Help, they discharged my private student loan.

[adviceplease]

I'm not sure if discharge is the right word.... I took out a private student loan years ago and I did not realize that I had to start paying it back before I finished school (stupid of me I know). I moved to a new city and did not know that the loan was due because I never received anything about it. My loan was sent to a collection agency with 8 months past due and seeing as I did not have that much money to pay it back at once I made arrangements to make the monthly payments plus if I had extra I would start paying back the past due.

I paid for 4 months of the minimum and then my husband was laid off (I do not work) so I called the collection agency and made arrangements to pay 2 weeks later through automated payment from my checking account when his unemployment went in. I do not check my checking often but finally today a month later noticed that they did not take the money out and called them. They said that they discharged my account off because I did not pay. I am very upset because I made arrangements and had the intent to pay but they dropped the ball on their end. I am waiting to hear back from a manager and I am freaking out.

So what is going to happen to me? My husband was a co-signer and I am assuming that they are going to sue us? If that happens do they garnish his wages? Any advice would be appreciated.

[bcohen]

At this point, there is really nothing for you to do. The loan is not "discharged", but rather will be "charged off" and sold back to the guarantor agency (for face value) who will then add fees and collection costs before trying to collect from you. The good news is that since this is a private student loan, as opposed to a federal one, the guarantor agency cannot garnish wages or bank accounts without first suing and winning a judgment, and even with a judgment cannot garnish Social Security, unemployment insurance, or any other government benefits.