– I graduated college in 2009 after using what seems to be 5 different loan companies; sallie mae, chase, AES and two I can’t even remember. I have spent the last few years digging myself out of credit card debt holes due to not finding a job for almost a year after graduation. All my credit cards are closed and I am in the process of paying them off. My plan was to pay higher payments for a couple years, get rid of them completely, freeing up money to satisfy these student loans.
– I have been paying consistently on three loans from American Education Services (very small $25 a mon) and the other small companies ($130/mo to a creditor and to ECMC $200/mo).
– Chase (about 9,500 owed) and Sallie Mae (about 67,000 owed) are after me for much larger amounts. They both have sent my loans to different collection agencies. I find it confusing to know who has what loan and even what I can do about them.
– I work at a high school on a 9 month contract and the collection agency for the sallie mae loan just called me wanting to lock me into payments. I would not agree because I do not have steady income over the summer months and usually have trouble paying my regular bills. I have no budging room June-Sept. The debt collector wanted to know how I planned to pay for my other debt if I was telling him I had no money to begin payments with them. I didn’t know I had to go into all my personal information and explain things that I don’t even have an answer to right now.
-The reason I haven’t paid sallie mae is because they want almost 400 a month. That wont fit in my budget. I take home about $1850/month plus an additional $500 in private tutoring.
I pay out:
– 350- rent
– 200- ECMC
– 130- another loan creditor
– about 250 in total credit cards
– 70 for phone
– 112 for insurance
– 250 on food/gas
that puts me pretty close to 1800 so I just (in the last 2 months) started to put a little money aside for use over the summer. If I add sallie mae and chase in the fall I could probably give each 150 bucks. However, I’d need a raise and more private tutor clients to save any money.
Thank you for reading this and offering your advice to so many. My questions are regarding student loans; defaulted sallie mae loans specifically. I’m 33 and I live in California.
1. Can I ask to deal with sallie mae instead of the debt collector? I get written material from both. I also read that I can request to only deal with a company in writing. Which is for my protection- for a paper trail as well as reducing heart palpitations because of having to deal with pushy people over the phone :(
2. How much do I need to reveal to debt collectors about my life/financial situation? In my written response to sallie mae, I’d like to include a run down of my bills and income. The income will not be the same for the months I am out of work.
3. I told the sallie mae debt collector that I want to set up payments to begin in September when I return to work but he did not want to go with that, stating that I haven’t paid in the past. Situations change and I’ll be making more money starting then. Are debt collectors or Sallie Mae willing to arrange this type of agreement for defaulted loans? I really want to make payments but will still not be able to afford 400/a month. How do I get them to work with my terms?
Thank you so much for your time and advice. I really appreciate it!
Dear Ms. B.,
I wish you had come to me a few years ago. The most logical approach is a chapter 7 bankruptcy to discharge your other debt in less than 90 days so you can get back to focusing on your student loan payments.
Dealing with student loans is actually a fairly straight forward approach. Read The Ultimate Guide to Dealing With Student Loans You Can’t Afford. If any of your loans are subsidized then they might qualify for an income based repayment program from the Department of Education. Additionally your subsidized loans would most likely qualify for forgiveness in 10 years under the Public Service Loan Forgiveness program.
Unsubsidized loans / private student loans have no required flexibility and don’t have to offer any concessions or affordable payments. If you can’t pay, each month, what they require they can sue you and garnish your wages.
The debt collector is not interested in logic or your math. They have guidelines they must collect under and are contracted to do so.
You could certainly request they communicate in writing but there is nothing that would require them to do so. If you cut off communication it’s just an invitation to dump you in the “to sue” hopper since you no longer neatly fit their process.
Another option is a chapter 13 bankruptcy that would give you a payment you could afford and legally stop all collection calls. The chapter 13 would most likely last for five years but would not discharge your private student loans. It would however buy you some time and peace while we wait and hope that Congress will change the laws back to make private student loans dischargeable in bankruptcy as they were before 2005.
We need a solution here and not a Band-Aid. Making partial payments doesn’t stop anything and not being able to afford the payment is not a defense when it comes to owing private student loans.
Without Congress changing the laws and requiring private lenders to offer income based payments the only way you can force the lenders to do anything is by either discharging your other debt and making enough room to make the full payments or filing a chapter 13 bankruptcy.
You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.
I wish I had better news for you but it is what it is.
Please post your responses and follow-up messages to me on this in the comments section below.