Student Loan Law Firm threatening me

[Imscrewed]

I have a student loan that went to collections while I was planning my BK. I am filing a chapter 7 and had to use the student loan payment money to pay for the attorney. In the meantime, they sent the student loan to an attorney for collection.

The attorney just called me and when I said it was filed, she stated that after it is all discharged, they will be pursuing legal action. I asked if we would be able to set up a payment plan and she said no. So what does one do with student loans turned over to an attorney once they are discharged?

There is no way that I can come up with the 30 grand. I'm freaking out.

Thanks.

[DebtEnder]

Well when it comes to student loans and garnishments the most they can do is 15% unlike 25% with other debts. The bk will freeze any action till discharge. Use that time to save up some cash and try to work out a deal beforehand.

[Imscrewed]

Thanks for the input.

Well the plus side is 15% of my income is basically nothing... so that wont do too much. However, I'm sure they will add plenty of fees and such to keep that debt growing.

So if they garnish my wages that means that others will know I filed... awkward

[dumpinmydebt]

Thanks for the input.

Well the plus side is 15% of my income is basically nothing... so that wont do too much. However, I'm sure they will add plenty of fees and such to keep that debt growing.

So if they garnish my wages that means that others will know I filed... awkward

The amount of garnishment depends on your location. In my state, they can garnish 25%.

I'm not sure what you mean by this bolded statement. Garnishment has nothing to do with bk. Having a garnishment does not mean one has filed for bk. It simply means the collector has taken further legal action to proceed with the garnishment. So just because you have a garnishment does not mean everyone is going to know you filed.

[DebtEnder]

I'll have to look it up but student loans have a federal cap of 15% of disposable income, which since no one fights it always ends up being 15% of net. Other loans can do 25% assuming state allows it.

[chicagoannie]

Thanks for the input.

Well the plus side is 15% of my income is basically nothing... so that wont do too much. However, I'm sure they will add plenty of fees and such to keep that debt growing.

So if they garnish my wages that means that others will know I filed... awkward

I think your federal tax refund will get taken, too. Might not be much, depending on your income, but they will take it forever, until the loan is paid. Be careful and smart about your witholdings at your job, so you take home as much pay as possible!

[KeithDoxen]

The question that no one has asked, but that everyone SHOULD have asked, is whether this student loan is federal or private.

If this is a private student loan, that 15 percent rule doesn't apply. Throw it out the window. This will be just like any other debt. The OP will be sued, the lender will get a judgment, and the state's garnishment and collection laws will apply.

If this is a federal loan, no need even get a judgement! The lender can exact an administrative garnishment of 15 percent of the OP's income.

Perhaps if the OP can tell us a bit more about the loan, we can be of more assistance.

[wnguyen]

Don't mean to freak you out but your student loan will not be discharged unless you have an undue or foreseeable hardship (and you have to file an AP when your bk is active). After your case is discharged and close, they will come after you for payments. If your wage is being garnished, I think the most they can get is 25% of your disposable income (that's what in most states). Just try to work it out with them.

[Imscrewed]

Thanks everyone. So I have 2 student loans. One is Sallie Mae, and the second is American Education Services. The AES loan is the one that has been turned over to an attorney. I am guessing it is a federal loan. I will go through my papers to find out for sure. I am going to try to explain to the law firm, that if they would work out a payment plan, it would end up being much more than if they garnish my wages/returns. I want to pay them off.

So here is the part that kinda has me pissed off. Why would my attorney tell me to stop paying my student loans? Especially, if me getting sued my the loan companies was inevitable. Such a nightmare. So basically, I am going to go through a bankruptcy, but instead of getting my credit slate wiped clean I will end up with judgments against me... so not cool.

[KeithDoxen]

Thanks everyone. So I have 2 student loans. One is Sallie Mae, and the second is American Education Services. The AES loan is the one that has been turned over to an attorney. I am guessing it is a federal loan. I will go through my papers to find out for sure. I am going to try to explain to the law firm, that if they would work out a payment plan, it would end up being much more than if they garnish my wages/returns. I want to pay them off.

So here is the part that kinda has me pissed off. Why would my attorney tell me to stop paying my student loans? Especially, if me getting sued my the loan companies was inevitable. Such a nightmare. So basically, I am going to go through a bankruptcy, but instead of getting my credit slate wiped clean I will end up with judgments against me... so not cool.

Please do your best to find out whether this is a federal loan or private.

If this is federal you have lots of options. You can rehabilitate federal loans that are in default many times. That means that you make a few payments and you're back in a normal repayment schedule.

Federal loans don't normally default during bankruptcy which makes me think this is a private loan. Your attorney probably thought that all of your loans would go into forbearance while in bankruptcy. Federal loans almost always do. Private loans depend on the lender.

Try to tell us more about the loan so we can help. I know it's a hassle to dig out the paperwork but even the name of the loan might let me know whether it's federal or private.

[currerbell]

Government v. private makes all the difference in the world. Hey KeithDoxen - has Access Group come after you yet? They just sent me an invoice informing me that my monthly payments are now almost double what they were pre-BK and the first is due 12/25/10. Two days AFTER they sent me a letter stating that my BK forbearance ended July 2011. There goes my brand new clean slate...

[KeithDoxen]

Have they come after me? It depends on how you look at it.

Have they called at all hours of the day, sent my account to two different collection agencies, and generally been annoying? Absolutely.

Have they filed suit? Nope.

Since they decided to let my loans go into default during bankruptcy, instead of granting me a bankruptcy forbearance, I didn't get any kind of payment schedule. I got a bill for the whole six figures. After I was done laughing, I decided to educate myself on what they could do to me. The answer is: not a heckuva a lot. I'm only a year out of bankruptcy, which means no houses or yachts for them to take. Wages are exempt from garnishment in my state. Any judgment against me wouldn't be worth the paper it was printed on. And they know that.