, 2007 by Cynic

[52club]

With how common student loans, consolidation of student loans, and divorce could Congress revisit the terms of the original agreement? I'm not a legal expert so I don't want to waste anytime lobbying with my representative for a change.

[lakbum]

I just want to add that even though I don't have any SL problems/issues, I read the Student Loans forums from time to time and I have found Cynic and LynnIM 5o be very knowledgeable and helpful. They might be blunt and to the point, but their advice is usually dead-on.

[EvilMan]

Hello all,

 

Why can the OP not take back the loan company to court and have the court order for the account to be split as previously stated in the old court order?

 

If she takes her old court order and asks for them to reorder the Loan company to force each party to refinance the shares of the loan equaly, then i think it should be do able.

 

The old court order was from 10 years ago, she will just be asking the court to force the loan company in doing what was ordered in the first place. I cannot see why a court cannot order each party to refinance the loans sepretly. Then if a party refuses, they can be put in contempt for violating the court order.

 

If i am wrong, can you please set me striaght. I know a party who is going thru something similar.

[stacyppl]

I am in the same boat. Never thought I'd ever be divorced. Anyway, the student loan and the laws backing them trump the divorce order. My ex-husband and I will just defer and forebear until we can't anymore and I hope that we can both pay half when we can no longer delay. I am not going to hold my breath and have to be prepared to pay it on my own because it's not like he's kept his word on paying child support these past five years.

[rynn]

Why is it that every time I read one of your posts, I can picture you with a snide little collector's smirk on your face?

 

You need to remember that not everyone is as educated as you, maybe they're not as business savvy or maybe they just really aren't the brightest bulb on the tree.

 

Having read through many exchanges Lynn has had with people seeking help on this forum, I think that's giving Lynn way too much credit.

 

I just want to add that even though I don't have any SL problems/issues, I read the Student Loans forums from time to time and I have found Cynic and LynnIM 5o be very knowledgeable and helpful. They might be blunt and to the point, but their advice is usually dead-on.

 

I personally cannot understand how anyone could read Lynn's posts and not perceive smugness, arrogance, and condescension in her emotional tone. Frankly, it shocks me that anyone defends her tone. The only possible explanation I can think of is that because Lynn sets herself up as an "expert", people excuse her, and that really is beyond me.

[LynnInMN]

Why are people bringing up a 3 year old thread?

 

I have said it before and I will say it again.....I will not sugar coat. This is the reality of the student loan industry. I have been out of the field for almost a decade but still have many friends still working in the field.

[tc9728]

Good question Lynn. Why are you replying. FL too boring? or too hot? Miss your days as a collector and feel the need to dig it in here?

 

People are hoping something might have changed, me included. I'm getting f$%ked by a lousy law supported by the loan industry so they can get their money as easy as possible. And yes, everyone is aware of the high moral standard of the financial industry.

I don't need to be told I shoulda read the paperwork. I trusted my partner. THAT was my mistake. If the situation was negatively affecting the loan companies from getting their money, it would have been repealed already.

 

Why are people bringing up a 3 year old thread?

 

I have said it before and I will say it again.....I will not sugar coat. This is the reality of the student loan industry. I have been out of the field for almost a decade but still have many friends still working in the field.

[breeze]

Good question Lynn. Why are you replying. FL too boring? or too hot? Miss your days as a collector and feel the need to dig it in here?

 

People are hoping something might have changed, me included. I'm getting f$%ked by a lousy law supported by the loan industry so they can get their money as easy as possible. And yes, everyone is aware of the high moral standard of the financial industry.

I don't need to be told I shoulda read the paperwork. I trusted my partner. THAT was my mistake. If the situation was negatively affecting the loan companies from getting their money, it would have been repealed already.

 

Why are people bringing up a 3 year old thread?

 

I have said it before and I will say it again.....I will not sugar coat. This is the reality of the student loan industry. I have been out of the field for almost a decade but still have many friends still working in the field.

 

It seems you registered here today just so you could bump this thread again, and insult Lynn.

 

This is a forum where you get the technical answers you need, like them or not, they are what they are. If you want to be an activist or beat your head against a wall, feel free to do it somewhere else. Everyone here is busy getting things accomplished - not whining and thrashing around.