here's the situation...

about 16k in principal on stafford loans from US dept of ed in default.

CA started calling work and finally dunned late last month.

Left message at work this week regarding garnishment. Called today to setup rehab.

Was handed off from rep to rep, and starting to feel like i'm getting the run around. As I understood it, rehab is usually based on a 1% payment, and NO down can be required.

They wanted info regarding take home pay and expenses. As it all actually testified to our desperate finances, I obliged general info. After this, they started demanding a third down. Said impossible and started working me on 10%. I repeatedly mentioned knowing that a down payment can't be required.

She said no down would require a payment of 1.3% of the balance. I honestly said that this isn't likely to be doable, and mentioned that a 1% payment would. Also pointed out to her that the figures she gave for with and without a down payment were inconsistent with the 1.3% payments. Rep claimed this was due "different lenders"

They got pushy and left an ultimatum that I call by 3 tomorrow and set up payments, or a garnishment will be made. I have no money to put down. The 1.3% payment will possibly break the budget and force bk. She claims "the govt must be notified by that time tomorrow"

The inconsistent story has me worried. I really need to know how to handle this one. Do I have any other option? Does this all sound accurate or like CA bs?

I'm literally sick over this one. Any help from you guys and gals will be HUGELY appreciated. THANKS!!!

Lynn can correct me if I'm wrong, but the DOE doesn't require a down payment, and the general rule is reasonable and afforable payments. Each CA that works with the DOE has a representative who you can call if you have problems. If you call the DOE, they will tell you who that person is. You have to go through that rep first to try to resolve the problem, and if you can't reach resolution, then you can complain to the DOE.

I'd call and find out who that rep is. Call them and complain about the way you were treated and indicate that you know the CA can't require a down payment in order to rehab. Tell the rep that "I can afford 1% and only 1% and if that is a problem, I will call the DOE." I suspect they will work out an arrangement with you.

Thanks for the tip. I'm just in a panic because of the threat that a garnishment will be issued if I don't contact them by tomorrow afternoon. Having dealt with CA scum before, I would normally chalk this up to abusive threats...but given the different nature of this debt I'm much more concerned. A garnishment would render our household financially insolvent.

I checked the loan status through the link in the stickies and which references a toll free for DOE. The same number is listed on the DOE site regarding rehab programs for direct loans. I was planning to give them a call in the morning, and figure that's my best option right now. If nothing else it will give me the contact info for the rep you referenced.

So is the lowest payment you can make in rehab 1%? If you have $100K in SLs and they are in default, then the lowest you can pay is $1000 per month? Do I have this correct?

Based on the info i received from USDOE today, 1% is a standard guideline.

However, given our financial situation at present, that would likely represent a hardship, but i'd still jump at it instead of garnishment. When I explained this to the rep at USDOE, she sent out some docs today for us to fill out regarding our finances. She said a lower payment can be established based on that info.

Doe the DOE didn't make you deal with the CA customer service rep? That's a good sign. Did you at least get the name and DD number of that person?

I offered 1% and the DOE accepted it.

What happened to me is my loan had been assigned to a CA. Once I looked through these boards and learned about rehab, and reading that 1% is standard, what's what I wrote in my letter to the CRA. Unbeknownst to me, the DOE had recalled my loan back to them (I assume to reassing it to another agency) and so the original CA forwarded the letter to the DOE. I received a letter from DOE agreeing to the 1% and saying that I would be billed. Then there was some sort of a mixup because a couple of days later they indavertently assigned it to another CA and when I called the DOE for clarification and confirmation of my terms, I was told I needed to deal with a new CA. I called them and they pulled the down payment and higher monthly payment crap with me and indicated that my payment would be higher than the DRE agreed to. I called the DOE back to complain and the guy first told me that I had to deal with the CA, and that's when I learned about the rep/problem solver that each CA has. Then he realized, by reviewing my account, that it was sent to the second CA in error and he told me that they could recall it back from the second CA once I make my first payment and going forward I could deal directly with DOE. He transferred me to the payment center and gave them instructions to recall my loan once the payment went through. That went flawlessly. I was really lucky. I don't know how they pay the CAs, but I assume they must get some percentage of everything they collect and that's why they push to get a down payment and higher monthly payments. I know for a fact that the CA rep I was speaking to (not the problem solver, but the actual collector) was lying to me. (Imagine that, a CA who lies!!!) Well, because of that, they ended up getting nothing because that's when I started to complain and got the loan recalled back to the DOE.