trustee allows student loan payments, Nelnet won't apply them!

[woeisme]

So I know I shouldn't be complaining, since I have it easy compared to some who aren't able to make student loan payments while in their CH 13 plan, but I was just so surprised today when I called Nelnet to find out why my last two payments to them never posted. (I have on-line access to my account.) Well, they tell me that they got the payments (which I knew since they were already deducted from my bank account) but that until my BK closes, they are not able to apply any of the payments to my account! So while I keep making my payments, they keep accruing interest on the total amount of my loan (plus the interest from the previous month) and then in 60 months when the BK closes, they will apply the total of all my payments, which by that point will be about 20K! I figured out that it's going to cost us about $3500 in extra interest fees this way, which isn't nearly as bad as the 20K+3.5K that would add up if my trustee didn't allow for the student loans in our budget, but it still seems like a scam that Nelnet is allowed to take our payments for 5 years, but never apply them until after our case closes. Has anyone else had this situation happen to them? I already put a call in to my lawyer to see if she has any advice, but I don't have a lot of hope that she'll be able to help since student loans aren't addressed in BK law, and I'm lucky the trustee allows for the payments as part of our budget to start with.

[woeisme]

By the way, Nelnet has also posted the payments, starting from when they stopped applying them, as delinquent on my credit. Right now one payment is showing 60 days past due and the other 30 days past due, even though they got them on time, since they can't apply them to the account. That burns my britches too, since they were paid on time!

[arkienurse]

Hey, Woe I can't remember if you are prose or not, but if you have a lawyer I would be on the phone to them. That doesn't sound right to me. My trustee made the payments for us for 3 years. They didn't show anything on credit report except IIB. They sure shouldn't be able to hold your money without applying it and wracking up more interest.

And if you are prose, call the trustee's office. I'll bet they know if it is legal or not.

[woeisme]

thanks arki, I have called my lawyer to ask her about this and several other things (I have a list of 6 things I want to discuss before my confirmation hearing on the 25th) but she hasn't called me back yet. I think it's weird too... we'll see.

[isitreal]

Please update us as to what you find out. My student loans are through Nelnet and I'm just entering into BK.

[aa06a47]

Sounds like a good old fashion loan shark screwing to me. It doesn't sound "legel" for them to do that, but since most of the student loan companies have adopted several congressmen, you never know. Talk to your attorney. I am interested in how this one comes out .

[AboutToBK13]

By the way, Nelnet has also posted the payments, starting from when they stopped applying them, as delinquent on my credit. Right now one payment is showing 60 days past due and the other 30 days past due, even though they got them on time, since they can't apply them to the account. That burns my britches too, since they were paid on time!

woisme,

Have you shaken the tree so to speak? I would be asking for supervisors, VP's whatever it takes. Is there a special handling/BK department that you can talk to? Have them site the statuet that allows them to not apply the paymenst.

They are basically extorting $3500.00 in interest from you by not applying those payments.

There has to be away to get these payments to apply.

Good luck.

[woeisme]

AbouttoBK13,

I asked the lady I was talking to yesterday to transfer me to someone in their office who deals with the BKs, and she said she couldn't, that it was "interoffice" and that she could send them an e-mail for me, but that she couldn't put one of them on the phone line for some reason! I mean, how weird is that??? I'm still waiting for my lawyer to call me back too. I called before Christmas and they never called back, now it's been over 24 hours and no call-back again, I'm getting peeved!

[AboutToBK13]

woeisme,

I would keep after them. I have found that if you pester them enough (in a polite manor), eventually you will get with someone that will assist you. I hope all goes well for you.

As an aside that may help others, after reading this, I talked with my lawyer about student loan payments yesterday and was told that our Trustee will fund them in a CH 13 at the same level as the rest of the unsecured debts. At least they will get something. Just wish it was more.

[woeisme]

Well, I talked to my lawyer's assistant today about the student loan issue. She had never heard of such a thing before, and plans on running it by my lawyer, but her advice to me in the meantime was similar to what was on here, keep pestering NELNET until I get a straight answer out of them. She said I need to inquire on whether or not my account is going to be frozen or not, I guess what she was saying is that if the account is frozen and no fees are accruing, then it's ok for them to not apply the money until the end, but if the account is not frozen, then they have the ability to add charges, so also have the ability to apply payments, that she doesn't think they can have it both ways (not frozen but not applying payments). She did say that a lot of companies try to come up with their own rules when it comes to dealing with people in CH 13, that they'll make all kinds of claims about what they can and cannot do, but that I need to be persistant about demanding to know where in the law it says they are allowed to do X, or where in the law they can't do Y. Because if they don't have that info, then they are just making up their own rules whatever way they please, and need to be called on it. I guess I'll keep trying to get a straight answer out of them... I'll keep you updated.

[Minnymouth]

Part of the problem may be that your Chapter 13 payment plan has not been confirmed from what your said in your posting.... this may be why they are not posting payments yet......

Also your Trustee may need to know that they are holding payments and not posting them..... check with your attorney on this..... that's what you pay HIM for.......

Keep us posted

[AboutToBK13]

Good luck.

[woeisme]

So I had my husband call Nelnet tonight (we have a joint consolidation loan, so he is also on the account) and the girl he talked to said our account was just fine, that the december payment was applied to the balance, has no idea what the other lady was telling me about not applying the $. He kept on her for a while (he's much more persistent than I am, which is why I had him call) and she asks for a higher up to talk to him, she also says there's nothing weird with our account, payments are being applied, BK doesn't affect it since it's non-discharged in BK, etc. I'm like WTH? after he gets off the phone. So I go to log on to our account to see if it's still showing past due the way it did before which is why I called them the 1st time, now it won't let us access our account! Says it doesn't recognize us in the system. Hubby calls back, they can't explain why we have no account access, must be either that we're screwing up trying to log on (not the case!) or a problem with the system, please try again later. Am I wrong to be totally suspicious? Now they are going to say they are applying payments, but since I can't log on to verify, I have to take them on their word for the next 5 years? Arghhhh!