My student loans are in default? Help Plz!?

Question

They have been garnishing %15 of my net wages for about 5 months. I want to take a portion of my tax return and use it for a lump sum payment and try to set up affordable monthly payments to get it back in good standing. Any advice?

Young stupidity. It was in forbearance for years, and I had moved several times. Not realizing the forbearance was up, partially because of the letters still being sent to my original address. Forgot till I received a call at work stating that I received a call at work stating that I had to make a substantial lump sum payment by the following day or I would be defaulted. I know it's my fault, I'm just hoping I can get this straitened out, learn from my mistakes, and get on with my life.

Thanks for all the help. I tracked down who had my loans, and called them. The let me get on a rehabilitation plan. I have to pay a monthly payment on top of my garnishment for 9 months then it will be reinstated, and be back in good status. They also are going to remove the negative marks from my credit report. The had no plans to take my tax return, but my student loans where not that much.

Answer 1

I'm in this situation myself...and I almost had an entry for judgment against me!

See if you can get the creditor (whoever is garnishing your wages) to put you on some sort of 'rehabilitation' program...where they'd continue to take a % of your wages, but just until you're in a financially sound position to set up a payment plan with them.

Also, as far as I kno, student loans can only garnish your STATE tax refund. Not your FEDERAL. I was in default for almost 3 years, and that's what happened to me. =P

PS: I posted what I did in my situation, on another's yahoo! answer... (just too lazy to retype!)
http://answers.yahoo.com/question/index;_ylt=AiD4gLPZFiC_JF2wbSS1bO6txQt.?qid=20070131212738AAg6ctu

Hope this helps!

Answer 2

There is not a lot you can do since you have already defaulted on the loan. First thing you should know is that should you be due a refund from from the IRS you will not be getting it. I know this probably sucks to hear, but when you owe the state or feds money (Stafford student loans are guaranteed by the feds) they will automatically seize any refund you might have been getting. There will be no option of only giving them part of it. You can certainly try contacting the lender to see if you can make a deal with them, but they are not required to make any deal with you at this point. What you might offer is to make a small additional payment along with what is being garnished and see if they will make an agreement that if you show a good faith effort to make a monthly payment on time every month for so many months in a row (such as 6 months) if they would consider letting you go onto a reasonable payment plan. Good luck.

Answer 3

1

Answer 4

Going through about same thing. I just contacted them and set up a payment plan. It is called a loan rehabilitation and what I have to do is make payments on time for 9 months and then goes back to the original holder and is everything is shown in good standing on my credit report. It was fairly easy to set it up, they gave me a few options. As soon as they get your first payment garnishments will be stopped and you will be able to get your tax refund, otherwise they will take it all. There is a number to call to see if your debt is listed with Department of Treasury. If you would like the number just email me.

Answer 5

Please refer to the hyperlink.

If any of your student loans are federally subsidized, such as Stafford Loans, the U.S. Treasury will "hold" your tax refund check and offset your tax refund against any FEDERAL delinquent debts you owe.

Thus, you are probably in trouble with the Department of Education (DOE) and that department submits a list of delinquent debts to the Department of Treasury who cuts your tax refund checks. When your social security number matches the delinquent list -- the Department of Treasury will "offset" your tax refund against the amount due the Department of Education. You will receive a notification letter INSTEAD of a tax refund check.

The government does this because it needs to collect on its receivables just like any other business ==> and yes, the government comes after the regular people first!

The government gets its money "off-the-top", so you won't have the opportunity to mismanage "their" money.

I would urge you to get a 2nd job to pay that loan back because having your paycheck garnished undermines your professional appearance and places an extra burden on your company's payroll accounting group.

I don't think most employers want to promote a person to a supervisory level to handle a company department when it APPEARS that a person can't handle their own personal finances.

Answer 6

Call the creditor who owns your loan. Send them the extra money, but don't count on them agreeing to NOT garnish your wages. Per your agreement in your loan contract, you defaulted which gives them legal access to your paycheck...it's like the golden ammendment in all contracts of loan.

If you hate your loan company...try to get another loan to pay them off, and then DON"T DEFAULT AGAIN to your new loan company. You will be hard pressed to find another lender willing to take your loan.

Answer 7

Sorry, but what makes you think you will see your Federal Income Tax check when you owe a Federal Student Loan.
You wont.
Call and ask if you can renegotiate the loan payment.

Answer 8

that could be a considerable bummer. i'm particular they hear that each and all the time, as scholars tend to flow lots, even though it does not harm to attempt to describe your concern and notice in case you may get a sprint relief. the final element you're able to do is to be well mannered and archives, and intensely respectful. that is not any longer what you want to hearken to, however the certainty is which you do owe them funds, and it develop into your duty to maintain them recommended of your contemporary touch info. nonetheless, perhaps they're going to comply with help you pay a factor now, and month-to-month money of something. bear in mind, be very, very intense-high quality, and don't lose your cool or get stressful or that is going to likely be sport over, and that they're going to easily fall decrease back on implementing the certainty which you owe enormous time and that they want their funds asap. you're inquiring for a considerable want, so be candy approximately it. good success!

Answer 9

Contact the student loan company and tell them what you want to do. See if they'll work with you.
How on Earth did you let them go into default?!? They usually let you defer for just about any reason.