A rep. from StudentLoanConsolidator.com is telling me that they can buy my $98,000 in loans from the CA that now holds them for the Dep't. of Ed. and pay them off and get them out of default status in 60 days. Is this true? But isn't it true that the only way I can have the "default" status removed from my CR is through rehabilitation with the CA that currently holds the loans?

The other thing is that I've been negotiating with the CA about the loans, and am being pressured into a monthly payment that is too high for my current circumstances, which should improve in a year. It's possible that I could manage the monthly payment they want me to make (just barely) in September, but I just received paperwork to sign that states that the first of the 12 monthly rehab payments is due 8/1/05. I have to move by 7/31, and until late May I did not know this. Moving is costly and I'm having to take unpaid leave for packing and moving, so my income for late July and August is less than usual. So I think I could agree to begin paying in September. Has anyone tried writing in changes on the letter/form we're supposed to sign, and attaching a note about life circumstances that make it impossible to commit to what their letter says about payments and beginning due date?

Thanks for any insights, shared experiences, etc.!

Your first question ... yes it's true that another lender can buy your loan and get it out of default, but the negative information will remain on your reports. The only way to get the neg info off is to rehab the loans.

The second question - do NOT let yourself get pressured into paying more than you can afford. The payments have to be reasonable AND affordable. If you can't afford to make the payments they are asking for, then negotiate them down. Tell the CA that you can't afford more than $xxx (make it a little less than you can actually afford). They're going to balk, but stand fast. Give a little - up to the payment you can actually afford, but don't agree to more than you can afford.

Call them back, tell them that you have received the papers, but you just cannot afford the payments to be that high. Tell them that you will be happy to pay $xxx but you can't afford the payments they are quoting.

How much do you feel comfortable paying? Have you requested rehab based on income?

Thanks for your always-empathetic and thoughtful replies. I guess I was thinking it would be better to send a CRRRR letter with proposed changes and explaining my circumstances, which I've *already gone over verbally* with them. I initially offered $200 per month, which is the max I can really afford until a year from now, and could begin paying that in Sept. I believe the "supervisor" of the initial person I talked to at the CA said this was "income sensitive rehab", but it felt like they were playing "good cop, bad cop", except it was "good collector, bad collector", to get me to agree to $395 per month. Sigh... Anyway, the circumstances of my life have gotten more financially complicated since we began negotiating on the phone, which leads me to want to begin the agreement in Sept. instead of August. I want to make a commitment toward rehabbing the loan that I can really keep.

Is it too soon to talk with the fed. ombudsman?

Thanks again!

Ya know, I'd try one more time to work it out with the CA, then if that doesn't work, definitely call the ombudsman. They can do things we can only dream of doing!

I've been where you are right now. I was in wage garnishment before I really woke up and accepted the fact that I was a moron. LOL You can search on my screen name and find all sorts of information on that debacle. Trust me you don't want to go there, because it hurts WAY more than the $400 they're trying to get from you now (cause it sounds like you make decent money).

Hang in there; I promise this is only a temporary glitch. Face it head on and stay strong!

Call thru the main switchboard and ask for a qualified manager, not a supervisor. From the switchboard operator, get the position and the full name. When you get the manager on the phone, ask him to repeat his title and full name. They will know you mean business.

Thanks, TQG and Lynn.

TQG, I think you misunderstood me somehow. I am DEFINITELY avoiding wage garnishment and working on rehabbing the loan. (...and trying not to be a *moron*!) =) I am just trying to be honest and realistic about what monthly payment I can commit to b/c I don't want to mess this up. There is *no* padding in my budget. It's fine to have a "decent income", but if you also have equally "decent" financial commitments, then it is a moot point, unfortunately. Thanks for the encouragement though. I am mostly staying strong in the face of a lot of stess all at once. Earlier today I was at a low point though. I talked myself out of it, and having an outlet and support like this was a big help too.

OK, tomorrow I'm going to ask for a "qualified manager" and attempt to get the payment lowered and the start date Sept. 1. Then I'll back it up with something in writing. We'll see what happens...

Thanks again!!!

Well, frankly, you're avoiding garnishment *for now* but that can change. It sounds like this loan might be fairly old ... mine was only past due by about 2 yrs before wage garnishment started, so it can happen at any time. My point was, you want to work out the payment plan BEFORE you get to garnishment stage.

Trust me, you do NOT want to deal with that hell. And I was trying to work with the guaranty agency when the garnishment order was issued!

Even though you think the payments to rehab the loan would hurt, it's nothing compared to the pain of garnishment. And garnishment can start at any point after you default.

ETA: Just to give you an idea of how much garnishment would hurt .. say you make $50k a year and get paid twice a month (at a rate of 2125 a pay pd). After taxes, you have ~$1800. They can garnish up to 15% of your "take home" pay. That's after taxes, but they don't consider health insurance, 401k, etc. Take home pay is calculated based on gross pay minus taxes - FICA, SS and Medicare.

So at 15%, they are taking $270 a pay period. That's $540 a MONTH, over $3200 a year. And that's just on $50k!

When looked at in this light, $400 a month may not seem as great a sacrifice, particularly if you make more than $50k a year.

I think your best avenue is to do rehab for 12 months. I also want to let you know that the ombudsman helped me greatly. I was told by the CA holding my loans that the only payments I qualified for to rehab my loans were either $380 a month (for income contingent) or $697. I was told these were my only 2 choices. I accepted the $380 even though I was unemployed and it was tough (this was prior to my finding CB).

I contacted the ombudsman via email and explained that I was having a tough time making this payment and they contacted PHEAA (holds my loans) and got the payment reduced to $200 a month. The ombudsman explained everything to me and was very professional. He asked me if I would be willing to fax paperwork, get on a conference call, etc. I had an answer within a week and the payment was reduced.

Try this. Let the ombudsman's office know that you can't afford the payment the collection agency is trying to get you to commit to and see if they can step in.

A few things...I'm already working on negotiating to rehab the loan. I know that that's the best course of action, and I'm trying to work it all out before they begin the process of garnishment. I make less than 50K, but as I said before, it's not how much you make, it's what your existing financial commitments are after careful budgeting that counts, as far as being able to afford payments the CA asks for. I don't just "think the payments for rehabbing the loan would hurt", I KNOW it. I've added up my budget and removed any and all unnecessary expenses and minimized others, and still can't make the payment they're asking for work. I am worried that if I call back the way I'd thought I would to ask for a smaller payment per month to rehab, they will send garnishment papers, and then I'll have to declare bankruptcy to stop that process and start all over negotiating with the CA, obviously something I want to avoid. So now I'm thinking about calling or e-mailing (as "flcleo" suggests) the ombudsman today.

I've had my wages garnished in the past (years ago) for other much smaller debts, so no lecturing is needed about that! I know what it feels like and I definitely want to avoid that, and as I said (again) I am working on that and they've sent me the rehab paperwork. The problem is that the payments are truly more than I can afford this coming month in particular, and for some months after that b/c of circumstantial factors already mentioned in previous posts. The more I look at my current finances, the more I realize that I would be setting myself up for failure at rehab if I accept the payments they want ($395/mo.) I might be able to squeak by in the Fall, but if anything unplanned happens, like a major car repair, I won't be able to handle it.

Anyway, thanks for the ideas, opinions and support of one kind or another...