Hello folks,

Here is the situation. I have a defaulted school loan from the late 80's (yikes). My wife and I just came out of BK and I'm fully aware that my school loan was not discharged. The BK was dishcarged/closed at the end of June. We had taxes that were also not discharged and in working with the IRS (which by the way was the most pleasant experience of setting up a payment plan I have ever had) an installment agreement was set up.

Now, I have recieved nothing in the mail about the SL's but did recieve a call from West Asset Management (and it was one of the most rude messages ever left on our answering machine). I figure this is in regards to the SL. My question is, how do I go about setting up rehab for my school loan. The amount of the loan is roughly 5,500 dollars. I have read here that there is a 1% guidline that is used in figuring monthly payments. Is this correct as I would like to pay roughly 60 dollars a month?

Also, I have read that CA's demand a "down payment" and that they need to take an "income statement" as well as demanding your checking account. Is this correct???

How should I approach this?

Thanks!

Your $60 payment should work perfectly for rehab. I would simply call them and tell them what you want to do. Let them know you have a bill with the IRS which you have to pay...that actually takes priority over student loan payments and they know it!

Checking account. Tell them you dont have one and cant get one right now from because of the BK. You have no family or friends that will give their checking account access or financial help! (milk it!!! )

The Higher Education Act does not require a down payment. They can ask but you are not required to make one to qualify for a rehab.

Good luck!!

Thanks Lynn! You are a definate asset here, and I can't say thanks enough for how you help the folks with questions on these boards.

I wasn't aware that IRS trumps SL's! I've been searching these boards and I'm just stunned at what some of the CA's are doing to folks trying to do the right thing (true, we did sign the contract and I understand this completely) I'm just hoping that in dealing with the CA that it goes as smooth as with the IRS.

I'm not good at the word games these CA's are schooled in, and I usually react with anger when threatend by CA's (which is exactly what they want) so I just wanted a little "upfront info" on what to expect.

I fully intend from the very first sentence to state "I am not refusing to pay I would like to rehab my loan, where do I send my first 60 dollars that I plan on paying monthly".

What I fully expect to hear in return is, "you have to pay the full balance, how much do you make, what's your checking account number, this is a one time offer or we are going to garnish you, etc.". Whew... I'm nervous already.

FWIW to those others who have had to BK, this seems to "reset" things like school loans and tax bills. I have a close friend who was being garnished for his school loan. Once the BK was filed, the garnishment stopped. Once the BK was discharged, he recieved almost immediately, new SL letters stating they were placed with a CA (this was *2 weeks* post discharge). He contacted the CA, and is now rehabing his loan.

BK does not reset student loans. It bascially freezes the due diligence clock and any garnishments that might be happening. It is frozen until the BK is discharged. Once discharged, the clock continues to tick from the point it was at pre BK. Sometimes a guarantey agency will pull a BK account back from a CA and hold it until it can be worked again. Once it can be worked again, it is simply placed at another CA.

Ahhh... more insight. :-)

Lynn, let me ask you, when I talk with the CA on the phone, what is the easiest way to keep the conversation civil? I know where I need my payments at, which is a little more than the 1%, but how should I react to the "income statement, down payment, one time offer, checking acct number" script I'm sure to be read?

Actually most collectors dont use a script. By calling in, it puts you in charge of the call. Tell them that you have worked on your budget, and with what you have to pay the IRS, all that is left is $60/month. Usually when I had debtors that just came out of BK, consessions were made, particually when the IRS is hanging overhead. Tell them you are strapped to the bone. Checking account....just tell them you cant get one because of the BK. It does happen!!