My student loan was moved to a CA (Van Ru) recently, and Ive been getting calls left and right about it. They have called my work 4 times (3 after I asked them not to).

I am a newbie, and posted in the credit forum touching on this, but after reading through this forum I am starting to get very worried.

The loans are years old now, theres many small amounts that add up to a big one. Anyway, today they threatened wage garnishment, and I dont want that. I have a letter of validation ready to send, but I'm not sure that with this type of loan if its a good idea or not.

What are my alternatives now? I read somewhere on CB that a letter of validation may not be a good idea. I'd much rather, obviously, deal with the Dept of Edu directly. is this still possible? Will I still be eligible to rehab this? Must I resign myself to dealing with the CA, and if so, is it possible to do this in writing only? If thats the case, what type of correspondence should I send.

I'm starting to really worry, and I'd like to start this ASAP.

Thanks

Let me just add ... If you are unsure what loans they are collecting for (if you had several) or if you want an accounting of the balance, you are completely within your rights to request that. Just be sure to send a very carefully worded, respectful letter that only requests the information you seek. Requesting validation and then being a hard @$$ about it can cause trouble, but if you have questions about anything they are collecting on, please do not hesitate to request the information.

I had to deal with Van Ru a long time ago, similar situation. What you should do is consolidate the loans. Call them and tell them you want to consolidate them. When I did that, they said OK, but they wanted me to pay something while they were waiting to be consolidated. I offered $50 a month and they said OK. 3 months later they were consolidated.

Go to ED.GOV and look at consolidating with them. They have a competetive interest rate, and offer flexible payment terms. You can also try to rehab the loans, but this can be a costly option. I didn't have the $$$ to do that. Also, if they have been delinquent for a while it will only report until 7 years passes.

Even if you are short on cash, you need to take care of these because they will never go away. Also, the collection agency is charging you a ton of interest. Good Luck.

Wrong. The CA doesnt charge you a penny of interest or collection costs. The guarantor does. Your interest is the same interest rate that you signed for. Nothing changes because it is with a CA. The guarantor will charge the the collection fees fees once you are 60 days post defasult. None of the interest calculations are done by any government CA.

Awesome, thanks so much for the information. I'm going to take all the advice above, and contact the CA and see what happens.

Okay, I contacted the CA today. She offered me to pay 5% as a down payment (which comes out to a fairly high number, for me anyway) and to fax in a pay stub which they will use to determine the amounts monthly, and that if I am willing to pay $270 a month that they will put it into rehab.

I asked about consolodation and she said that its not possible this late in the process. Is this correct? And if so, is it possible that after a few payments, at that point I could try and consolodate? And finally, if I do the rehab program, do I then forfeit any chance of consolodating later?

Thanks for the help so far.

One last thing - they said I have to give them my bank account numbers or credit card to make the monthly payments, but obviously I dont feel comfortable with this. Do I have a choice?

WIth regard to the interest. Let me rephrase. You are being charged for costs of collection and late penalties which add up quickly. I ended up owing about 15% more than the original balance. Either way, it's a more costly option to ignore them.

I don't think that they (Van Ru) are correct in saying that you can't consolidate them. Call direct loans and get the info. You can also call the loan originator about this. Check that out again.

What Van Ru might be saying is that it is too late to stop garnishment proceedings if the OP doesnt start the payments right now. The loan originator has nothing to do with the account at this point.

Dazz, you seem to know very little about the way student loans are handled after they default. You may want to do a little research here.

Whether the OP consolidates now or not, the collection charges are there. It's too late to reverse those effects. Also, the loans have defaulted, and as Lynn pointed out, the original lender has absolutely nothing to do with them now; the government paid the claim and then farmed them out for collection. And once that happens, one is generally destined to deal with the CA. Again, nothing can change that.

But you are right in one regard; it's costly to ignore student loans.

OP - there is no provision in the SL guidelines that require a down payment for rehab. I would suggest you call back and ask for a qualified supervisor. Lynn has given this very advice many times - call through the switchboard and ask for that person's name then ask for a qualified collections supervisor. Ask for a name every time you talk with someone; make a point of it. Tell them that you are aware that there is no requirement for a down payment, and that you want to pay them.

I didn't see where you mentioned the balance - what are they saying you owe them? Ball park figures only please. Generally, 1% is the required monthly payment - so for a monthly payment of $270, that would indicate a balance of 27k ... but knowing CAs like I do, I would expect that your balance is far less than that?

Even though they threatened wage garnishment, they have to send out the paperwork informing you that they will be pursuing that avenue and then they have to give you the chance to appeal. If you cannot afford the customary 1% then you would need to provide financial data to work out a "reasonable and affordable" payment.

You also didn't say if these loans are old enough to have fallen off your credit reports. If they are still on there, I would definitely do the rehab, but if they have already fallen off, I would go with consolidation.

Thank you again for the help.

As far as the balance, its is currently about 35000, which is also the same as it was before it was turned over to the CA. Not sute if I can negotiate that?

I havent received any paperwork yet. The person i talked to said that that process could be stopped if I fax my information to them soon. The loans are still on my credit report. They range from 98-02 as afar as date they were first given. I am not sure when they would fall off the report. Is it true that Student Loans will stay on much longer than the SOL, because they are SL? (6 years in NY, where I am)

So, I guess my course of action now is to call back the CA and ask for the qualified supervisor. I will let him or her know that the rehab doesnt require a down payment, but I want to start paying. I will then, hopefully, set up the payment plan monthly and begin making payments. I'm assuming this will be around the $270 a month, which is doable but will make things tight. Then I will start looking to consolidate, and hopefully get that through soon. Does this sound correct?

Can anyone recommend a good and decent consolidation company?

And also, she mentioned they would have to get my bank or CC information. Is this true, or can I pay by money order?

Here's your research:
http://www.ed.gov/offices/OSFAP/DCS/index.html

Defaulted student loans are not the exclusive domain of the CA. I called Sallie Mae and set up the consolidation. Van Ru was involved, but only as far as the temporary payments were concerned. Consolidated in 90 days. Also, if multiple accounts for the same loan are on your credit report rehab doesn't get rid of all of them.

The CA said "You can't consolidate at this point." That to me is BS.

You called SM and set up consolidation WITH THEM. Anyone can do that, and no one said it wasn't possible. I said, and Lynn said, that it is NOT possible to deal with the CA when the loans are in default and you're trying to work out rehab (in other words, the original lender will not "pull them back" from the CA).

I have asked nicely now I'm going to be blunt. Stop giving information that is only half correct on this forum. It is dangerous and it doesn't help ANYONE when what they're being told is not correct.

Best of luck to you; let us know what happens!

Actually if you knew anything about student loans which it appears you don't, you would know the difference between a FFELP loan and a Direct Loan. The OP cannot call Sallie Mae...they have a DOE loan. They can only consolidate with Direct Loans and the rules require that they be in satisfactory repayment. And yes, since the CA is a representative of the guarantor who owns the loan and has to sign off on the loans, technically they do have exclusive domain. You can set up as many consolidations as you like, but if the guarantor/CA chooses NOT to sign off on it because the conditions are not met.

I guess then the rings of Saturn were alligned with Pluto the day I CONSOLIDATED 9 LOANS BETWEEN DOE, UNIVERSITY PERKINS, USA FUNDS AND SALLIE MAE with ONLY a 3 month- $50 per month agreement.

If I could do it with a couple of phone calls, why couldn't OP? Go ahead. Flame on.

You're not being flamed but you are about to earn yourself a warning. You've been told to stop giving out inaccurate information, yet you insist on continuing.

Cease and desist NOW or I will give you an official warning.

Smart-assing the forum lead is also not a way to get yourself positive attention around here either.

dazz

The reason that you could do the consolidation with Sallie Mae is that they were your servicer for at least one of your loans. Sallie Mae DOES NOT service Direct Loans. The OP's loans are all with the DOE/Direct Loans. I am not here to flame you, if I was you would need asbestos underwear, but I will tell you that what worked in your situation will not work for the OP. I would also strongly suggest that you step back from the keyboard and put your hands in your lap. Any further and I will be issuing the warning. I am the senior mod and the founder of this forum.


fla-tan
Forum Moderator

Just as an FYI: The CA collection cost is determined by the total balance due. My situation was that I owed nearly $13,000 and had my income taxes offset. I called DCS and spoke to a rep who went over the numbers with me and she said that because tax return offsets are applied to BALANCE and INTEREST first, the remaining balance is all the CA can collect on. After offset is done remaining balance will be $1200. Their fee? $360. Had I made payments to them directly sans offset their fee would have been $3900 or 30% of the $13000. DCS rep also said that I may be able to get a rehab agreement for the remaining balance so it can clean my credit report. If not, I can offer a settlement for maybe $400 to pay it off altogether. But I'll cross that bridge once the tax offsets pay it down. I would never recommend that anyone wait as long as I did to get to the point of garnishment AND offset. It was a long, hard, expensive road to take and I'm glad it's almost over.

They are not giving you correct collection costs. Collection fees are applied by the guarantor at a rate of 18.5% at 60 days past due. There isnt a CA in the country that is making more than 9% in collection fees. The CA does not get paid on offsets . At a $1200 balance after tax offset, they are not making much ....just over $100. You may have $360 in collection fees left but the CA does not get it all. The collector is full of donkey do.

OK so just to clarify. I filed '03, '04 and '05 taxes at once, so three offsets (rounded numbers)

$13000 I owe
$4500 first tax offset
$ 8500 balance

$8500
$4600 second tax offset
$3900 balance

$3900
$2700 third tax offset
$1200 balance

None of the $$ from the offsets are applicable towards the collection costs, which are calculated based on total balance due...so they only get max ~9% of $1200??? It explains why the CA was so desperate to get to me before tax season..even to the point of violations. Bittersweet.

FYI ... you won't be able to rehab on $1200. You would need to have $1000 after 9-12 months of payment for it to qualify as rehab. At a minimum payment of $50/month, there won't be $1000 left at the end of that 9-12 months.