My student loan is in default...now what?

[FirstLight]

My student loan has been in default since I got remarried to an abusive monster who kept me pregnant and housebound for three yers... the money was in HIS control, and I was certainly not going to get finished with my education in that circumstance.
When I left 4 years ago, (ran for my life, with 3 kids in tow...) I was hoping to get back on my feet and get my credit straightened out and finally, maybe, finish my BA...get a "good job" and buy a house someday for us to be a family in.

The closest thing I got to a good job was a receptionist position at a contractors office, where a .50 cent raise was held hostage under close scrutiny...I was then forced to quit because my daughter was diagnosed woith a birth defect that has us traveling to specialists all over no cal...I had to go into "business" for myself, freelancing and taking whatever I can get, even working until midnight at home to make an extra $25. I make $500 a month from a part time gig at my church, and that is for a family of four.(including one teenager) HIS father stopped paying childsupport because they wanted an extra $50 a month (because of the $50K he owes me for the years he ran) - that was 1/2 my income, and we have been on the skids since January... I kep trying not to freak out, but there aren't enough hours in the day to make the money we need to survive! (Not when I only get from $8-10 / hr)

I called the student loan people to try and get out of default becaus I SO desperately need my tax return to try and get out of this HOLE

So now here I am, I've had my tax return (EIC) "eaten" by the feds for the last five years because of this, and everytime I try to contact someone to get into a place of forbearance due to hardship, they refer me to a collection agency that will only accept payments (well over $250 a month) for 12 months before they even consider letting me APPLY for forbearnce, and then my actual HARDSHIP has to be determined. I'll tell you about my HARDSHIP, dammit!

I understand the need to get people to pay back their owed money. But when I was 22 and in college and they told me I was going to get all this money (which, mind you , went to living expenses like a deposit on an apartment, or childcare for my oldest son) "by the time you graduate, you'l be making so much, that the repayment will only take five years..."

There's no program for victims of domestic violence and financial hardships like this?
I can't even pay my utilities this month, have to beg for food from my church, and next week I have to drive 300 miles to take my daughter for hr quarterly bloodtest and specialist visit because of her condition.

As I revealed some of this dificulty to the person at the Dept of Education...
The lady said on the phone that there was nobody I could talk to to change the rules, unless I wanted to call my congressman (ha!)

I hung up the phone and just started crying...
HOw can I get out of this endless hole, just say "fuck it" and find an illegal way to get ahead - like our government...?
I am seriously wondering if I should even try to file my taxes at this point, because they wil go for garnishing my wages next - (from my church job that only pays $250 every 2 weeks!!!! ) How can they do this to a family ...

[Fredda Weinberg]

1. There is now a student loan ombudsman. See your congress

critters' website for contact info. Good luck.

[leftofcool]

2. They can hold your tax money

but they can not garnish your wages without taking you to court, then you can tell the judge. I doubt they will do that, but they will keep your tax money and you have no recourse. That is what they do. Now, they can go after social security which used to be sacred.

[Orrex]

6. Not true, in my experience

I received a letter stating very plainly "either give us 15% of your monthly income, or we'll take 15% of your monthly income."

No court was involved; it was simply a matter of the terms of the loan.


For all practical purposes, student loans are indistinguishable from indentured servitude.

[yardwork]

3. I'm really sorry to hear about your troubles. Have you tried calling Legal Aid?

There should be a Legal Aid group in your county that provides legal advice for free. Look in the yellow pages, or google them. Also, check to see if there is a Women's Center or something like that in your county, as they sometimes can connect you with free or reduced cost legal or tax services. Finally, can your church help at all? Are there parishioners who volunteer financial planning or legal services to congregants in need? Have you asked your minister?

I admire you for getting away from the abusive monster and raising your children on your own. I hope that things get better for you soon!

[FirstLight]

7. Thanks, I have usd both legal aid and the women's center...

But what sucks is that I have to have money to create a repayment plan... and at this point, we are just so deep in the hole, i see no way out. Counseling can get me off the default list, the only way they will even CONSIDER forbearance is after a year of repayment...so that leaves me nowhere.

time to just knock over a liquor store, eh?

Or just write that bestselling novel that will make me millions so I can throw all the money at the debtors at once and say HA!

edit :typos & tears

[yardwork]

9. It's just awful. I'm so sorry.

It sounds like you need to go after your children's fathers for child support. The laws are designed to protect custodial parents from exactly what you are experiencing. It sounds like the fathers aren't contributing a dime at this point. Can't Legal Aid help with that? It would give you the funds you need to arrange a payment plan for your debts.

[FirstLight]

19. The county already has open cases for child support collection...

husband #1 - quit and they can't locate him at a new job, apparently they send out the forms and then have to wait 30 days to follow up with another form...blabalablah

husband #2 - the monster is incarcerated and they wil suspend the caes until he gets out in 6 years or so

together they owe me $75,000

I have only seen a fraction from hubby #1, and he has never tried to see his son
#2 was a sexual predator, so we like the idea of him being locked up and hopefully being someones bitch

[yardwork]

20. There should be a way to use the money they owe you to help your situation.

I don't know what it is, though. Other posters on this thread have good suggestions. I am sending you good thoughts. You are a good mother. You are a survivor. You saved your own life and that of your children. You will get through this! I know that.

[damntexdem]

4. You have to forget all that you learned.

Hey, the Bushistas would be happy if everyone did that, anyway.

[nels25]

5. Okay I do not know how to help you

but I am surprised that the Department of Education would not work with you.

In 2005 when I needed help they were only to happy to work out an arrangement with me.

I think that perhaps contacting your local congress critter might be an option, could not hurt.

As for your abuser I have nothing but many unprintable and bad adjectives to say about him.

I hope you are going to be all right, and if there is anything I can do I would only be to happy to do so.

I can and will keep you in my prayers, and you have my support such as it is comfort to you.

I detest domestic violence with every fiber of my being.

:grr:

I so want to do well and have a happy ending and life!!O8)

[FirstLight]

8. thanks, but now you made me cry again!

:hug:

[juajen]

15. I'm not sure who you're talking to; but I have three children

who still have student loans to pay off. They all have been on economic forbearance, which is when you do not make enough money to make payments. One daughter who consolidated her loans pays only a small percentage of her income. You need help from somebody. You obviously are going to the wrong people for advice. Do call your Congressman and they should be able to send you to the proper place.

You will have to backtrack considerably and try to get out of default. Default only happens if you have not asked for a forbearance when you are qualified to have one. Collection agencies are the pits and will not be able to help you at all.

[grasswire]

10. there is a hardship exemption

First, don't believe what the collection agencies are telling you.

My niece got the same horrible runaround. The collectors terrified her. They lied to her. They said their way was the only way -- and as a single parent not getting child support, it was impossible. Totally intimidated her.

Then, the moment I found out about the hardship exemption, she called and told them she was going to file one, and they changed. The person who helped her with the paperwork for that was sympathetic and understanding.

Google "hardship claim student loan" and find the info on the .gov website. If you can't find it, I will get it.

Do not believe the lies they are trying to pressure you with.

Not only does she have a reasonable payment plan, but now her status is rehabilitated and she could even return to school.

[FirstLight]

12. Is that the same as having it discharged?

I know that bankruptcy won't touch student loans, either... I am looking for the info...

[grasswire]

17. no

It is a much more lenient repayment plan. I realize that you are in a hole right now. And it's probably too late to do anything that would allow you to get your refund for 2007 tax year that would help you out of that hole. So maybe your best choice is to stay in default until they come to the point of garnishing your paycheck. And don't believe that step is imminent until you actually get the official notice, because there is a long run-up period during which they will threaten garnishment and tell you they are GOING to do so. But there is an official moment and a period during which you can request a hearing, etc., request the hardship claim, and that will delay the process.

[fight4my3sons]

21. I went through bancruptcy last year and student loans are NOT

discharged. Mine are under economic hardship deferral right now.

I'm sorry you are going through this.
:hug:

[Hekate]

14. I googled what you said and got right to a PDF file that can also be viewed in HTML...

On the same page there's "What is the Brunner test for dischargability of student loans..." ".. loan is dischargeable in bankruptcy based on a claim of undue hardship. ... hardship has become the only criterion for discharge of student loans in ... "
www.bankruptcylawnetwork.com/2007/08/23/ what-is-the-brunner-test-for-dischargeability-of-student-loans/

That might be a good place to look.

FindLaw also has an article.

There's more. Just a quick scan indicates that they have indeed tightened up on one's ability to get out of paying student loans by filing bankruptcy (apparently it got to be too popular as a dodge, so now everyone is punished) -- but what I saw was a variety of bases for claims of undue hardship that are covered in these articles.

I hope JournalGirl will call her congressional representative urgently, and get hold of Legal Aid asap. This is just heinous.

Hekate

[grasswire]

11. also....

...they will not take your tax "rebate" to apply to student loans, as I understand it. So if you file taxes before April 15, you should get one of those. FWIW.

If you are generating huge refunds, you might want to consider changing your witholding status so you keep more of your money on each paycheck. For the future, obviously.

[FirstLight]

13. I found the form...will this keep them from taking my refund?

Do I need to contact them and tell them I am filing it? Or should I just send it in? I think there is an address on the bottom. And FWIW, I will have my taxes ompleted by this week...so hopefully i can get that $600 check. I hate to say it, but that is a lot of money for us right now!

[JoDog]

16. $600 is a lot

I am on the brink of bankrupcy myself. And you are correct--bankruptcy no longer disperses privately held student loans. You can thank the 2005 law for that one.

Definintely talk to legal aid. And educate yourself on what your rights are under the Fair Debt and Collections Act.

In addition, you may want to take a bankruptcy attorney up on a free consultation. While a bkr will not get rid of you school debt, it can help you with other financial problems and help you in proving hardship. Also, depending on what state you are in, your student loans may go into automatic forbearance during the dispersal period (the two or so months from the time of the bkr hearing to when the debt is expunged and the bkr is recorded on your credit rating). Not a solution, but some breathing room.

[grasswire]

18. no it will not keep them from taking your refund

sorry. It will keep them from garnishing your paycheck.

[geek_sabre]

22. Are all your loans federal?

I've been out of school for about 9 months, and I was able to get a forebearance 3 months into repayment by applying online for my direct loan (a 15 second application) pretty quickly and easily, and after I consolidated to one of my providers, I was able to apply for a 12-month forebearance online due to financial hardship without any detailed explanation, and got it approved about 4 days later. Most providers will also consider a "retroactive" forebearance, so if you're all in one company, your forebearance will automatically have a start date at your last payment received, which will help with your default.

Sometimes "face to face" they don't want to hear your story, or are not completely informed about your rights. Its easier to do it online if you're able to.