Question:
Dear Steve,
Several years back my married daughter had been working and due do the economy had been losing many jobs. She decided to go back to school to hopefully get a better job. Of course to make all this happen she needed to apply for student loans. In order to get the loans she needed a co-signer.
I was a widow at the time and working a good paying job. Since then my daughter has graduated with a bachelor’s degree. She now works in Human Resources but not making nearly what she was to be making for someone with her educational background. She has two children, the oldest has some medical issues and the youngest just turned one.
Her husband takes care of the baby since daycare is too expensive and there have been times that he has to go to the oldest son’s school because of his medical issues. Also since these student loans I have changed jobs and in the last 3-1/2 months just lost my job.
Before losing my job I had decided to start my own business. So I now have a cleaning business with a partner and the business is an LLC. I also married in 2008. Many changes have occurred since my daughter began this quest and unfortunately neither she nor I can pay the payments that AES student loan services is wanting.
My daughter has tried numerous times to work with them and their answer is always to pay the payment they are requesting which is $500 a month. I give her $170 a month towards that one. For one of the other student loans, Well’s Fargo, I have been making monthly payments of $239. Both of these I co-signed. Stupid I know now.
Needless to say I received a letter that the AES loan is going to collections. In all of my life I never have been sent to collections. I have always been able to work out something. My daughter and I are at our wits end and don’t know what to do!!!
My questions are: 1st can they go after my cleaning business? Can they go after my husband, even though he did not sign on the loan. If we go with your advice-which I like the sounds of, on just not paying and saving up the money that she had been sending them. Can they do anything with my cleaning business at all? Any advice you can give will be much appreciated. WE need OUT of this MESS!!!
Jane
Answer:
Dear Jane,
These both sound like private student loans and as you have since learned, two things are true here. The first is the cosigner is on the hook for the loans. The second is the private student loan lender is not required to do a damn thing they don’t want to do to make the student loan payment more affordable.
Unlike federal student loans with a myriad of repayment options, it is not surprising for private student loan lenders to say it is our way or the highway. Some private student loan lenders like Navient are willing to settle the amount owed for less than the balance. If someone is reading this and wants to know how to get Navient to settle, click here.
AES has been typically not as helpful to work out solutions and affordable payment plans. You’ve learned that the hard way.
Without the lender willing to come to a mutual agreement on affordable repayment, your options are limited. But you do have some. The first would be to look at the school and how the private loans were used. If the school was not accredited or the loans were used for things other than qualified educational expenses, then the loans may be able to be discharged today in bankruptcy. Click here for more on that.
But a solution more people are facing is to just stop paying the unaffordable student loans. It’s not the best option but it does have some advantages. Please read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan.
The private student loan lenders will push and push for you to make the payment they demand but at some point you will just have to throw in the towel. Continuing to make a payment that is not sustainable just pushes the eventual reality into the near future rather than deal with the underlying issue of the loans being more than you can afford.
A last strategy is always to consider filing bankruptcy to eliminate other debt you may have so you can make room to make the required student loan payment.
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I have two AES private loans I took out in 2007-08. In 2009, I became unexpectedly totally and permanently disabled. I was awarded Social security disability benefits, but they income from that is just 30% of what my full time wages were.
We have struggled and struggled to make payments on those loans since 2009, with little success in dropping the balance. We did do a Ch 7 BK in 2010, but at that time our lawyer wouldn’t touch the private student loan debt for bankruptcy inclusion.
At first, AES was very difficult to deal with, and adamant that full payment be made each month. Over time, fewer and fewer collection calls came in.
Then the AES loans went into collections, from there, they went into total default, but contrary to my fears, the earth did my open up and swallow us after defaulting.
At that point, our credit was totally ruined, and we hated to, but did rationalize that you can’t kill a dead man. So, with my disability related medical expenses, we focused on paying those, and haven’t paid a thing on the AES loans since October, 2014.
Back this past November, I did get the first in a very, very long time collection call about the AES loans. I believe this was a different collection agency than it was for these AES loans in the past. I explained our ongoing, unchanging financial situation to this collector, telling him we are sorry but there simply is no money to make payments with, adding (and you might consider tho is too) that if AES was ready to file suit against us, we will simply be forced to file a Slow Pay Motion.with the courts in response, and from what our local family lawyer says, the presiding judge in this county who sits for financial civil hearings typically fully supports the citizen defendants in these kinds of legal suits, and….
That was when the collector cut me off in mid-sentance with interjecting a “Now, now, now….(nervous chuckle) we don’t want to go there did we?”
He then have me the name of a lender who makes bad credit loans and said maybe I could get a consumer loan to pay off this private student loan.
I told him I truly doubted anybody would loan to us, but I’d try. This collector said he’d call me back in a couple days to see if I was successful in getting a loan, but he never did call back, and that was mid-november.
So, if your state allows citizens to file Slow Pay Motions to stand up to the collector AND provide the court with an honest assessment of your financial situation, indicating in your submitted financial info what, if anything, you could pay on the debt, you just might get some debt relief that way, and that would allow you the court’s blessing in making a loan payment that is affordable for you, and possibly too, get some of the debt discharged at the same time. Google Slow Pay Motion and your state of residence and see what comes of it. You can’t file a Slow Pay Motion until you are served with papers and given a court date thorough.
But now, having read more and other of Steve’s articles, I’m wondering something new about my AES loans and this collector. If this is a new collection agency, and if that agency bought my bad debt from AES, and if they can’t produce the original loan contract document, that would explain why this collector got a bit nervous, trying to steer me away from any court procedure, if I understand correctly. If that is the case, and this collector can’t produce the original contract for my loans, the loan debt is unenforceable anyway, and he would have no legal right to collect on it anyway.
Then again, I took these alleged private “student” loans out in 2007-08, and at that time, lenders were sending the loan proceeds check directly to the borrower at the borrowers home address; totally bypassing any school involvement. The university I was attending had no knowledge at all ever that I’d acquired this private loan funding.
In 2010, the law for taking out private student loans was changed so that private student loan lenders HAD to involve the student’s school in any funding by a private student lender.
This is telling me that the private “student” loans I took out thru AES were student loans in name only, when in reality, they were “Direct to Consumer” unsecured loans, and most likely totally dischargeable in an adversary hearing.
I’m looking at that now. Good luck, and while I know this is very stressful stuff, you’ll get it worked out, just like I will.