I found the a Promissory Note from the bank my wife's defaulted private student loans are with. Here is section K:
K. DEFAULT; WHOLE LOAN DUE
Subject to limitations of applicable law, I will be in default under this Note and you have the right to (i) give me notice that the whole outstanding principle balance, accrued interest, and all other amounts payable to you under the terms of the Note, are due and payable at once (subject to any applicable law that may give me a right to cure my default) and... blah blah blah
What applicable laws give me the right to cure the default, and how can I cure it? The lender refuses to work with us.
At this time, there are no laws giving you rights to rehab a private loan....only federal loans have it written into law. There never has been any laws for rehabbing privates. I guess it could change and that is why it is written into the note.
Who is your loan held by??
In my very similar situation (though for more money), it got very ugly. Basically the loans got sent to a CA, and the choices were for me and my cosigner to be sued for the full amount OR to make a sizable (10k) lump sum payment to show good faith, and set up a monthly payment plan. That's the trouble with these private loans--there is no way to get back in their good graces. I've just begun my third year of payments to a CA. Basically I authorize electronic checks for a year at a time, and hope that each year is not my last and that THIS is not the year that they decide that really, they just want to sue. They could force my cosigner to liquidate some assets, so obviously I want to avoid that at all costs. When you owe such a large amount of money, and then go rogue on them, you really are at their mercy.
It's a double edged sword that these companies are not making these kinds of loans anymore. On the one hand kids that can't do it any other way, don't have any options to finance their education. On the other hand, these were a very bad deal for the consumer who might not get the job they thought they would when they enrolled in the program.
Good luck, I feel for you. Hopefully you'll be able to work something out before they sue you.
Well, rehab is totally out of the question now, as I just found out the two larger loans, about $20K total) are in litigation!
What happens when a bank sues someone for student loans? Will my wife need to go to court?
Hubby's FICOs when we started: high 400s (June 2008)
Hubby's FICO NOW (04/06/09): TU: 679 EQ: 608 EX: ???
My FICOs: TU: 643, EQ: 606
Closed on new home: 1/20/2009 -- If we can do it, YOU can do it!!
In cases like this, I would try the Ombudsman. I just sent them a request for help on my husband's defaulted loans. I am not sure if they can help with private loans, but it doesnt hurt to try.
But either way, she ends up with a judgement on her credit report. How do they (and who IS "they"?) determine what state/city she needs to go to court in?
At least with a judge, she'll get a payment plan, instead of "payment is due in full... it's charged off... you need to pay it in full..."
It still makes me sad. I hope her grandparents aren't affected too much, and I wish this was taken care of over a year ago before it all started, but that won't change what's going to happen now.
I called the legal department this morning, and spoke with a very nice lady there.
The good news is that we can bring the loans current and resume making monthly payments! No court appearance will be needed.
The bad news is that we need to give them $1100 by Feb 5 to get them current, which includes the February payment.
The good news is that I will receive almost $5k (before taxes are taken out, so $3k after taxes) in profit sharing on January 30!
The bad news is that one loan will require monthly payments of $104, which is a little high, but the loan is for $10K.
The good news is that other monthly loan payment will only be $35!
The bad news is that it wasn't the two larger loans that were sent to legal, only one was, and the other large ($9k) loan was sent to the collection agency.
It was almost TOO easy. I asked her why I was suddenly given the option to "make things right" when I hadn't been for the last several months. Her reply was that now it was up to her to make the decision, and that is what she decided. I told her I wished ALL the loans went to legal!
Can I DV the collection agency? Their fax came in this morning. The amount that they got totals $14206.95, but will settle for $11,367, but we have to pay by Jan 15. Since there are three accounts, would we need to pay ALL three, or can we do the little one? For the big one, they want $6778 for the settlement and unless we use a credit card, that won't happen. Even for the other ones, the amounts to settle are $3030 and $1559.
I just realized, January 15 is tomorrow, so they can forget it...
If I can DV, should I fax it so they have it by tomorrow?
A couple of things to keep in mind:
You are still at the mercy of the CA. Whatever agreement you make with them, be sure you meet your obligations to them to the letter. When you don't, they don't have to do anything else for you, and they will sue your wife. And if she doesn't have any assets, they will sue her cosigner (they'll probably sue everyone at once). If there isn't cash on hand, the court can force the party with the assets (grandparents) to liquidate those assets to pay cash. My sense is that the CA's don't like to do this, but they can, and do.
Sounds like this is some internal collection service. Otherwise, I would not rely on the CA's representation of what will happen at the OC--i.e. that paying the CA will bring the loan current with the OC. I suspect that "bringing the loan current" will only mean that they won't sue you, and that you will continue to make payments to the CA. Really, best case is that you will eventually resume your payments with the OC.
Lots of folks on these boards advocate getting the deal in writing. My experience is that with student loans, they just won't give you the deal in writing. Another reason why you remain at their mercy.
You can DV the collection agency, but I don't think I would. You're not disputing that your wife owes the debt, and it doesn't seem to me that you're really questioning the CA's right to collect this debt. I think that, especially at the point that you've acknowledged the loans and have represented that you want to make arrangements to pay the debt, it's kind of bad faith to DV. At the very least, this will delay the process, leaving her grandparents on the hook for payment for even longer . . .