Student loans sent to collections after filing

[fireworks]

Our CH7 bankruptcy was finalized about a month ago, and tonight I got a call from Sunrise Credit that my student loan had been placed with them for collections. I called Citibank to verify that and did a search here on the forums - I'm definitely not the first one this has happened to.

Sunrise offered me a settlement at 40% off the original amount. I might be able to pull that off if I can get paid by some clients PDQ, but I'd rather pay less if I can - has anyone had any experience with them? Suggestions on a counter-offer?

[Exployer1234]

Are you done with school? If not then they can not send you to collections if you are still in school. You have to go through hoops to get them to take you out of collections, but it can be done.

If you are not going back to school I would go ahead and accept a settlement offer. Especially if it is 40-50% off the original loan. Personally I would even see if they would go lower to 60%. I can say that some companies have it set where after 10 years you do not owe anything, and some are 15-10 years.

[fireworks]

I've been out of school for a few years, but I'm planning to go back this fall. I'm definitely considering the settlement offer just to get out from under the debt, I just have to come up with the money. Once I have their offer in writing I'll be making a counteroffer for much less. If nothing else it will buy me time.

[Exployer1234]

If you are going back in the fall then I would try to get the status changed on you loan. Otherwise if you go back in the fall you will not be allowed for any funding if you are considered in default.

I would speak to the school you will be attending on what the best route to go.

I am still battling my school that I will be attending in the fall. I have a feeling my loans are going to be going into default status evemn though I have not defaulted on the loans. I actually filled out all my loan papers 3 months prior to filing my BK. Now I am going on 3 weeks since my 341 meeting. I guess I will see on friday when I call them again for the 20th time.

[wonderingrov]

My (consolidated) student loan is through Citibank, and I did some research on ways to resolve a defaulted status (I'm filing today or tomorrow, so I wanted to check this out before filing). There is a program with defaulted student loans called 'loan rehabilitation.' This program essentially places the amount due on monthly payments. Once you have made the first 9 payments on time, the loan is taken out of default status, and you repay the loan under the agreement you reach with the lender. That is the way I plan to handle mine if it goes into default due to me filing. Basically, you would want to tell the person you are dealing with at the collection agency that you want to 'rehabilitate the loan' and then work from that point with them. Here is a link with some of the information I have found on this:

http://ed.gov/offices/OSFAP/DCS/rehabilitation.html

Another good thing about this is that it essentially puts you back in 'good standing' if you want to receive other student loans.

[fireworks]

Thanks for the link to the rehabilitation program. Because this particular loan is just a private student loan, not a federally guaranteed loan, the rehabilitation program does not apply.

The collector sent me an offer to settle for about $2700, which is 40% off of the full amount of $4400. According to the terms of their offer they will only accept that through the 29th which gives me less than a week to come up with it. Not likely.

I offered $1500 to settle the debt, which would require completely cleaning out my emergency fund - not ideal, but I would do that if it would get rid of them. She said they won't accept anything less than $2700. She then offered to accept $1400 as a down payment, and then payments at $275/month for 12 months. I'm definitely not cleaning out my emergency fund as a down payment, and even if I did I can't afford $275/month. They payments I've been making to Citibank were about $50. She's asking for 5 1/2 times that amount, AFTER a down payment. Ridiculous. I told her when she had a reasonable payment plan offer or settlement offer to call me back.

I have a call in to my lawyer to see what, if anything, they can do for me. Our discharge came over a month ago and they sent us a form letter that basically said they considered their obligations fulfilled and any further work would be billed separately. I doubt they can do much that would be cost-effective at this point.

I potentially have a check coming in from a client that would make the $2700 by the deadline, but it might not be here in time. Even if it is, I don't want to spend it all that quickly - I had been planning to use it to buy a car. I really need to replace my beat-up gas guzzling pickup.

So, I'm looking at options. The collection agency has threatened to sue but I have my doubts that they would over this amount of money. I'm thinking if I just wait for a few weeks and come back with another settlement offer they may be more willing. I'm going to start with a debt validation request before I do anything further.

[fireworks]

I did get a call back from the paralegal who worked our bankruptcy. Without the contract she couldn't say for sure one way or another, but did say that it sounds like this is entirely legal, that Citibank was within their rights to sell the loan to collections and that the new collector is within their rights to call the whole thing due. I'll definitely let this be a lesson to any of my friends who mention taking out private student loans (especially from Citi). I certainly won't be doing any business with Citi in the future.

After getting over the initial anger and offense at the situation and the asinine collector, I looked at the numbers and decided just to settle. As annoying as it was to receive a collection call, post-bankruptcy, on a debt that I've been making monthly payments do (as agreed in the original contract), a 40% discount is a 40% discount. If I didn't pay they could really cause hell with my credit report, take me to court, etc. We're hoping to move in a couple of years when I finish school so I'm working hard to keep my credit spotless post-bankrtupcy.

I counter-offered them 60% off the original amount and they turned it down - said they would consider that a down payment and I could pay the rest of the balance (the whole $4K balance) in monthly payments. At that point I was about ready to tell them to piss off and wait for them to come back with a lower offer, but that check did come in just in time to pay the $2700. I'll have to put off the car purchase for a few more months but that's OK. It looks like I may be getting a company car in the fall which would take care of the immediate need.

Anywho, thanks for the suggestions. For anyone else who finds this thread, you'll do well to check the documentation, but it's probably all on the up and up. It's asinine to ask a bankrupt person to pay for the entire balance right away but they can and they will.