Almost in Default-need answers please!!!

[Anonymous]

ok...husband has $60000 in loans with an addt'l $20,000 in interest.

his payments started this May which were so high-$577 (may not seem high to some of you but with all our bills including daycare it's alot to come up with an addt'l $600/month!)  he ran out of his forebearance/deferment time.......he doesn't qualify for income sensitive programs.  we make good money but just can't afford this high of a payment.  we've made ONE payment.  He's now 120 days behind and we are not able to work any deals.  he's called the student loan people at AES and they're hard to deal with....we were just trying to get some answers:

he owes $2700 in back payments to be caught up (we don't have that money to come up with). 

since he's only 120 days behind, isn't it wrong that they're threatening default when all i've read is that the loan has to be 270 days behind?  and, if he pays another payment of $577 this month, will that knock off 30 days of being behinds since we're making another payment?

we just want to do what we can to NOT DEFAULT!

And, if we do....how much of his paycheck can they take?  he makes $1700 every two weeks?  and can they come after mine?  i read they can come after only 10-15% of his earnings after taxes....this true?  there was some confusion when i saw 25%....

help.....i'm sick to my stomach trying to figure out what to do......we need help!

thanks in advance.

[Anonymous]

My wife and I are in the same situation, except she has the loans (~$80K), and they're already in default (AES and Great Lakes are in rehab; private loads just charge off and don't do rehab)

Here's my idea:

If you have any credit cards, see if any have balance transfer deals.  If you don't have any cards, apply for two.  If there are no deals available, consider getting one that offers you 0% for a year (they are still around, but there will probably be a 3% fee).  Transfer a balance from the one with the better deal to a card with a zero balance, leaving a credit balance (money they owe you, ie, overpayment) on one card.  Request a credit balance refund.  Deposit the check.  Pay your back payment.  The process takes about a month from when the balance transfer is approved.

Most credit card companies want 2% of the balance each month, so the $2700 will cost you $56/mo.

I've heard they can only garnish 15% of your paycheck, but I don't know for certain.

Message Edited by Mike14 on 11-11-2008 02:59 PM

[LynnInMN]

Boxgirl...are these private or federal loans?? Huge difference in how these loans are collected.

[Anonymous]

In the short term, can you sell anything laying around your house?  Can you cancel cable and cut back to a basic cell phone plan?  Can you borrow from friends and family to get you temporarily caught up while you decide how to deal with the long term?

It would seem you have two options for the long term - decrease your expenses or increase your income. If you aren't currently tracking your expenses, now would be a good time to start.  If you run out of ways to trim the fat in your budget (cable, eating out, shoes, etc) you might need to consider bigger things.. If you have car loans, sell the car and buy a beater.  Move to a cheaper house/area.  Get a second job. 

It looks like you already know these won't go away Good luck!

[Anonymous]

thanks for your replies.....

we ended up borrowing last night from his mom to get caught up.

i looked at our bills to figure out how we can be sure to make the $600 monthly payments and seems workable. 

unfortunately, we'd like to get rid of one of our new car payments but we can't.....payoff price is too high for what people would be willing to pay these days these times!  my payoff price is $23K and the someone could get the car for $18K probably now with car dealerships selling much lower now to stay in business.

my husband did cut his gym membership.  we will lower our cable bill slightly(not much we can cut out really) and we only have one cell phone plan since husband has his paid thru work. 

so....i'm just relieved we're able to get caught up for now......just hope we can keep up with the payments. 

thanks again.

[Anonymous]

well, change in plans!

MIL doesn't have the money to give to my husband....so, we have no other options other than to just start paying the monthly payments on time and maybe a tad bit more than that each month.

can they still default him even though he's only 130 days behind?  he's got all stafford loans-no private loans....i read on the net that default can't be claimed until payments are 270 days behind?  that true?