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If you default on student loans, is it legal for the government to immediately add on 43% collection costs?
Financial Aid
I borrowed $55K (colege & grad school), ending in 1994. I couldn’t get a job, got sick, and was homeless. The bank declared my loans in default, even tho they did not meet all the criteria for default. I finally got a full-time permanent job in 1996, but then lost it in 1997, was a temp for 2 years, and have been paying almost $1,000/mo. since 1999. But somehow, the government says that I owe more than $198,000 (yes! one hundred ninety-eigh thousand!) and in fact, the interest is more than my payments so the balance is actualy growing. All lawyers tell me that unless you are disabled or mentally ill, you cannot discharge student loans in bankruptcy as long as you can pay SOMETHING–it makes no difference under the law that you will never be able to pay off the loan before you die, or that it is an extreme hardship to have this hanging over your head for the rest of your life. Lawyers tell me that it must be an “undue hardship” which is impossible to meet unless it makes you homeless.
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Tags: Bank Loans, Bankruptcy, Extreme Hardship, Full Time, Grad School, Homeless, Job, Lawyers, Lost, Mentally Ill, Rest Of Your Life, Student Loans, Temp, Tho, Undue Hardship
September 23rd, 2008 at 8:12 pm
Yes it is possible. They are going to tell you that you should have contacted them to be placed on a forberance so you don’t have to pay when you lost your job. It is really hard to get a loan marked as bankruptsy but I have seen it happen in the past but if you talk to the lenders you might find some way to get some of the interest wiped out or some of the collection costs.
September 26th, 2008 at 12:42 am
student loans can NOT be dc thru bankruptcy.. If u are permanently disabled they will be written off. Even if u are mentally ill and can work, they can’t be written off ..must be a permanent disability where u can’t work. Undue hardship can be anything..illness, death in family that keeps u working. Temporary economic hardship..u really need to contact them and see if u might qualify for any sort of deferment or any payment methods that u can qualify for.. Most of them will work with you but as this point, u are probably screwed. but I would talk to them.. don’t be surprised if they tell u “u should have applied for deferment when u were not working or sick”.. GL
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