First of all, I just wanted to say that I am so happy to have found this board! Also, I want to apoligize in advance if this has already been talked about.

Here is my situation:

My husband has 3 students loans and when I became pregnant we couldn’t afford to pay one large loan ($16,000) and now it has gone into default. They have turned his private loan over to a collection agency and I have been receiving many calls at my job. The man (collector) said he has 3 options of repayment for us.

1. Pay $8,000 down with $90/month
2. Pay $5,000 down with $200/month
3. Garnish wages up to 25%

I basically told him that there would be no possible way for us to come up with thousands of dollars to put down. Obviously if I had the money I would have been paying on my loans. I offered to pay $100/mth and he says that he would need something down. What do I do? Do I keep calling him and offering to pay $100 or do I let him try to Garnish our wages? We are a newly married couple who are barely making ends meet. We really can’t afford for them to take 25% of my husbands earnings. Help! Where do I start.

TIA~
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Wow, wish I could help, but I never had a privately funded student loan. He is correct, though, in that they can garnish wages, but it's probably UP TO 25%, not a flat 25% without consideration of other obligations. Considering the $$ of the original loan though, $100 probably won't get you close to bringing the loan out of the danger zone. I am paying $70/month on a $6k loan.

I would send a letter to the CA and ask for all of your options to be laid out in writing, then make a counter offer. But be prepared to pay at least $200/month because I don't think you have any hope of getting a payment any lower based on the original loan amt.

What about the other two loans? What happened to them?

Anyway, maybe Cheech will come along and answer your questions ... I under there's a lot of experience under that belt on private SLs. :wink:

Find out if this loan is eligible for rehabilitation. If so tell the CA to go screw themselves. I dont know if you can rehab private loans, but if so, go that route with an income contigent payment plan. They have to accept resonable payments. just to give you an example, my CA charges 50 dollars per loan or 1% of your balance whichever is greater. that would be 160 PER MONTH FOR YOU

Do rehab if available.

12 months of payments that are reasonable and affordable. You have to make 12 payments and after the 12 months the negative TL's turn to positive.

Best way to go.

Thank you all! I keep seeing the term "rehab" what exactly is that?

As far as our other loans, they are low enough that we have been able to pay our monthly payments on those. They are fine, it's just this big one that we have had trouble with!

Thanks again!

First, why is the CA calling you at your job about your husband's SL debt????? Did you co-sign? Were you even married when he took out the loan??? If you aren't responsible for the debt (and, not that I know for sure at all, I suppose that in some community property states it may be possible), then he has no business -- and no legal right -- to discuss this with you.



Again, assuming that this is a federally-guaranteed loan (which most, but not all, are), then they can garnish your wages without going to court. But, they are limited to 15% of your disposable income -- income after taxes, mandatory retirement deductions, health insurance, etc. The CA was being misleading about the 25% (wow, isn't that a surprise -- not!!). The 25% is the maximum of total garnishments (not including child support) that can be taken, of which your student loan garnishment would be only one. If you don't have any other garnishments, than the 15% number is what you should be looking at.

Offer them whatever you know you can comfortably afford for 12 months. In rehab, you have to make all 12 payments on time, so you want to make sure that you have agreed on an amount that is doable. Many people here have talked about it being about 1% of the total amount due (so, if it's $16,000, that would be $160/mo.), but, I know I didn't pay 1%, so it's certainly not a hard and fast rule.

Like I said, except for my first comment about calling you as opposed to your husband, this advice really only applies if you have a government-backed student loan, but if it's truly private, they can't garnish without going to court and getting a judgment anyway.

Good luck!! I know this is really stressful, but it will work out -- there are lots of people here who have come out on the other side (I just finished rehab last month)!!!

Rehab is an agreement you have with the CA whereas you pay a certain amount every month for 12 months. Once the rehab is completed the negative TL's on your report are removed and replaced with new TL's.

Usually after you complete rehab, the CA will sell the loans to another servicer and youll get nice pretty new TL's without the negatives you had before.

If you miss even 1 payment during the 12 months...you start all over again....so if you agree to make the payments..dont miss one.

Ive got 2 months left on mine...and the day the bill comes in the mail..I send it out.

First, why is the CA calling you at your job about your husband's SL debt????? Did you co-sign? Were you even married when he took out the loan??? If you aren't responsible for the debt (and, not that I know for sure at all, I suppose that in some community property states it may be possible), then he has no business -- and no legal right -- to discuss this with you.


I was wondering the same thing! I don't even know how the guy even got my work number. No, we were not married when my husband took out the loan and my name is no where on the loan. He also got me so stressed out yesterday that he had me crying at work.

I think I will work on a letter this weekend about trying to do that rehab then.

Actually, I did get to choose my rehab amount, after much negotiating. They wanted about $1200/mo (law school loans -- ugh!!), then they went down to $850, and I ended up getting them to agree to $500, which is about 1/2 of 1% of my loan. I did have to send in financial forms, but that was after they already agreed on a payment amount, so it was just a formality. I think this is fairly common -- you just have to keep at them.

Also, while I didn't get a rehab agreement either (and may have to fight them on it -- I don't know yet) because this was pre-CB and I was still ignorant on the process, you can get one. After you've agreed to the terms, ask them for a written verification of the rehab agreement. It's not mandatory, but it would make things much easier when you're done so you don't have to go out afterwards and prove that you did it, if it becomes necessary.

Since this isn't your loan, I would make sure that any correspondence regarding this debt that you send out be done under your husband's name. You don't want your name associated with it at all or else it may give the CAs reason to continue to call you. Also, next time they call you at work, tell them that this is not your debt and that they need to contact "Mr. sara1022" (honestly, I wouldn't even tell them how to contact him, but that might be the "bad" side of me!). Since they have also proved that they may be less than trustworthy, it may be a good idea to send them a limited C&D (cease & desist), asking that they contact you only in writing. Send it CMRRR. This gives you a paper trail in case you have any problems with them in the future.

Also, TxQuiltGirl, I don't think you're going through garnishment anymore, but, just in case, you may want to check the DOE's web site. There was an information packet for employers that included a worksheet that gave the parameters for how to figure out the amount of the garnishment. Health insurance premiums and mandatory (which most are not) retirement deductions were also exempted. That’s where I was getting my information. Again, I thought you weren’t going through that anymore (yay!), but wanted to pass that on to you in case it was still an issue.

Good luck with the rehab letter -- good idea to deal with them in writing!!