Where does someone begin to deal with defaulted debt?

Posted by West_Tadpole9339@reddit | studentloandefaulters | View on Reddit | 16 comments

My loved one graduated college almost 10 years ago and worked for a couple of years before he suffered a severe mental health breakdown and completely stopped working ever since. He is in complete denial of his federal student loan (eg, doesn’t open any loan-related mail) and reacts in complete panic mode when pressed. I’ve been helping with his bills but have no visibility into his student loan debt until today I accidentally opened his mail and saw this it recently went into default. It’s probably about $20k. Where do we even start? His mental health is so fragile that I cannot just pepper him with questions or tell him to “look into” options.

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Warm_Investment_1012@reddit

Have you thought about filing for total and permanent disability due to the mental challenges preventing him from working? Does he see a physician regularly? The other option would be to consolidate or rehab the loans but both would require payments to be made once all said and done.

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West_Tadpole9339@reddit (OP)

We’ve looked into declaring disability before but he’s not cooperative with doctors. We’ve been dropped by probably 10 psychiatrists who won’t work with him anymore. He has a primary care physician that he’ll tolerate but I don’t know if she’ll make a strong enough case for him.

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VeggieCat_ontheprowl@reddit

Is he receiving SSI or SSDI? If his disability reaffirmation paperwork shows reconconsideration due longer than 7 years or if he has been receiving benefits for longer than 20, a copy of that paperwork along with a request for discharge due to permanent disability should work. I became disabled in 1985. My paperwork required review every 5-7 years, so DOE rejected my request. But it now is 41 years of continuous disability and I am receiving SS retirement benefits now. I finally have documented permanent disability and will be filing for discharge this week.

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TheZetetics@reddit

I'd either kick him out or take away his video games and force him to get a job. Either way, if he had his loans paid-in-full or in default (the status they are in now), you're screwed either way...as a loser is a loser. For a grown man to go into "panic mode" when you ask back to back questions about addressing ones debts...is incredibly weak sauce. I would suppose that you are being manipulated. Tough love is the only action that will carry the day here. An outstanding loan is the least of your worries, you have a character problem on your hands. Good luck. And i'll say a prayer that this guy develops some back bone.

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West_Tadpole9339@reddit (OP)

This person has had a lot of trauma and severe mental health issues including suicidality and also abuse and abandonment by his parents.

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ssmc1024@reddit

I am not trying to give you any advice…please contact someone that is an actual financial expert…BUT I just hoped to give you a little peace of mind since I saw that nobody has answered you yet. The only thing I can say is that I have had student loans of over $40,000…plus Lord knows how much interest at this point… for at (least) 30 years, probably closer to 35 and I’ve never had any issues except them contacting me all the time. Actually, they don’t even do that anymore. I’m 62 yrs old now but I remember when I was much younger and would be so stressed and upset over it all the time that I would just make myself sick with worry. I remember talking to a lady on the phone one time from Sallie Mae and I finally got fed up and just told her ‘Look, I don’t have any money. And if you try to garnish my wages, I’ll just quit my job. You think I want bad credit and to have y’all call all the time? I can barely pay my bills and unless you think you can get blood out of a turnip you’re wasting my time and yours.’ LOL

I think that might be around the time they just quit calling me. Anyway, I hope you figure it out, but please try not to worry about anything too bad happening if you can’t pay. Of course it’ll show up on your credit score, or in this case your brother’s, but they can’t take your home.

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West_Tadpole9339@reddit (OP)

Thanks for this note. Have you just avoided employment to avoid collections? Or is there some income threshold where they can’t garnish? Just worried under this administration that policies could he changing.

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ssmc1024@reddit

Well, mine are all old but no, I’ve never not worked because of the student loans. I mean, if they tried to garnish my check I’d have quit and worked as contracted worker, which I was for many years anyway, but I’ve honestly not even worried.

You are right, though, there is no telling what will happen in the next 3 years but I don’t worry about it. Good luck and try not to stress over it.

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but they can’t take your home

The feds actually can do that. It has happened before, although it is rare. As to private student loans it is possible too (depends on homestead protections in your state, etc)

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