I filed for Chp 13 in Oct. We were Confirmed in Nov. I have 2 private student loans totaling $30,000 that was being serviced by AES. I have been paying these student loans regularly and the only way I found out I was in default was b/c my Nov. check was rejected and returned on 1/21/11. When I called AES(Servicer), I was told that my loan went back to the originator which originally was Chase but got bought by this First Marblehead Corp, who informed me that b/c of the BK I was automatically in default. I now come to find out that I cannot renew my professional license if I am in student loan default!!!! My lawyer is absolutly no help and had I known any of this I would not have filled BK. I have 1 year until I have to renew, but i feel like such a fool for going back to school and trying to better my life....It was bad enough that I am totally under employed and cannot rely on any stable income, now I won't even be able to work b/c of the auto default. Is there any way to get out of this default status???
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If the loan is truly private then you will not be able to bring it out of default. Federal loans can often be rehabilitated, but private loans generally cannot because once they go into default, the guarantor pays the lender and the guarantor now owns the loan. Naturally, the guarantor is going to have a whole different set of policies about what sorts of payments it will accept. You should try to negotiate a payment plan with the owner of your loan.
Also, what kind of professional license do you have, and in what state? I have never heard of a professional license being denied because of private student loan issues. I know that with federal student loans, they can basically put you in stocks in the town square until you pay, but with private student loans, there usually aren't any issues beyond what you would experience with normal consumer debt, other than your inability to discharge them via bankruptcy. Maybe you aren't reading the fine print, and maybe your license can be renewed as long as you are paying your federal loans as agreed. I can't really help more unless you tell me more about your license. -
I have a license for Dental Hygiene in the state of Illinois. I called the dept of professional licensing and they said " you cannot renew your license if you are in student loan default." I don't know why my default through bankrupsy would impair my ability to be a Dental Hygienist!!!! I don't understand how it behoves the private lender to default my loan and make it impossible for me to earn a living. I'm sick to my stomach! I don't know how to find out if my loan is TRULY a private loan as my lawyer seems to be useless in this matter. I'm hesitant to call the lender until I know some more information. They were not very nice when i called originally.Comment
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I agree that it is absurd to make payment of student loans a professional licensing requirement. It seems that employment in one's field is a necessary condition of being able to pay off one's student loans, and such employment cannot be secured absent the professional license. The whole thing is a bit silly, and is another example of the problems that have been created by our very messy student loan system.
Based on the players involved with your loan (AES, Chase), and the fact that it defaulted upon filing bankruptcy, it sounds like you have a private student loan. Your best bet at this point is to explain to your licensing board what happened, and ask them what you can do to make things right. Explain to them that you cannot "un-default" a private loan, and the best you can do is to get the lender to agree to a payment plan. Perhaps they will renew your license as long as you are able to come up with a payment plan with the lender.Comment
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Yes, that senario has occured to me. I will wait for my lawyer to call me, and see if he will call the lender on my behalf. They seem to be nervous to talk with me because of the bankrupsy stay. I don't really trust paying them money being that they say they can't send me a statement. They said I could pay them and that they will add the payments to principle only. Should I add them in my trustee payment??? My trustee payment is already at $900/month. What sucks is I can't go the SOL route because I need my license to work. I'm really in a pickle here! I am just sick at the amount of people being scammed by these sleazebag lenders. It's like the world of Ayn Rand. We must have some type of regulations to protect people from this type of lending. I firmly believe that the banksters are trying to do the same thing with student loans as they did with the mortgages...I read somewhere on the internet that First Marblehead buys these student loans and packages them up into securities, not sure of the whole story but I am in Chicago snowed in with nothing else to do but read up on the student loan bubble that WILL burst I just don't know when. I won't even go into the crap the mortgage leenders have put me through, UGGGG. What is wrong with the universe!Comment
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There's absolutely a student loan bubble out there. No one in their right mind would pay 100,000 dollars for a liberal arts degree at a four-year college if it weren't for student loans creating the illusion that the program is free, i.e., the payments seem as if they're light years away. And no bank would lend a 19 year old kid that kind of money for that kind of degree if the government wasn't rigging the game for the banks. Millions of Americans are "underwater" with their student loan debt just as they were with their mortgages, i.e., they don't earn enough to even pay the interest on the loans per month. Which means that the bubble will burst, just like the housing bubble did.
But back to your situation. You shouldn't have to pay anything on the loans during the Ch 13. For some reason, I had thought you had said it was a Ch 7. I would maybe have your attorney talk to a supervisor at the licensing board and explain the contours of the law to that individual. They probably don't know anything about how bankruptcy works. Basically explain to them that your student loan debt is essentially frozen during the bankruptcy. If they won't buy that, try to get the student loan payments included in the 13's payment plan. You'll still owe the balance of the student loan after discharge, but paying them each month might make the licensing board happy. My guess is that neither your licensing board nor your attorney has a lot of experience dealing with this issue. Student loan defaults used to be rare, and they're just now exploding.
Incidentally, did Marblehead know that you were in the middle of a 13? Why on earth would they buy a debt that they couldn't collect on for five years?Comment
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Yes, why on earth would they do that unless they had something to gain. They somehow want people in default. Maybe they get paid by the govmt. if I default even though it is not a federal loan??? Check out forgive student loan debt site. There is a infographic. Maybe just like the mortgagae scam they package the loans and sell them to investors...yada yada.Comment
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Apparently they did know I filed chp 13, that is why they claim to have put me into default. I looked at my original loan and in small print it say if you go into bankrupsy your loan will be in default. I could not work for 2 years during the time I was in school. Graduated in '09 to find out the job market everywhere is saturated with too many hygienists. according to FAFSA My husband and I made to much money(what a joke) to qualify for the goverment loans, and I had to borrow enough to cover my half of the mortgage while in school. Then the crash happened and suddenly we had zero credit and they doubled our interest rates. Oh yeah, while I was in school we had a fire and had to move out for 6 months. To recover what we lost, our insurance required us to buy first and get reimbursed later(ha). I guess you could say we had a perfect storm of sorts. So, my point is that I was in a desperate situation and I feel dumb for not reading the fine print on the loan.Comment
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Sounds like you're almost in the same boat as me. I'm still waiting to hear something back from my attorney. Filing Chapter 7 apparently put my private student loans into default. I had no idea and am surprised my attorney told me there would be no problem as I was paying the loans and didn't have any problem with that debt.
Now I'm scared and angry. I feel my attorney should have advised me appropriately.
The only thing I am fairly certain about is your issue about the professional license ( I am in process of getting a professional license myself) is that can happen with defaulted federal loans. That doesn't appear to be relevant to the private loans.
I'm just terrified where this is going. I thought bankruptcy would be a new start for me, not put me my family into an even worse place.Comment
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I am sorry to hear about your situation. It is nerve racking enough to go through getting a professional license! I worked so hard in school and now I am working 3 jobs and it's still isn't full time. It seems like my attorney is a bankrupsy factory, after he goes to court he leaves everything up to his paralegals!!! How do you know it is only applicable to fed loans and not private?Comment
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That's what I have read around the web. Defaulting on private versus federal loans appear to have some differences. I believe the Feds don't need to go through a process to garnish wages and take tax returns. Privates are dealing with all the nastiness of unsecured credit collections with none of the benefits...can't get rid of it. Feds hang over your head with the license stuff, but there is loan rehab and I think they only take 15% wages versus private collections suing you and getting 25%.Comment
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