Get Out of Debt Guy - Steve Rhode

My Private Student Loans Have Been Bought and Sold So Many Times. – Alex


“Dear Steve,

I make 15 hr and I have about $150,000 in private student loans and $50,000 in Federal loans. My federal loan payment right now is $32 a month which doesn’t cover the interest but it’s really all I can pay now.

I have defaulted on all the private loans since they offered me no reasonable solution or payment plan. I should add the private loans are spread out between 3 different companies, and now probably 4 different debt collectors.

Just by simple math I would never be able to make the payments requested by them. I have no other debt, I save 10% a month in my work 401K and have about $10,000 in my Roth IRA. I’m ok in the short term but if they come and sue me and garnish my wage, which im not sure how they could since these loans were bought and sold over the last 9 years, and I’m hoping no one has the actual paperwork on them, then they could get 25% of my wages in California and what would be pretty devastating, but still less than my required payments.

If they do this could they also take my IRA and 401k? How do I solve this problem?


Dear Alex,

The would not be able to take money in your qualified retirement accounts. And you are so smart for saving right now. It’s a mistake I see so many making. See The Saddest Avoidable Mistake People Make When Getting Out of Debt.

If the private student loans have been bought and sold that much there is a real potential the paperwork is missing on the loans. Lenders have been so sloppy over the last decade. I’m going to ask a California attorney I know to comment on this question and they might be able to assist you.

The only real solution that exists today is to consider a chapter 13 bankruptcy to get all the payments under control at least for the next five years. We can hope Congress will make private student loans dischargeable again like they were up till 2005.

Let’s see if this California attorney I mentioned can help you out with those private student loans and challenge the validity of them to see if they are still enforceable or long lost.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!
Get Out of Debt Guy - Twitter , G+ , Facebook
If you have a credit or debt question you'd like to ask just use the online form .