Get Out of Debt Guy - Steve Rhode

MY SSDI payment is About to be Garnished Over a Federal Student Loan

1-844-335-1967

Question:

Dear Steve,

I lost my job and was unemployed in 2013. At the time, Sallie Mae and Nelnet were my student loan servicers. I applied for and was granted deferment or forbearance and had to submit my paperwork in triplicate because Sallie Mae has my loan in two bundles (of loans).

I tried to return to work but my physical condition prevented me from continuing. By then Sallie Mae was taken over by Navient but they worked with me so I would not be in default. Every so often, I would have to resubmit documents. Around June of 2015, I got a letter saying our income tax refund was being kept because of student loan debt.

When I told my accountant that I had email confirmation that I was in forbearance, he told me I must have an outstanding loan unaccounted for.

In reviewing my email, I realized that Nelnet had stopped sending me notices at the end of 2014. I wrote them but by the beginning of 2015, College Assist was in charge. I tried communicating with them by snail mail several times but received no response.

Instead, at the end of 2015, I got a threatening letter from Performant Recovery acting for College Assist. It said I must establish a repayment plan with them within 30 days or else… I sent them a letter and got no response for a couple of months until June of 2016 when Transworld Systems, Inc contacted me on behalf of College Assist.

I was dealing with some serious health issues and in September of 2015, I had to apply for social security disability. I received a favorable determination but my SSDI did not begin until November 2016. In September of 2016, Navient notified me that my forbearance was ending. I sent letters and email to my student loan servicers and to Transworld saying that I will be applying for a Total and Permanent Disability Discharge of my student loans but in the interim I am hoping to be put on a repayment plan that I can afford on my disability income to get and keep my student loans current.

I got a letter from the Department of Treasury notifying me that College Assist was seeking a Treasury Offset on my SSDI.

Transworld Systems responded within 2 weeks saying that my account was closed in their office. Further inquiry about the debt should be directed to College Assist. Transworld Systems also noted that according to their files, they did not report my account to any credit bureau.

I sent still another letter to College Assist explaining that right now I am trying to catch up on all the debt I incurred before my disability payments started so garnishing my social security with a Treasury Offset of 15% would create a situation where I would never be able to recover from the financial hardship I have experienced.

In return, I got a letter from Premiere Credit of North America acting on behalf of College Assist and another letter from the Department of Treasury.

Meanwhile, I went to studentloans.gov to apply for income-based repayment. Everything with my Navient loans was fine but I was advised that Nelnet does not participate in the electronic system and I would have to contact them directly. I feel like I have been trying to make arrangements with them for 2 ½ or 3 years. First with the entity of Nelnet, then College Assist, Performant, Transworld and now with Premiere Credit of North America. It seems like they would rather put me in collections with a different company every 6 months and tack on exurbanite collection fees rather than work with me to straighten this out. In February of 2014, I owed Nelnet $54,048. As of January 2017, I owe them $74,577. Can you suggest a course of action to end this insanity?

Janet

Answer:

Dear Janet,

It is very unfortunate your servicer never mentioned putting you into an income driven repayment program. Your payment would have probably been $0 a month and you would have avoid the tax refund intercept, collection and penalties.

You can check the status of all your federal student loans through the National Student Loan Data System. You need to do that right away.

So it sounds to me as if you have one or more federal student loans that were or still are in default. That’s how you wound up with the first snatched tax refund.

If you’ve received a SSDI garnishment notice you should absolutely make sure you ask for a hearing and explain you’ve already applied for Total and Permanent Disability (TPD) Discharge. The instructions on how to ask for a hearing are in that notice you received. You can provide them with the date your TPD application was submitted.

I’m wondering if your TPD application had all of the federal student loans included on it. One or more might have slipped through.

Additionally, just because you are getting SSDI does not mean you will be approved for a TPD. As the TPD sites says, “I currently receive Social Security disability benefits. Does that mean I automatically qualify for a TPD discharge of my federal student loans? Not necessarily. The standard for TPD discharge purposes only accepts some Social Security Administration disability determinations. Eligibility for Social Security disability benefits does not mean you are automatically eligible for TPD discharge.”

If a TPD application is received that includes all your federal student loans, collection is supposed to be suspended for up to 120 days while the application is being processed. Again, this make me wonder if a loan was left off your TPD application. If any of your loans are in default and payments are being collected by wage garnishment and/or Treasury Offset, the garnishment or offset will continue. Once your request for TPD discharge is approved, the wage garnishments and/or Treasury Offset Payments will be discontinued.

You can learn a tremendous amount about the TPD process, here.

It is unfortunate that you’ve had so many issues with the loans. But you have to remember, nobody is really watching over your loans but you. You need to be proactive to speak up when something is amiss and take swift action to stop the situation before it gets further out of hand.


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