Student Loan Collections Practices

[cabledude27]

I dont know if this is the right forum, so Mods feel free to move if necessary. My brother has a Sallie Mae loan that was sent to a collection agency and called them to attempt to start paying and get it sorted out. They agreed to a payment plan of an initial payment of $200, then approximately 100 or so there after. The problem and the root of my question is that they are demanding that he provide a bank account to take the $200 from him. He doesnt have a bank account at the moment but pays by money order for all his bills and such. He's offered to send them a cashiers check, etc, but they flatly refused stating again he must have a bank account or they will start the process to garnish his wages. To me this doesnt seem right and I need some advice to provide him and/or some keypoints for him to use in his discussions with them. Thanks in advance for any help you can provide.

[erika]

Tell your brother to get a bank account.  Although it doesn't seem like it's fair, the collection agency is exercising a hard ball tactic to make sure they get paid.  The collection of student loans doesn't have the same rules as other debt.   I say this because, if your brother's loan was issued under the stafford loan program, then they will not have to get a judgement against him in order to garnish his wages.  If that happens, they will could take a lot more than the $100 month that he agreed to (the actual amount is a percentage of what he earns). 

[Anonymous]

He needs to get a bank account, or the wage garnsihment will begin. My very good friend is 46, and  cannot get Sallie-Mae to stop wage garnishment. She made foolish decisions when she was younger (like defaulting on a 5K student loan) She's been working hard to clean up her credit, and repay old debts, as she now wants to buy a house, and despite having excellent income, and some good trade lines reporting positive activity,  the Sallie-Mae defualt/garnishment is the monkey on her back.

From what I have seen, and I'm no expert, defualting on a student loan through a company like sallie-mae $$, is possibly as bad as owing the IRS. You can't run or hide, and they will come after you until they get their $$$. My friend has hired an attorney, and is hoping to negotiate a settlement amount with Sallie-Mae. Once the garnishment started, nothing she did could stop it.

[Anonymous]

I can tell you from experience, that this is the case.  Once they take your wages, you cannot stop the process. 

I was upset when they first began the process.  I was able to turn in paperwork that stated my income and expenses, to ensure the garnishment was not too high.  The paperwork was turned in long before the deadline, but they began the process any way. 

A couple of years ago, I was able to make payments in addition to the garnishment.  I had to spead up  the process since I was going back to school and needed the loans.

I am no longer in default.  My loans are paid.  The best thing is I have a positive TL from Sallie Mae.  They (voluntarily) removed the default status from my reports and they noe report as "pays as agrees".