Please Help
Posted by hightoarecord@reddit | studentloandefaulters | View on Reddit | 4 comments
Hi everyone. My sister went to college for 3 years and during her third year the school closed. My mom was a co-signer on her student loans. The government loans were forgiven bc the school closed, the private ones were not. I’m not sure if she didn’t know this or just didn’t have the money to pay, I don’t know. So it’s been 4 years since she payed on her private loan. She just got a civil action summons in the mail. After speaking to the (whatever entity has control over the loans now I guess) the offered her a payment plan so it doesn’t go to court or whatever. The payment plan is $662/month for the next 4 years. He said the loan HAS to be paid in full in the next 4 years. He said that’s the only option if you call the educational financing authority directly they’ll just refer her to them. Is on her own she definitely can’t afford the $662, I mean she never got her degree bc the school closed and she has gone through periods of homelessness/having no financial stability. My mom is terrified that if she doesn’t pay that amount every month they are going to take her house bc she is the co-signer. Is there anything that can be done? She’s going to call the “free legal assistance number” that they gave her, but what can they do? Is it possible to get this loan spread out more than 4 years so it’s not so expensive? My mom is so upset that she cosigned.
Gingerandthesea@reddit
What school was this for? Her federal loans were discharged under the Closed School Discharge Program with the Dept of Education but private student loans are tricky. Over at r/BorrowerDefense, there are a lot of people in similar positions where they have had their federal loans discharged under the BDTR program for scammy for-profit colleges but still have private loans.
Who now has the loan? Who was the loan through before it defaulted?
Unfortunately talking to the debt collectors may have started the statute of limitations over so you should seek out a lawyer about private debt. Also, take some time to learn about your states consumer protection laws about debt collection practices. There are statute of limitations on debt and rules they must abide by. The debt collectors on debt cannot make threats so pay attention to what the these goons say to you and write it down if you opt to talk to them. The debt collectors have to follow by state consumer protection laws and if they violate any, you should report them. If you have a court summons, don’t ignore it and go other wise it’s default win for them if you don’t attend. The Federal Trade Commission and Consumer Financial Protection bureau are two resources you can read through as well.
Navient now has a misconduct application for folks with true private student loans that people are applying for and getting discharges. The Project on Predatory Student Lending (PPSL.org) has info about this so this may give you some ideas on next steps.
I’m not a lawyer and just sharing this info for starting points.
ProleDBA@reddit
Thanks Gingerandthesea. This is a lot of awesome information.
Additional-Ad-9088@reddit
Ask what is the statute of limitations for unsecured private loans?
716TLC@reddit
I've not had this particular experience, but based on what others have said in this subreddit, I would suggest:
Call lawyers that specialize in student loans and debt collection, or even bankruptcy. If the sister is very low income, they may be able to discharge the loans (or freeze the court case) through bankruptcy. Use the free legal aid number but also find lawyers yourself. Get professional advice.
If mom has decent credit, try to refinance the loan in order to get it spread out over more than 4 years and make it a smaller monthly payment.
Do not avoid court, no matter what mom must show up to court. Preferably, the student / sister will go to court also. Failure to show up at court results in a default judgment that will not be in sister / mom's favor.
Worse case scenario, take the deal, pay a few months, default again, and hope the process restarts? I'm not sure this would work, but it may keep the wolves at bay.