What to do about a defaulted student loan and how do u handle evil collection agencies?

[shalane85]

I just cleaned up my husbands credit and then this happens. I know I should post this under student loans but this forum is more populated. We recieved a phone call last night from a Regional Adjustment Bureau saying that he has student loans that are now in default as of January 29, 2009. The loan was for 6000k but with the ocllection costs they say he owes $8441. That to me seems excessive for collection costs. Then they say he has to pay 120 a month to get out of default status. We struggle right now to pay the mortgage, car note, and daycare cause I was laid off. We cant afford to pay that and they are so unwilling to negotiate with us. I dont know what to because they say they will garnish his wages and if they go that route we wont be able to afford to live, let alone pay bills. The CA was so rude that one lady hung up on me but not before she told me that we shouldnt have took out the loans if we couldnt pay it or that we shouldnt have bought a car if we cant afford to pay other bills. I dont know what to do. What rights do we have? Has anyone had any experiences like this? And is it ever possible to negotiate the payment amount if you are trying to get your loan out of default?

[Anonymous]

Is this a federal or private loan? Although they are student loans, federal and private are worlds apart. From the sound of your post this sounds like a federal loan.

I can't provide any guidance on what your options are and what rights you have, but I can share my experience.

I had a private student loan go in to default and it was for $10000. I was still in school and my mother was a cosignor. She was the one with the money and she was the one they were after. The CA on her account was beyond mean and rude. She brought my mother to tears on several occaisons and were threatening to sue her and garnish her wages. They wanted payment in full and that was it. There were no other options. We had to no way to pay in full. After a week or two my mother was able to scrounge up enough money to give them and then they made payment arrangements.

You have to stand your ground to these people. They can be ruthless and make it seem as if life itself is going to stop if you do not pay this. Please remember that things can always be worse and this is not the worst thing to happen to you. You will make it through this.

If you cannot afford what they're extorting asking for - tell them! Say I cannot afford that. It is not possible for me to pay what you're asking. Tell them what you can afford. 

This is something you're going to have to deal with now. You may need to make some sacrifices to get this under control. Getting rid of my home phone and television would about cover $120 a month. Maybe you'll have to look at what you can skimp on right now to get this taken care of.

I know you're in a tough position. Please keep your head up and know you're not the only one this has happened to. You will get through this.

Best of luck!

[shalane85]

This is actually a private loan. I dont know why they have to be so rude. What is the difference b/w private and federal student loans as to what they can legally do to you? Can they do everything the feds can do?

[shalane85]

If you were in school why did they go into default?

[Anonymous]

Check out this thread: http://ficoforums.myfico.com/fico/board/message?board.id=rebuildingcredit&message.id=48901#M48901

This was something I started the other day because my wife now has a private loan in default. In there you can read about some of the differences between federal/private loans. I think the biggest difference is the ability to rehab a federal loan once it is in default. A private loan, once in default, is going to be collected and I do not think there is an option to get them back in good standing.

My loan went in to default because in the spring semester of 2006 I dropped out. I did not have a 6 month grace period (I thought I did). I went back to school in the fall of 2006 but since I never paid, it went in to default.