Ch 13 and Student Loans

[ceebreeze]

I was wondering if someone can give me some guidance.  I filed Ch 13 in June 2011.  I included $40,000 in student loans.  Shortly after filing, I received a letter from the servicer stating that they would no longer be servicing my loans due to the Ch 13 and they were sold/transferred to ECMC.  Well, ECMC assessed a $10,000 collection fee.  When I received the letter from the courts giving me 30 days to dispute the new creditor, I talked to my attorney and he advised me against disputing it.  He said potentially, the judge could rule and include the $50,000 in the plan instead of the original $40,000.  My attorney said I should wait until my BK is discharged, then dispute the $10,000, because I will still have a balance on the loans at that time anyway.  In the mean time, I my loans are accruing interest based off the $50,000 figure.

Has anyone experienced anything like this??  The idea of this issue laying unresolved, just continues to make me feel like I'll be paying on my degree until I'm dead.

[SoulMaster]

You might want to get a second opinion from another lawyer.  AFAIK, Student loans can't be discharged through BK.

-SM

[ceebreeze]

Thanks!  But my loans are not being discharged.  In Ch 13, you can include your loans and  the courts will lower your payments.  When the BK is discharged I will still be responsible for the full amount of my original loans which were $40,000.  The problem is, now, if nothing changes, I will be responsible for paying the full $50,000 since ECMC assessed a $10,000 collection fee.

[aussiesareforever]

I recommend seeking a second opinion too. I think any judge should waive the exorbitant and ridiculous "collection fee"

[Anonymous]

I also recommend getting another attorney's opinion.

Not only are student loans not dischargeable through BK, but they continue to accrue interest during the BK.  At least mine did.  So my balance shot up after discharge.

My student loans changed hands from Nelnet to UHEAA when I filed, but there was no "collection" fee attached to the balance.  10K is exorbitant.  My interest rate also shot up to something like 7% and will go back down to something like 3 or 4% after 36 months of on time payment post discharge.  Nobody mentioned any of that to me at the time I filed, so it was all a surprise.

That being said, the BK itself was still a huge help in managing other non-student loan debt.  I'm glad it was an available option.  But I agree with folks to do some checking in with another attorney to determine your best response.  Not that it's ever fun to pay for and find another attorney - this second opinion could be priceless in information received and/or peace of mind as you move forward.

[Anonymous]

I have the exact same issue.  Except I filed for BK in 2006 and my student loan is now serviced by ECMC and I'm on a repayment schedule but its extremely hard to get in contact with the reps.  I noticed the other day they assesed a 10K fee as well on my 44K student loan.  So I owe 54K total.  I about died when I saw that! I didn't think I had any legal action to take but now that I see the responses maybe I do.  Of course legal fee's can be expensive too.

I know that one of my other student loan lenders said they would settle for 50% of what I owe.  I haven't asked ECMC yet about a settlement since I really don't have the money to settle but I wonder if they would.  It might be a good way to get out of the mess if you can possibly get a loan with another bank on the settled amount.  Pay off ECMC the lower settled amount and then work on paying off your loan with the new bank and it might even be a lower interest rate.  

[Anonymous]

If you have questions about your loans while in bankruptcy please call 888.486.4722

[Anonymous]

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@nelnetadam wrote:

If you have questions about your loans while in bankruptcy please call 888.486.4722

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According to our attorney and trustee:

During BK, CH 13 regulations forbid contacting your creditors; and your creditors cannot contact you.

Contact can be re-estabished after BK.  During BK, contact must be handled by the attorney or trustee.

Makes life interesting, to say the least.

[RecoveringShopaholic]

I think you should get a second opinion.  Are your loans PHEAA or Sallie Mae or private?  My student loans were 'owned' by my consolidator during my process, they could not attach a fee or charge interest they were basically frozen like other creditors.  They did transfer me to their bk division so I have several of the same account listed on my CR.  hmmm...