student loan debt went from 30K - 55K after 6 missed payments?

[njinco]

Is there any sort of non-profit group that can help with a student loan problem?

I had $30K of student loans when I filed for BK in 2009 (discharged 5/30). At the time, the loan was in default; I wasn't paying on anything during the year I filed.

They went to collections (some agency that specializes in student loans). When I contacted them to start repaying, they set me up on an affordable payment plan.

However, right now my student loan debt on my credit report is listed as $55K. Now, I know there are penalties, but how did this debt rise $25K??? There were about 6 months when I didn't pay on the loan. No more.

How do I get help? I don't want to owe this much--it doesn't seem right.

Thanks!

[HHM]

Because the default penalty is HUGE.

If these are federally backed student loans, there is an appeal procedure. But hey, once you go 270 days without making a payment, you are in default. I know of no non-profit or technology that can go back in time and change that fact.

[njinco]

Okay, but $25? I understand the penalty is huge, but really? That's ridiculous and there has to be something I can do...I obviously had a financial hardship (and had sent letters to them at the time telling them so) to the point of BK; how can they get away with an almost 50% penalty?

Has anyone else had a problem with defaulting on student loans, and if so, what did you do?

[BKOnce]

SKY interest rate = 100%

[jadams]

Once the loan defaults, like HHM said -- they can asses a HUGE "collection fee".

I've heard you can sometimes get it reduced with an appeal, but even reduced it's still high.

[wonderingrov]

Here is a link with some information I had found when I was researching possible default scenarios when I file:

http://www.usafunds.org/borrowers/loan_payment_solutions/default/default_consequences.htm

Specifically, in relation to additional charges, it states the following:

You will incur additional costs.
Collection costs of 21.5 percent of your outstanding balance may be added to your account when you default. In addition, interest continues to accrue. For example, if you default on $5,000 in student loans and fail to make a payment for two years, at the end of that period, the balance that you owe could grow to more than $7,000, including collection costs and additional interest.

[HHM]

The trust fund taxes are easy, but will depend on the circumstances and what sort of trust fund taxes we are talking about, federal or state.

In both cases, you will be 100% responsible for any interest unless the interest is illegal or miscalculated.

For trust fund taxes...
1. If your business was a sole prop, you are 100% liable for all penalties, interest, and collection charges (if any). All of it is Non-Dischargeable.
2. If your business was incorporated in some manner (LLC, S-Corp, C-Corp) and business is defunct (no longer operating), then, normally, the penalties and interest die with the corporation. You, as the responsible person, will only be liable for the principle amount of the tax.

Student loans are more troublesome.
1. My sense is, the entire lot is non-dischargeable. The student loan consists of the terms of the master promissory note. Thus, any penalties, collection charges, all fall under that note and become part of the loan. I cannot find any authority to the contrary. You still must prove and undue hardship.

2. However, I understand the argument you wish to make. The BK code says that to be non-dischargeable, the loan must be a qualified education loan, a QEL consists of a loan to cover certain expenses, and that collection expenses and penalties do not fall under that definition.

What you should do is go to the law library, find an "annotated" version of the United States Code (annotated means it list court cases that reference the particular statute) and review all cases related to 26 USC 221 (and the other statutes stated therein).