Amusing Student Loan Call

[treehugger1]

After looking carefully at my age, my salary, what monthly payments would be in a BK 13 at close to 100% payback, I decided to call the current holder of my $70+K in student loans.

After verifying my name, DOB, and SSN, the call went something like this:

Me: Could you tell me how many days my payments are late?
Rep: 132 days. Would you like to make a payment.
Me: No thank you. I would like to default on my loans.
Rep: Ummm, your loans don't actually default until 270 days.
Me: I know that. I just want to hurry along the process. Can we speed up the process to administrative wage garnishment?
Rep: I don't understand. We can give you another several months of deferrment to help you out.
Me: I only need your help on how to officially default.
Rep: If you default it can affect your credit.
Me: My credit is already in the sh*tter. I'm begging you to get this loan to the DOE and into wage garnishment.
Rep: Oh,....Why would you want to do something like that?
Me: It's a long story. But, if you folks would garnish for 15%, then my loans get paid, and other collectors can only have 10%.
Rep: This is not in your best interest.
Me: Nothing I've ever done has been in my best interest.
Rep: Long Pause: I'll notate the account. Are you sure you won't let us help you? We may have some plans.
Me: Nope. I already told you the plan. I don't think you get it. I know I could go to the Ford direct consolidation, etc. I choose not to. I have decided to let these go to default. Would you notate that, please.
Rep: Yes,...sir. The calls will continue.
Me: That's okay. I'll continue to not pay until these default and the DOE garnishes my wages.
Rep: I'll notate the account.
Me: Feel free to call anytime.
Rep: Your references are quite old. Can I update these for you?
(My references are from 18 years ago.)
Me: No, thank you. Could I make up some names and phone numbers for you so you'll have something to put in the blank spaces?
Rep: No...that won't be necessary.
Me: Have a good day.

By the end, the rep was laughing so hard, she was nearly in tears! I don't think they get many callers contacting them and asking how to default and how to make the process go faster.

I told her that I fully intend to pay off the loans, but I need to go about it through wage garnishment. She appreciated my somewhat unusual candor.

It was almost like a scene out of Catch-22. LOL

[jadams]

Just be careful that once the loan defaults it will end up with a Student Loan Collection Agency (Wyndam Professionals or the like).

They will almost immediately tack on a HUGE amount for their "collection costs" ($18,000 is not uncommon on a $40,000 loan balance).

So even if they have it for a day or two before you agree to a wage assignment and such, you're going to end up paying them a fortune for doing nothing.

[treehugger1]

Well, figure it this way. Five years of BK 13 deferrment interest bearing at 8.25% (this is even the best I can get if I do the Ford reconsolidation) on $740000 is $35994.56. So, 48.6% increase after I could exit a BK 13. The department of education tells me that total collection costs for my loans are capped at 25%. This is not true for all GSL's, especially the more recent ones. Mine are decades old.

The Dept of Education told me that it is likely my loans will go directly to them at 270 days and not be first passed through a collection agency. In addition, I can wait until day 269 and file for the Ford consolidation. They didn't seem too concerned when I told them I was probably going to default with the servicer (AES.) The issue is getting the servicer to forward the loans to the DOE. The loan servicers do not like to give up the student loans to the DOE as they lose their service commissions.

[2Bshinyandnew]

Was this the guy that called you?


http://www.youtube.com/watch?v=XmZ-5OUZgMQ

[treehugger1]

That is hysterical! It wasn't the guy, but I hope he eventually calls! You have to wonder if the US government require these folks to provide you with the appropriate privacy policy of their organization. LOL. I'll tell them I begged the DOE to garnish my wages and they refused. What can I do. The DOE missed their early opportunity to receive the Treehugger Stimulus Package!

I'm thinking of using that call as my answering my answering machine (voicemail) message. That would really be funny.

Or, reset my answering machine to say, "You have reached <name>. If you are calling me, then you probably owe me money. I am a reverse-debt collector! Please submit as much money as you can, as soon as you can, to <my address>."

Speaking of stimulus, I recently agreed to a very reasonable settlement with CitiFin. They sent me a contract that states the first payment is due the first of July. I agreed as the deal was too great to not accept. Today I get a call from a Cfin representative telling me that I need to make the payment by 5/31. They said the original offer wasn't good until I made a payment by 5/31. I know their deal as the account will charge-off in a day or two. I told the rep that I'll abide by the contract I signed and sent back via email, and was accepted by the account manager. The rep went ballistic. I simply said, "You'll get the payment on the first of July. If you want to argue this contract in my state, feel free." I finally told the rep to take some of the stimulus (TARP) money they received and use it to cover the debt. As a taxpayer, I choose to use my allotment of the federal banking stimulus money to pay my debt to CFin. If you have a problem, contact the government.

Obviously they had some kind of SNAFU in their process when they sent me the contract. Screw 'em now.

[bk4sky]

i work for a SL company and we have to ask all those silly questions when we call, it makes up look retarded! Ive actually had a few calls about people requesting the wage garnishment, the thing is there's no way for us to force it, we kinda have to wait for the DOE to take it back and move forward with those steps.

[treehugger1]

BK, I don't think it makes you look retarded at all! It's the system that's retarded. The people I've spoken with from current servicer (AES) to the DOE have all been very polite and have bent over backwards to try to suggest a different situation. I think the real issue is that in a BK 13 the SL's are given no priority and become a part of the five-year limbo-land. WHile one can make payments outside of the plan, most folks have nothing left after the trustee devises the monthly payments. I have always found it interesting that any other government debt such as the IRS or state IRS debts have priority, while other debts with the Feds cannot (Sl's.) Why would congress not put into play legislation that considers subsidized SL's priority unsecured debts? The only folks who I can think of that have anything to lose are the servicers and current holders of the SL's. The biggest losers are future taxpayers who will foot the debt that remains unpaid. There is must be another reason for not prioritizing SL's as unsecured debt, but for the life of me I don;t know what the reasons might be. Any thoughts from your end?

[treehugger1]

I'm going to add another interesting tidbit here. I have heard from colleagues and others that many folks who are contemplating BK will now max out their cash advances to the tune of tens-of-thousands of dollars and use these funds to pay off their student loans. They then wait 3-9 months and file for BK. Not a bad idea, when I think about it. Unfortunately, I never had such lines of unsecured cash advances, but the idea seems reasonable. It seems that in their (credit card and high-risk lenders) attempt to force a means-type test leading to payments on unsecured debts, these folks may have created a far worse situation. Consumers, rich and poor, are not stupid. They eventually figure out a new way to play the game, much faster than corporate America gives them credit for!

[BigJohn]

If they have equity in their home, a second mortgage to pay off the student loans might work, especially if they still live in an area where the value of homes are depreciating a lot.

Yesterday somebody called me and said I could borrow $45,000 and the loan would be unsecured and I could spend it on anything I wanted to spend the money on (really!).

[bk4sky]

BK, I don't think it makes you look retarded at all! It's the system that's retarded. The people I've spoken with from current servicer (AES) to the DOE have all been very polite and have bent over backwards to try to suggest a different situation. I think the real issue is that in a BK 13 the SL's are given no priority and become a part of the five-year limbo-land. WHile one can make payments outside of the plan, most folks have nothing left after the trustee devises the monthly payments. I have always found it interesting that any other government debt such as the IRS or state IRS debts have priority, while other debts with the Feds cannot (Sl's.) Why would congress not put into play legislation that considers subsidized SL's priority unsecured debts? The only folks who I can think of that have anything to lose are the servicers and current holders of the SL's. The biggest losers are future taxpayers who will foot the debt that remains unpaid. There is must be another reason for not prioritizing SL's as unsecured debt, but for the life of me I don;t know what the reasons might be. Any thoughts from your end?

yeah....i honestly have no idea why they wont let you include a SL in BK, or a part of your chpt 13 BK plan, i dont agree with it.