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Defaulted Student Loan Help

Marsha Said:

I want to eliminate my debt but it doesnt inclde credit cards. i have a defaulted student loan & some other st?

We Answered:

A defaulted student loan cannot be "consolidated" with other debt.

Here's what to do about the student loan.

You are getting notices in the mail, no doubt. Call the toll-free number on the notice and find out who is handling your student loan. Then, call that company and talk to someone about getting the loan back on track. This is called "rehabilitation." It is fairly easy to do.

Keep a few things in mind though: the individual that you speak to is a collector. His salary is commissioned, based on how much he collects. So he will press you to make a large lump-sum payment. He will say "how much can you pay? I'm looking for $1500 to start? Can you do that? No? How about $1000? Can you come up with $500." etc.

Just play along. If you don't have it, just say, "No, sorry, all I can do is $50 a month" (or whatever).

Before you call, go over your budget and make sure you are committing to a reasonable amount for a monthly payment. This payment will be set up on an auto-draft from your checking account.

Here's the great news: after you make 9 consecutive, on-time payments, your loan is "cured." Fees and penalties are removed. The loan is then moved from the collection group to a lender who handles it just like any other student loan in repayment.

If you were to want to return to school, you would be eligible for additional borrowing.

Also, negative reporting to the credit bureau is removed.

It is really important to address the issue of the student loan. It has been reported to your credit and you won't be able to make a move financially until you get it straightened out. You cannot consolidate or bankrupt a student loan. The government will withhold your tax refunds. Your wages can be attached as can your property.

So take the matter into your own hands and get it set up as soon as you can. You'll be so relieved.

As for the other debt, it depends on what kind of debt it is.

Keep in mind that consolidation programs charge you for the service. They take a percentage of your monthly payment for themselves. Since you are already struggling, how much sense does this make?

If you have creditors, contact each one and set up a monthly payment play. If your debts have gone to collections, start working to pay one of them down, then move to the next one.

There is a book called "Financial Peace" by Dave Ramsey. It's the best book out there on managing debt and getting your credit straigntened out. Go by the bookstore or the library and have a look.

First, though, deal the the student loan.

Natalie Said:

My student loan is currently in default is there a ferderal grant to help me repay the defaulted student loan?

We Answered:

You must make at least 6 consecutive monthly payments in order for you to get out of default. There are no government programs that will help you pay this off, you must pay it from your funds.

Call the holder of your defaulted loans and begin to pay it as soon as possible. The fees will continue to increase until you do this, so its to your benefit to begin now.

If you are even considering going back to school, you will never receive financial aid, including loans, until you make these payments. Believe me, its worth it to get in good standing, because this debt will never go away!

Ernest Said:

I have a new defaulted student loan, how do I file taxes as a business, and keep my refund?

We Answered:

schools.medianewsonline.com - it provides some tips about applying to US federal and state grants for college students.

Marilyn Said:

i have a defaulted student loan but my college is now closed, how do i get the irs to take it off?

We Answered:

You can only have the loan discharged if the school closed WHILE YOU WERE ENROLLED. Is that the case?

http://studentaid.ed.gov/PORTALSWebApp/s…

Lance Said:

Is there any organization(s) of any kind that can help with a 12 year old defaulted student loan?

We Answered:

The answers depend on several things regarding your friend.

First- are they federal or private loans? If they are federal, are they subsidized?

Second- as you and your friend likely already know, student loans are protected from traditional consumer bankruptcy laws and they can garnish wages, offset tax refunds and in some cases even force the sale of a person's home and/or assets depending on the equity anticipated.

Third- The prediction is that second to the foreclosure situation, that student loans are the next big crisis to face the American economy because financial aid will become more difficult to obtain and furthermore due to the lenders ability to apply up to 25% penalties WITH compounding interest when loans default- loans can easily double, triple, quadruple from their original balances and there is NO recourse for the borrowers.

Fourth- There are some programs that may be helpful to your friend. I would have your friend start first with contacting the an Ombudsman from the Federal Student Aid Office. This is a service where they will assign a mediator to help communicate with the lender. Not to be confused with lowering any debt- but to help resolve disputes. Some Ombudsman are more helpful than others. Here is the link

http://www.ombudsman.ed.gov/

Fifth- Here are some other links that your friend should look at to help become familiar with things that are being discussed with regards to the issues borrowers are having with defaulted student loans- it is an epidemic.

www.IBRinfo.org
http://projectonstudentdebt.org/index.ph…
www.studentloanjustice.org

There are others- but I can't find the links at the moment. You are welcome to email me and I will email you others if you or your friend are interested. horsenut2000@hotmail.com

Cindy Said:

I have a defaulted student loan with a wage garnishment of about $300 per month. Help me consolidate?

We Answered:

Well, sorry to break it to you, but the feds are 'screwing you over' because you tried to screw them over. If you were unemployed, you should have worked with them immediately to get a deferment on the loan. And it sounds like you just kind of 'forgot' that you owed the money, since they don't garnish until it's been a very long time and they have tried to work with you with no results.

Can you get another job just to cover the immediate expense of the three consecutive payments? Or borrow from someone who won't expect it back right away so you can get ahead, and they won't charge you interest. That way, you can pay them ON TIME, and they will lower the monthly cost. But keep in mind that as soon as you don't pay the new amount on time, they will most likely bump up the payment again.

You won't get rid of the garnishment, because it's a legal action handed down by the court. That's your punishment, basically for not taking care of the money.

Good luck!

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