Pioneer Credit Corp

[silverwings]

Hi Folks,

I have student loans in default. The are government backed. The loans have been in default for about 5 years. Interest and colelction fees have accrued to the total amount of about 68k.

Some background is that I had a rough divorce, followed up by severe financial hardship, no child support,major tax liens... all the worst stuff that you can get saddled with, I have gotton.

It looks like bankruptcy for me eventually. I am resigned to that.

 

Anyway, this collection agency has been pestering me for about 3 months to start paying on this loan. They are Pioneer Credit Corp.

I have told them repeatedly that I cannot make payment. I want to rehab the loan but I am not currently in a position to do so. I will be in about 6 months. Till then, my income is very limited.

 

They want me to pay 450.00 a month. I tell them I can't. So now they have asked me of I would like to qualify for their internal hardship program. The lady tells me that it will not rehab my loan, but it will get it out of default, the derogatory information remaining on my report.

I do not want that. I told her so. She immediately began to threaten me me loss of income tax return payment ( I dont get any anyway) and also that she will refer my case to the fed govt who will start litigation against me.

Really, I told her, the fed is going to come after me and clean out my non existent assets, take my one and only child, the cat, and my current income of 1500 a month.

 

She was very threatening, and my response is not repeatable here.

 

The question is, is the fed govt likely to file a lawsuit against me for not repaying my loan RIGHT NOW? Is she right?

I don't think the govt would, but I don't really know the ins and outs of this stuff.

 

Thanks!

[LynnInMN]

The possibility that it will become a judgment account are pretty low. They tend to litigate on accounts where there are assets. Your name is already on the income tax seizure list...that would be a given. My concern for you now is that you are working and they can step in pretty quick and start an administrative wage garnishment against you.

 

So unless you have a big job change coming with a huge salary increase, I dont see that you would be able to afford rehab. Why not apply for a direct loan consolidation? You would qualify for the income contingent repayment plan.

http://www.loanconsolidation.ed.gov/

[silverwings]

Hello,

 

Once I do the bankruptcy, I will have enough income to make monthly payments on the remaining back taxes and on the student loans.

The loans were all consolidated years ago. Before they went into default I tried several times to get hardship/forebearance, but they told me I had exhausted all of my options.

Now they tell me I have more. However I don't want to do a program that is not rehabbing the loan.

Thanks for the reassurance : )

I am puzzled, though, how they can offer consolidation at a lower interest rate to me if the loans have already been consolidated. I have asked how they can do that, and they keep telling me they can consolidate, but don't explain HOW?

[LynnInMN]

There are no deferment, foreberances or hardship programs on a defaulted student loan...it is simply a collection agency term. They are trying to get you to rehab or consolidate, and the term "hardship program" means absolutely squat.

 

You probably dont qualify for a lower interest rate since your new consolidated loan would be a weighed average with an 8.25% cap. So unless your interest is higher than that, you would continue with what you already have. There are ways of reducing the interest by on time payments and direct withdrawals. Defaults can be re-consolidated...it is a fairly easy process. The link is above. You would then have affordable payments.

 

Rehabbing the loan turns it into a 10 year loan. I calculated on a loan amortization chart that a 10yr loan at 8% (just guessing here)for $68000 would be monthly payments of $825 per month. Can you afford that for 10 years???

[Emanze]

Hi Silverwings, I am in the same boat as you. Don't let those collection people intimidate you. That's what they are paid to do. Last week I had one who was so rude he hung up me. That was a first. Remember you don't have to take any abuse and you don't have to take their calls.

 

Also Lynn,

 

You are my resident expert around here and I've been reading this post to learn more.

 

I think you know I am trying to rehab my loan. But I thought that when you rehabbed a loan, it went out of default in a year. And, if so, wouldn't Silverwings qualify for hardship payments again? That's what I am hoping will happen to me but now I'm a bit nervous.

 

They had told me they will consilidate it with my other loans through SallieMae at the end of rehab but now I'm wondering if my payments will jump up so high I can't afford it.

[silverwings]

It turns it into a 10 year loan?!!

I thought they just put you back on the orginal term, which was 25 years.

OMG.

I have my own business and it is taking off well enough that I figured I could pay off the taxes AND make payments on the loan.

Sheesh.

Maybe the hardship program will work after the rehab, like what you are trying to do, emanze.

[LynnInMN]

Yes they may allow "reasonable and affordable payments" during the 12 qualifing payments but once the rehab goes thru, you are given only 9 more years to pay it off.

 

From the DOE site....

 

Loan Rehabilitation

 

You may also be interested in participating in the loan rehabilitation program. After you have made 12 consecutive monthly payments that are both reasonable and affordable, we will agree to reinsure the loan. You will then be eligible to have the loan purchased by a lending institution. Once a loan is rehabilitated, it will be taken out of default, the credit bureau reports made by the servicing agency will be deleted, you will be able to repay the loan over a 9 year period, and you will again be eligible for additional Title IV student financial aid funds.