Hi all,

Here's our situation. Unknown to me, but irrellevant I guess, DW let her Direct Loans SL go into default as of Sep 07 (I cosigned for these loans).

The only type of Direct Loans that I can think of that require a cosignor are PLUS loans

Last known balance was $13K. Approx 1 month ago, Allied Interstate (?) called the payroll dept. of my work stating that I needed to contact them or they were going to garnish my wages yada, yada, . Relayed message to wife: your loans, you fix this!!!

Is this what they said? Or was it just a message to contact them?


She contacted them and they told her the only way for this to not go to garnishment was to pay $10K upfront, make 9 monthly payments of $112 and (according to DW) they told her the debt would be cleared, $0 balance, paid in full, etc. Wife told them we could do this, but would require negotiating loan from my 401K and would take some time. She then gave them checking acct. info and told them the date she expected the loan to be processed. - BIG MISTAKE TO GIVE CHEKING ACCT INFO BEFORE HAVING FUNDS IN-HAND IMO!!! As to be expected, funds were not available before the date she said they would be, and despite several phone messages to allied (could never speak to actual person) they tried pulling a $10K e-check from our acct. on the date she had given them which naturally bounced.

We did not hear back from them until last Friday when they again called my work (not me personally) threating that if they did not receive action from me in 24hrs they were going to take "legal action". Up till this pt we were assuming everything was ok and Allied was waiting on the 401K loan to be processed per DWs phone messages them. I called them this time and they threatened everything from garnishment again, to legal action against me personally for "writing a bad check to the US Government". The conversation ended by them stating that I HAD to FedEX them a bank check for $10K by the 30th of May or they would proceed w/ garnishment & Legal action against me (not DW)!!!!!!!

For starters, cancel the 401K loan. Put the money back. Allied cannot take legal action....they have no authority nor are they a law office. If they actually disclosed to your payroll department the details of the loan, they have violated FDCPA.

As a side note, again don't the rellevance, they did begin taking the agreed upon monthly payments of $112 from our acct. as of this month (May, 08)

DW said we received no correspondence from them during this time only "hang ups" from an unregistered number, while they claim leaving several messages for us.

Sorry for the long intro, but wanted present as many details of the situation before hand.

My questions are:

1) She goes into default in Sep, 07 and they come after me in just 7 months. DW has also been working since May, 07. - I've heard of people dodging SLs for years. Why come after me @ my work and not her & why so soon? Am I just the unlucky one who was easier to trace?

You were easier to find. However, as a cosignor, you are just as liable as her.

2) A lump sum of $10K on a $13K balance sounds absurd to me. Would this be usual & customary? Now that DW committed to this amount, what are my chances of having this lowered to something reasonable in my next conversation with them? They are obviously using the INSUFF transaction as leverage against us, yet with the lump sum and the monthly payments equals less than what the last known balance was. I'm sure there have probably been collection fees, interest, etc added on.
DW claimed they told her it was a "settlement" but this is contradictory to everything I am reading here, one that they don't offer settlements lower than the principal amount AND garnishment for the full amount would be the easier way to go and they would be guaranteed the full amount.

Normally checks for anything over $1000 are called and verified before depositing. Did they actually deposit it??

3) From the sounds of the amounts & duration of the monthly payments, it sounds to me like they are putting us on a Rehab program. However, from other posts, I do know that rehabbing a loan is not an option if the final balance would be less than $1K. Is Allied lying when they say after the lump sum and monthly payments the remaining balance would be $0? OR is what they are implying, or DW missed in her conversation with them that at that pt, the loan be "rehabbed" and the "default" condition removed from the CA TL in our CRs & there would be a remaining balance which would either be sold off or transferred back to Direct Loans?

I agree that it sounds like they are going the rehab route.

4) I think I know the answer to this next question, but will ask it anyway. Since we have now started making the agreed upon "voluntary" payments, albeit only one to date, are they still able to garnish? I would say yes since we are still in default but want to confirm this anyway.

Actually they have screwed themselves. You are now in repayment and they cannot garnish. They will try to guilt you out of the $10k but at this time, I do believe you may have some major FDCPA violations.

5) Are CA's for SLs in any way bound by the FDCPA? I know they have greater freedoms acting as contractors for the Fed's but come on. I am informed enough to know a veiled threat of legal action against me for an something when they couldn't possibly prosecute me for. There's also the issue of disclosure - the payroll clerk at my work knew the entire details of this debt after talking with them. I do know this would be a violation if it were just a regular CA.

Oh yeah....they are FDCPA bound. Have the payroll clerk write down EVERYTHING that was said to her.....get it notorized. With this you will make $1000 and the account will be pulled from AI.

Any insight anyone has into our situation or how to approach my next conversation with them would be most appreciated. At first thought, I was planning to approach this just as any other CA trying to collect a debt by sending DV and limited C&D etc. However, based on the invaluable information this sight has to offer, I quickly found out THAT APPROACH IS EXACTLY NOT WHAT TO DO. I guess I also want to better understand our rights as a consumer. I've read many posts on this site that explain the enhanced lattitude CAs working for SLs have and what all they "can" do. I'd like to learn what they aren't allowed to do!!!! After speaking with them and coming to know the full details of the situation, I feel violated, and more than anything, ANGRY!

Again, thanks in advance to anyone who may know what would be the best approach. Thanks also for a great site!!!!!!!

Lynn
This is in reply to your question. Allied stated to the payroll clerk if we did not contact them they would proceed with wage garnishment. We have asked the payroll clerk to make a statement if she can.
Violation. All they are suppose to do is verify employment, not disclose the debt to the payroll clerk .



We then contacted them, thus the $10,000. This is a little overwhelming, and we are not sure how to handle it now. We have made a voluntary payment and would like to continue with the rehab program. We are getting numerous calls from this company. What now?