HELP: Private Student Loan Charge Off / Default (Sallie Mae)

[nelcida23]

If you only had one cosigner at the time of the loan can sallie Mae go after a cosigner you had in a different loan that's not defaulted?

[Anonymous]

No, the only individuals who are act risk of being sued are the names and socials on the contract. If you have a co-signer on the loan that is in default, this is more reason to settle. As they will likely suffer the brunt of the damage. Since co-signers often have better credit, and are further along in life and have more assests to go after. 

[nelcida23]

thanks. now i will need to check what i need to do. since i have 12 loans for sallie me. 11 of them were cosigned by the same person & one was cosigned by a different person & now sallie mae has both cosignes forl all 12 loans. which one of them is defaulted.

[makememsile]

Hi. I just read your post, and I hope you can help me with the situation I am having with SallieMae and NES.  I made the unfortunate choice of co- signing my son's student loans from 2005-2007 for about $35,000. All loans went into forbearance, then he defaulted on all of them ( about 6 different loans) So, I started making payments in 2010 to save my credit, however, in Jan 2011 I was contacted by NES that all defautled loans had to go thru them. They offered me a settlement of $3000 down ( which was very hard for me to do and caused my other loan payments to be late) and they would also take out $150 a month from my account. They said they would reduce the total owed from $35000 to $17500. I agreed and they withdrew the $3000 and the monthly payment on time for 6 months. Then in June, 2011 I was again contacted by NES that the person I made the settlement with was not authorized to do this, and they needed another $3000 down immediately. They started calling and threatening me at work. When i looked up my statements from SallieMae, it showed that my initial payment of $3000 went towards "other fees" and was told that this was commission for NES, and the balance was now over $40,000. I was forced to declare  Chapter 13 bankruptcy in Nov 2011 just to get NES off of my back and to save my home.

My son has finally matured and is taking responsibility for these loans. He has started making payments over the past year, but he is having the same issue I did with NES. They pressure him to make a settlement with NOTHING in writing, and no one knows where all his payments are that he has been making. It seems to me that once these loans are defaulted on, it is really next to impossible to catch up and pay these back. Why is this the case, and how can this be legal? Everytime my son calls NES, he is given a different account number, and his payments can't be traced at all, and the few that can all went towards "commission" with nothing at all applied to the loans. His balances are now up near $50,000, with no end in sight.

I have another 30 months until my bankruptcy is discharged, and I am already getting concerned about dealing with SallieMae and NES all over again. My son and I would be more than happy to pay what we owe to get rid of these, and I would even take a 401K loan to pay off some of these loans. I only started my 401K last year but I should have enough to borrow in 3 years to pay off some of the smaller loans.  My question is, how do I know that the settlements I agree to with NES are legit? Where has all this money that we have sent them over the last couple of years been going? 

I would really appreciate any advise you can give me and my son, as we are trying to do the right thing. I know I made a BIG mistake co-signing loans for him, and never would have believed this would happen. Is there anything my son can do to get these loans back on track, and anything I can do on my end before my bankruptcy is discharged ? Thank you so much for your advise!

[Jon85]

I'm under the assumption that private student loans are not government debt since they are not federally secured. 

So you would have to be sued and get a judgement against you for garnishment to happen since it's a private SL. No?

[kjel]

Private student loans are an entirely different thing than federal student loans and don't have the type of relief programs that the federal loans do.

Because the levels of default are reaching historic highs, some private student loan lenders are now offering workout solutions. While you pretty much cannot discharge private student loan debt in bankruptcy they do follow the statute of limitations laws as well as the 7.5 year credit reporting time period. Pretty much their only recourse is to take you to court if you are within the SOL. If they do take you to court they can possibly win a judgment which could lead to garnishing your wages.

Here's a good resource website: http://www.studentloanborrowerassistance.org/collections/private-collections/

[nelcida23]

Hi,

NES are unreasonable and it doesn’t matter what you say to them they won’t make any effort to help all they care about it’s to make their commission. I still getting calls from them everyday even though I’m on a payment plan with them. I contacted them so they can stop the calls and I still getting them. Now I’m going to make a complaint to the federal trade commission because that is considered harassment.

In order to get them to work with me I made a complaint to consumer finance and I got in contact with Sallie Mae student advocate office. I gave them a down payment and now I’m making $100 a month until pay in full. Now they reduced my interest to .01% because I haven’t missed any payments. Below are the link for the consumer finance and the number for Sallie Mae student advocate. I hope this helps.

Sallie mae student advocate:  1-888-545-4199

http://www.consumerfinance.gov/blog/category/student-loans/

[nelcida23]

depending on who is your lender most of them will work with you but Sallie Mae. It’s better if you try to work things out before they garnish your wages. 

[toragrrl]

I have a slightly different question. I was sued by a client in 2009, lost the suite and had to file bankruptcy to avoid a $250k+ judgment and legal fees. During the bankruptcy, I continued to pay all 4 of my student loans on time and in full. I did not default. However, Citibank claimed that because one of the loans didn't have a cosigner, their policy it to automatically put it into default when I filed for chapter 7. Even though we all know student loans cannot be discharged in a bankruptcy. The payments I sent them each month for this loan, they simply applied ot the other three loans. Then, immediately after my bankruptcy was finalized, they demanded I pay the defaulted loan in full. About $24k.

Of course, I had no money, I'd just been through a bankruptcy. I called, wrote, argued and begged with the bank, to no avail. After a while I gave up, and I didn't hear about the loan again. Until yesterday, when Discover Card called to say that they'd bought this debt in 2010, that it has now been charged off, and they want the full balance.

Needless to say, I'm a little PO'd about this. I didn't default on this debt. What are my recourses here, other than paying the $24k in one payment, which I definitely don't want to do?

[nma851]

Few things:

1)  This is a Private Student Loan - this does NOT go by all the "normal rules" whatsoever.  If anything, the rights of the consumer are essentially "gone".  Will explain one-by-one in a moment.

2)  This type of loan is UNSECURED - there is no "Guaranty Agency" that SM can look back at to get the loan paid;

3)  This type of loan is not a Federal Loan (part of the FELP) & therefore not guaranteed as stated in bullet #2;

4)  This type of loan is treated, for purposes of credit reporting & collections, as an unsecured loan;

5)  This type of loan, despite being unsecured, is subject to the same rules in Bankruptcy as Federal Loans - Interesting given the loan is not "Federally Backed", "Guaranteed", nor part of the "FELP/HEA" program(s).  Thank you Congress for FAVORING the student loan industry by making UNSECURED debt the same as a government debt.  It doesn't make sense, I know;

6)  This type of loan can only be collected upon via "traditional" means, i.e. collection agencies must treat as unsecured.  The "special" part of this is while garnishment and all that can happen if it gets that far and/or you get sued, they still must do so within the SOL for your State;

7)  Delinquency will only report 7.5 years as the CRTP - this is semi-beneficial as it will drop off as a credit card would versus a "true" FED loan that will report forever in a day;

8)  If a Guaranty Agency tries to pay-off the loan, this is a HUGE no-no as there is no "Guarantee" with a Private/Unsecured loan;

9)  To discharge in BK, you'll need to file an AP (Adversary Proceeding) to determine its dischargeability (hardship discharge).  This is VERY difficult, especially with the income you've stated.  

10)  TRY your best to settle it BEFORE they get a judgment.  Once they get that judgment, you will not have any wiggle-room whatsoever.  

I know it is not fair nor is it right that a 100% completely unsecured loan is treated "special" just because it is an education loan - or designated as such.  CAs will try their best to use this to their advantage, i.e. state anything under the sun about how they'll take everything including your first born.  While this is true as well for the most part, the fact remains they CANNOT just attach via treasury offset, etc. without a lawsuit.  They MUST sue and get a judgment to forcibly take your money (garnishment/offset).  "Real" student loans do NOT require a lawsuit & subsequent judgment - the FED will just seize/attach without the whole UNSECURED lawsuit that is necessary for the offset/garnishment.  

In a nutshell, this "special treatment" of a PRIVATE UNSECURED & NON-FED-BACKED student loan essentially strips the consumer of any/all available remedies to get out of the debt.  About the ONLY way is A) Hardship Discharge through BK - VERY slim chances and B) Death.  Even the Disability Discharge aspects, which I obtained for all my Student Loans, does not apply to the PRIVATE loan!  Even though I had all my loans discharged, this one kept coming back to haunt me - discharged one day for being crippled for life, not discharged 3 years later as "whoops this was a mistake".  I call it my flip loan as I never know what side of the fence I'll be on in any given month. 

Truly, I fail to understand, after all these years, how the lenders for these loans persuaded Congress to strip OUR rights while giving the lenders MORE rights.  The whole purpose of BK is a "fresh start" and how does one accomplish such whenever 95% of my debt (at that time) would have been JUST this loan?  It's absurd that preferential treatment is given to these UNSECURED lenders who will stop at NOTHING....  Go Congress....