nidena
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Post by nidena on Jul 29, 2019 18:58:49 GMT -5
This student loan business is such a load of hooey!! A friend of mine--an aged mid-70s pastor--took out loans 23 years ago in amount near to $30,000. She paid on time for a number of years but then ended up moving often over the course of the next few years, from one coast to the other, to the Midwest and then back to a coast. As a result, it took a long time for the SL paperwork to catch up with her so that she would know how much she still owes. Mind you, this woman is not very organized to begin with and being 70+ just makes it worse.
Her SLs went into collections because of her not paying for so many years during the many moves. Even so, the payments that she did make back in the day didn't even tough the principal. They went straight to interest. I know this because of a response she received from Ms. DeVos' office this past week. Because of the collections status, they're garnishing her social security. She wrote Devos et al to outline a few complaints that she had regarding the whole thing; namely that as soon as she had made payment arrangements with the collections company, her debt was sold to someone else. smh.
Anyhow, I read the letter that she received this week and, in a nutshell, it says: It's your fault you didn't keep up with the SL company to know to whom to make payments. It's your fault that you owe so much. It then goes on to delineate that any payments received, at this point, will go first to the collection company for fees, then penalties, then something else, then interest, and then principal.
Her current balance is $56,000ish with $8,000 being fees/penalties and $17,000 being interest. She's 74!! She'll never pay this off. Not when her income is $9/hr for 30hrs/wk and social security benefits. freaking ridiculous!!
I'm going to work with her to get the garnishment stopped--there's a form to fill out with all her income and outgo--but, ultimately, I think once she succeeds at that, she should just let it go. I mean, they can't go after her grown children to pay off her debt when she dies. It'll just be something the company attempts to extract from her estate, is what I'm thinking.
Thoughts? Ideas? Suggestions?
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haapai
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Post by haapai on Jul 29, 2019 19:23:21 GMT -5
I have no suggestions regarding how to deal with this situation. What happens when someone defaults is black hole. I've never gotten a good handle on what collections actions are possible and what strategies might be appropriate.
OTOH, it really stings that the collection fees are almost certainly gobbling up any payments or garnishments.
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Deleted
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Post by Deleted on Jul 29, 2019 19:50:04 GMT -5
She is definitely in a bad situation.
I have never understood the "I didn't know that I owe money because I haven't received a bill" mentality. People know they are going to get a bill when they buy something with a CC. If it doesn't come, call the company. You know you have a utility bill every month. If it doesn't come, call the company.
She knew she owed on her student loans. If she had wanted to make the payment, she would have.
I'll cut her some slack for her age, but moving around really isn't an excuse not to pay your bills. I sound harsh, but that just has never made any sense to me: "I didn't get a bill so how could I pay?"
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TheOtherMe
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Post by TheOtherMe on Jul 29, 2019 20:05:36 GMT -5
Even moving around, she knew she went to school later in life and had student loans, so there is no excuse to not have been making some payments over the years.
I have no advice but I do know Social Security can be garnished.
There is a formula for garnishment. I had to do garnishments when I did payroll for a store. The person being garnished didn't get to figure out how much the garnishment was on her student loan. The company servicing the loan had a formula and it made it very, very difficult to pay for a roof over her head and food, but she owed the money.
I would guess there will be a claim against the estate. There is a claim when Medicaid is involved.
Good luck, but it sounds like this is an old student loan that hasn't had payments made for many years. She knew she had student loans, just as every person who I had garnishment papers did.
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haapai
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Post by haapai on Jul 29, 2019 20:18:00 GMT -5
There's something distinctly odd about a market for old debts in which the debt goes up in value as it ages but that might be the case for defaulted student loan debt. It probably goes up in value as the borrower approaches the age at which they can collect social security. It's also probably relatively insensitive to amount owed. That is, the value of the debt is based on what can be garnished from monthly social security checks, not the amount owed.
What a sick business!
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grumpyhermit
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Post by grumpyhermit on Jul 29, 2019 20:46:03 GMT -5
Don't default on government loans; they will collect their money. I had a friend that went into default on her student loans and was shocked (and dismayed) when they seized her tax return.
While there is very little I like or agree with about the DeVos Dept of Ed, this isn't really on her. This has been the rule for a long time. I went through exit and entrance counseling about 20 years ago and I remember very clearly them covering that it was the BORROWERS responsibility to keep the loan company up to date about addresses changes. Frankly, her excuse for not paying sounds like just that; an excuse, and a weak one at that.
I think your focus on trying to stop the garnishment is about the best you can hope for in this situation.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Jul 29, 2019 20:54:40 GMT -5
I remember the paperwork being VERY clear what would happen if you default when I graduated. I signed paperwork stating I understood the terms. Kinda hard not to understand death or being a vegetable is the only way the loans would be discharged.
I've also found my loan company to be super accommodating. They don't want to go thru the hassle of collections.
I'm sorry the lady is in this situation but a five minute phone call giving the lender her new address each time would have solved this.
Or just using the internet. I do all my transactions online they don't need my physical address to bill me.
Once things escalate to collections that's it it's out of the lender's hands. It's a mess once it gets to that point.
Her actions have caught up to her. She knew she had loans yet chose to live in blissful ignorance till it caught up to her. Now it's too late to fix it.
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nidena
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Post by nidena on Jul 29, 2019 21:01:19 GMT -5
I completely agree with those who have said it's on her and that not having the invoices isn't an excuse for not paying. And I have good feeling that the reason she didn't pay is because she sucks at paperwork. I mean, really sucks. And at her age, then, she definitely should have/would have had no leg to stand on in a defense for not paying. It would have been an age only a few years older than I am now and I'm well aware of my own situation with my student loans.
All I can do is help her in her current situation. I've helped her reduce her car insurance. I keep trying to get her to get rid of DirecTV because she can stream on her damn tablet with her cell service and I'm trying to get her to switch cell providers to something like MetroPCS. She's terrible with money but, unfortunately, all those habits are completely ingrained and there's no undoing them at this time.
When we list out her expenses, how can they justify whatever her garnishment is when it so heavily conflicts with her living expenses?
(I'm even more thankful that my SLs total only $6,000 and will be paid off within the next 18-24 months.)
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Jul 29, 2019 21:13:45 GMT -5
Because they don't care it's about paying the debt owed. It's an impersonal business transaction. You shouldn't have let it get to that point in their eyes. They are under no obligation to help you.
The time for that would have been before it went to collections. She would have had options if she'd called her lender before this.
I remember the paperwork being crystal clear they could take my tax refunds and my SS later in life until my balance was paid. I agreed to this when I signed the paperwork. This is why you read the fine print.
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bookkeeper
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Post by bookkeeper on Jul 30, 2019 8:25:02 GMT -5
I completely agree with those who have said it's on her and that not having the invoices isn't an excuse for not paying. And I have good feeling that the reason she didn't pay is because she sucks at paperwork. I mean, really sucks. And at her age, then, she definitely should have/would have had no leg to stand on in a defense for not paying. It would have been an age only a few years older than I am now and I'm well aware of my own situation with my student loans. All I can do is help her in her current situation. I've helped her reduce her car insurance. I keep trying to get her to get rid of DirecTV because she can stream on her damn tablet with her cell service and I'm trying to get her to switch cell providers to something like MetroPCS. She's terrible with money but, unfortunately, all those habits are completely ingrained and there's no undoing them at this time. When we list out her expenses, how can they justify whatever her garnishment is when it so heavily conflicts with her living expenses?(I'm even more thankful that my SLs total only $6,000 and will be paid off within the next 18-24 months.) Garnishment is only concerned with your income, not your expenses. When I was executing garnishments at my last job, I was court ordered to take up to 30% of someone's paycheck to cover the balance owed. If you had minor children, the garnishment formula took less of your check depending on how many kids you had at home. The collections company doesn't care about your other bills, just the one you now owe them.
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bookkeeper
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Post by bookkeeper on Jul 30, 2019 8:35:13 GMT -5
I have friends that are crying the same foul only with medical debt instead of student loan debt. This couple is 71 and 66 years old. They moved to our city about 8 years ago. Last time out socializing, I asked the husband when he will retire, he is 71 after all. He hesitated and then admitted that they had some medical debt to clean up from a long time ago. Apparently they had made arrangements to pay a medical debt over time in their previous location and then they moved. Somewhere along the line, they stopped making payments. The debt went to collections and has grown to include interest and fees. They don't even know what the original debt was for, or where it came from. I encouraged them to work with consumer protection in our state and get their options going forward. After reading stories about zombie debt, I encouraged them to make the collections company prove the debt is theirs. We came home shaking our heads. How can two grown people not have any idea of what their debts are, who holds the debt and what your payment should be? I am too much of a super advance planner to understand how you can put your head in the sand for years.
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TheOtherMe
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Post by TheOtherMe on Jul 30, 2019 8:47:58 GMT -5
I completely agree with those who have said it's on her and that not having the invoices isn't an excuse for not paying. And I have good feeling that the reason she didn't pay is because she sucks at paperwork. I mean, really sucks. And at her age, then, she definitely should have/would have had no leg to stand on in a defense for not paying. It would have been an age only a few years older than I am now and I'm well aware of my own situation with my student loans. All I can do is help her in her current situation. I've helped her reduce her car insurance. I keep trying to get her to get rid of DirecTV because she can stream on her damn tablet with her cell service and I'm trying to get her to switch cell providers to something like MetroPCS. She's terrible with money but, unfortunately, all those habits are completely ingrained and there's no undoing them at this time. When we list out her expenses, how can they justify whatever her garnishment is when it so heavily conflicts with her living expenses?(I'm even more thankful that my SLs total only $6,000 and will be paid off within the next 18-24 months.) Garnishment is only concerned with your income, not your expenses. When I was executing garnishments at my last job, I was court ordered to take up to 30% of someone's paycheck to cover the balance owed. If you had minor children, the garnishment formula took less of your check depending on how many kids you had at home. The collections company doesn't care about your other bills, just the one you now owe them. This is what I found out when I did payroll for a small business. It was the creditor who determined the amount taken out for the garnishment. Our employee was single with no dependents and I think it was 15% that I sent to pay towards the student loan every pay day. If they do, for some reason, consider expenses, DirectTV will not be considered necessary. ETA: A quick google search shows 15% of wage income or social security can be garnished for student loans. Look for a garnishment on the $9 per hour job, too, as soon as the creditor figures out there is more income.
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nidena
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Post by nidena on Jul 30, 2019 8:59:27 GMT -5
Oy! It's good to know that her expenses aren't taken into account, only because the changes that I encourage her to make to them will only benefit her. Referring, again, to the DirecTV and cell service. I think we'll look into a refi on her mortgage as well. It certainly can't hurt.
I will also let her know that her grown children should expect nothing from her estate when she passes.
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haapai
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Post by haapai on Jul 30, 2019 9:06:46 GMT -5
Oy! It's good to know that her expenses aren't taken into account, only because the changes that I encourage her to make to them will only benefit her. Referring, again, to the DirecTV and cell service. I think we'll look into a refi on her mortgage as well. It certainly can't hurt. I will also let her know that her grown children should expect nothing from her estate when she passes.Only if the loan is private. Federal student loans die with the borrower.
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nidena
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Post by nidena on Jul 30, 2019 9:07:40 GMT -5
It's NelNet so...federal, I guess. That's good.
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nidena
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Post by nidena on Jul 30, 2019 11:16:22 GMT -5
There's something distinctly odd about a market for old debts in which the debt goes up in value as it ages but that might be the case for defaulted student loan debt. It probably goes up in value as the borrower approaches the age at which they can collect social security. It's also probably relatively insensitive to amount owed. That is, the value of the debt is based on what can be garnished from monthly social security checks, not the amount owed.
What a sick business!
I just reread this. I can't help but wonder if there isn't a whole dept for late-age borrowers. In the case of people like me--age 43, borrowed $6000, annual income $40k--probably not so much; but in the case of her--age 51, borrowed $30k, annual income $30k--that dept was probably counting the days (years) down until they could garnish.
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Cookies Galore
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Post by Cookies Galore on Jul 30, 2019 11:26:47 GMT -5
The best way to get out of default is to work with the feds. My husband defaulted on his SLs years before we met. Huge sticking point in our relationship and he had his wages garnished and his tax refund taken. Getting his loans back in good standing were a stipulation before we got married, and all it took was a call to AES to get on a repayment plan and nine months later, boom, loan is in good standing and reverted to the original 1.9% interest rate.
When you move you let your creditors know your new address. She got herself into this easily avoidable mess, she can get herself out if she calls to set up a repayment plan.
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nidena
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Post by nidena on Jul 30, 2019 13:01:07 GMT -5
The best way to get out of default is to work with the feds. My husband defaulted on his SLs years before we met. Huge sticking point in our relationship and he had his wages garnished and his tax refund taken. Getting his loans back in good standing were a stipulation before we got married, and all it took was a call to AES to get on a repayment plan and nine months later, boom, loan is in good standing and reverted to the original 1.9% interest rate. When you move you let your creditors know your new address. She got herself into this easily avoidable mess, she can get herself out if she calls to set up a repayment plan. That's part of the problem. She had set up a repayment plan and then the debts were sold/turned over to someone else and THEY weren't agreeing to/with the repayment plan that was set up and wanted her to pay a higher amount. Mind you, this is mostly hearsay, from her to me, as I wasn't in the actual conversations but, with the information that I have, I'm trying to help her get to a point that she can pay for things and not have to worry about not eating.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Jul 30, 2019 13:22:16 GMT -5
The problem is your SL will continue to collect interest. It's just like saving for retirement the interest will continue to compound., .. only in this case it's a really bad thing. My assumption is the reason the current company will not agree to the payment play is because that payment now no longer covers the minimum needed to pay off the balance.
The problem I see here is she has let it go so darn long she is now in collections. Collection companies are in the business of selling debt, not hanging onto it for you until you can swing the payments. She might get lucky calling her original lender but I doubt it.
This is a really bad position for her to be in but she needs to understand they don't care. She will be required to pay the minimum amount in order to get this debt paid off, whatever that minimum may be. She signed paperwork stating they have the right to seize her SS and/or tax refunds until the debt is paid.
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nidena
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Post by nidena on Jul 30, 2019 13:30:45 GMT -5
The problem is your SL will continue to collect interest. It's just like saving for retirement the interest will continue to compound., .. only in this case it's a really bad thing. My assumption is the reason the current company will not agree to the payment play is because that payment now no longer covers the minimum needed to pay off the balance. The problem I see here is she has let it go so darn long she is now in collections. Collection companies are in the business of selling debt, not hanging onto it for you until you can swing the payments. She might get lucky calling her original lender but I doubt it. This is a really bad position for her to be in but she needs to understand they don't care. She will be required to pay the minimum amount in order to get this debt paid off, whatever that minimum may be. She signed paperwork stating they have the right to seize her SS and/or tax refunds until the debt is paid. I'll be sure to stress that to her. And I just have to do my best to help her budget accommodate the payments.
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Cookies Galore
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Post by Cookies Galore on Jul 30, 2019 13:50:51 GMT -5
The best way to get out of default is to work with the feds. My husband defaulted on his SLs years before we met. Huge sticking point in our relationship and he had his wages garnished and his tax refund taken. Getting his loans back in good standing were a stipulation before we got married, and all it took was a call to AES to get on a repayment plan and nine months later, boom, loan is in good standing and reverted to the original 1.9% interest rate. When you move you let your creditors know your new address. She got herself into this easily avoidable mess, she can get herself out if she calls to set up a repayment plan. That's part of the problem. She had set up a repayment plan and then the debts were sold/turned over to someone else and THEY weren't agreeing to/with the repayment plan that was set up and wanted her to pay a higher amount. Mind you, this is mostly hearsay, from her to me, as I wasn't in the actual conversations but, with the information that I have, I'm trying to help her get to a point that she can pay for things and not have to worry about not eating. Sounds like she's dealing with a collections company (which makes sense) and not the actual federal loan administrator, such as PHEAA (PA higher education assistance agency). My husband went through the Loan Rehabilitation Program. Before he started the loan rehab he tried to work with the collection agencies, which went nowhere and cost him money in the end.
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haapai
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Post by haapai on Jul 30, 2019 18:18:10 GMT -5
One thing to be aware of is that these are most definitely old-style federal student loans. They are quite different than the loans that started being issued in the aughts.
Were they ever consolidated? The easiest way to figure this out is to ask if they still carry variable interest rates.
ETA: The above is hopeful possibility but there's still a lot of math to be done. It is entirely possible that even if the loans can be rehabilitated and reset to a long repayment period, the costs and PITA of rehabilitation and slow repayment may be higher than the costs of having Social Security garnished.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 2, 2019 11:41:24 GMT -5
This student loan business is such a load of hooey!! A friend of mine--an aged mid-70s pastor--took out loans 23 years ago in amount near to $30,000. She paid on time for a number of years but then ended up moving often over the course of the next few years, from one coast to the other, to the Midwest and then back to a coast. As a result, it took a long time for the SL paperwork to catch up with her so that she would know how much she still owes. Mind you, this woman is not very organized to begin with and being 70+ just makes it worse. Her SLs went into collections because of her not paying for so many years during the many moves. Even so, the payments that she did make back in the day didn't even tough the principal. They went straight to interest. I know this because of a response she received from Ms. DeVos' office this past week. Because of the collections status, they're garnishing her social security. She wrote Devos et al to outline a few complaints that she had regarding the whole thing; namely that as soon as she had made payment arrangements with the collections company, her debt was sold to someone else. smh. Anyhow, I read the letter that she received this week and, in a nutshell, it says: It's your fault you didn't keep up with the SL company to know to whom to make payments. It's your fault that you owe so much. It then goes on to delineate that any payments received, at this point, will go first to the collection company for fees, then penalties, then something else, then interest, and then principal. Her current balance is $56,000ish with $8,000 being fees/penalties and $17,000 being interest. She's 74!! She'll never pay this off. Not when her income is $9/hr for 30hrs/wk and social security benefits. freaking ridiculous!! I'm going to work with her to get the garnishment stopped--there's a form to fill out with all her income and outgo--but, ultimately, I think once she succeeds at that, she should just let it go. I mean, they can't go after her grown children to pay off her debt when she dies. It'll just be something the company attempts to extract from her estate, is what I'm thinking. Thoughts? Ideas? Suggestions? if she goes back to not paying they will go back to garnishing. She can do income-sensitive repayment and just pay monthly what they deem the minimum and then she can just leave it afterward as to the estate, and not care if she is paying principal. But, I don't think she will get away with removing the garnishing, and then going back to ignoring it. Maybe that isn't what you meant?
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Bluerobin
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Post by Bluerobin on Aug 2, 2019 12:46:59 GMT -5
Just file personal bankruptcy already. The judge will adjust the debt or wipe it clean. Either way, she will come out owing less.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Aug 2, 2019 15:04:22 GMT -5
Just file personal bankruptcy already. The judge will adjust the debt or wipe it clean. Either way, she will come out owing less. You cannot declare bankruptcy for student loans. That's made pretty clear before you take them out and again in exit counseling.
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Bluerobin
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Post by Bluerobin on Aug 2, 2019 15:38:54 GMT -5
Just file personal bankruptcy already. The judge will adjust the debt or wipe it clean. Either way, she will come out owing less. You cannot declare bankruptcy for student loans. That's made pretty clear before you take them out and again in exit counseling. Evidently, that is one of the terms. I wonder how well it has been tested? A good lawyer could help her get the debt adjusted at the least.
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TheOtherMe
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Post by TheOtherMe on Aug 2, 2019 16:27:07 GMT -5
Not paying on a loan for around 20 years because you are bad with paperwork should not be discharged in bankruptcy (even if student loans could be discharged).
She did this to herself by not keeping track of paperwork for 20 years. Once they had an address, it would not surprise me that an attempt was made to contact her directly.
In the situation where I was the bookkeeper, the employee answered the phone and kept the garnishment at bay for some time by telling them that person didn't work there. She also brought in the mail and was intercepting that. Then they called when she was off and the owner answered the phone. Garnishment went in to effect.
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nidena
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Post by nidena on Aug 2, 2019 22:00:32 GMT -5
This student loan business is such a load of hooey!! A friend of mine--an aged mid-70s pastor--took out loans 23 years ago in amount near to $30,000. She paid on time for a number of years but then ended up moving often over the course of the next few years, from one coast to the other, to the Midwest and then back to a coast. As a result, it took a long time for the SL paperwork to catch up with her so that she would know how much she still owes. Mind you, this woman is not very organized to begin with and being 70+ just makes it worse. Her SLs went into collections because of her not paying for so many years during the many moves. Even so, the payments that she did make back in the day didn't even tough the principal. They went straight to interest. I know this because of a response she received from Ms. DeVos' office this past week. Because of the collections status, they're garnishing her social security. She wrote Devos et al to outline a few complaints that she had regarding the whole thing; namely that as soon as she had made payment arrangements with the collections company, her debt was sold to someone else. smh. Anyhow, I read the letter that she received this week and, in a nutshell, it says: It's your fault you didn't keep up with the SL company to know to whom to make payments. It's your fault that you owe so much. It then goes on to delineate that any payments received, at this point, will go first to the collection company for fees, then penalties, then something else, then interest, and then principal. Her current balance is $56,000ish with $8,000 being fees/penalties and $17,000 being interest. She's 74!! She'll never pay this off. Not when her income is $9/hr for 30hrs/wk and social security benefits. freaking ridiculous!! I'm going to work with her to get the garnishment stopped--there's a form to fill out with all her income and outgo--but, ultimately, I think once she succeeds at that, she should just let it go. I mean, they can't go after her grown children to pay off her debt when she dies. It'll just be something the company attempts to extract from her estate, is what I'm thinking. Thoughts? Ideas? Suggestions? if she goes back to not paying they will go back to garnishing. She can do income-sensitive repayment and just pay monthly what they deem the minimum and then she can just leave it afterward as to the estate, and not care if she is paying principal. But, I don't think she will get away with removing the garnishing, and then going back to ignoring it. Maybe that isn't what you meant? She was making payments. A whopping $35/mo. Then they started garnishing so she stopped the $35 payments. If we can get the garnishment stopped--it's a couple hundred $$--she'll go back to paying a smaller amount.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Aug 3, 2019 18:34:11 GMT -5
That makes sense. Good luck to her on getting that through!
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nidena
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Post by nidena on Aug 5, 2019 13:24:29 GMT -5
To add/continue the story...apparently, she's getting garnished AND paying the $35/mo. This situation will continue unless/until she calls the company (AllTrans, I think it was) to set up the payment arrangements but, when I suggested she call, she says "I don't want to talk to that woman again". I rebutted with "You don't know that you'll talk to her." Pause. "Okay," I continued. "Then the garnishment will continue until you die and then your estate will pay for them. Put your stubbornness aside and call the company." We were supposed to fill out that damn paperwork today but she had some sort of infection that prevented her from doing so. Since last Thursday. I told her that if she can't do it tomorrow (Tuesday), I can't help her because I've stuff going on from Wednesday of this week until October. I can't help people who won't help themselves.
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