student loan collection

What is the name of your state? Pennsylvania

My husband had a business which failed and claimed bankruptcy. we were told that his Federal Student Loan went into default status because he was unable to make payments. We were also told that this was not dischargeable in the bankruptcy. The collection agency has contacted us. We tried to make arrangements to pay this debt, but they were extremely unreasonable in what they wanted each month. I told them that we could not afford to pay that much each month, and they told me to find a way and hung up on me. I have been sending them $50 a month and told them I would send more as I was able (once the other debts were under control). My question is - can they garnish my husbands wages even though I am sending them something each month, and also - is it true that the interest is supposed to stop accruing on the loan when a bankruptcy has been claimed? We are not refusing to pay this debt - but they want us to pay $260 a month for 1 year - and then it MAY be possible to have the monthly installment decreased. Any help is greatly appreciated. Thank you.

[bigun]

I wish I could help but, I know zlich about student loans. However, I can direct you to a sight that can help. Try the discussion forum at [url]www.creditnet.com.[/url] It is a free site but, you must register. A lot of posters there have fought student loan battles with Ca's and have some ideas. In fact, before posting use the search function and try something like rehabbing student loans and see if you find some information. The reason I suggested that is someone posted a similar problem to yours just a few weeks ago and got a lot of suggestions.

Greetings,
You are correct student loans that were guarenteed by the government ie. stafford, plus perkins ect. are not dischargable under chaper 7 UNLESS you can prove undo hardship, which is basicly impossible, because there is no definition for undo hardship and women on welfare with children have been denied relief under 'undo hardship'. My favorite quote atm( dont flame me if its alittle off, its early in the morning "There are three things that are sure in life : Death, IRS, and Student loans". As for lowering you monthly payment, you could try a few options. 1: send a certified letter to your loan agency including the terms you feel you can make 2: contact the Dept of education [url]http://www.ed.gov/index.jsp[/url] (these gents can help!) 3: i forget who else, ill try to remember later. anyways; Yes, they can seek to garnich your wages but they cannot garnish what you dont have. Of course if you are making 5k a month and living in a 3k apartment with a 1k bmw bill and spending 1k on OTHER, they can garnish Lastly it is NOT true that your interest payments or any payment for that matter to your student loans is suspended during a BK. They will not contact you during your filing just like every other creditor cannot contact you, BUT you are still required to pay them during, after, and before the BK.

Mike Butters:
Student Filing BK
Student Living on Loans
Doh

Thank you both biggun and Mike for your quick replys to my problem. Your help is greatly appreciated. I will check out both sites and see what they have to offer. One last question I had - if they happen to garnish his wages - can they garnish them for more than what they originally wanted us to pay? Once again - thank you for your help.

[racer72]

For the CA to garnish wages, they must first obtain a judgment against your husband. This is where your husband needs to be proactive. The judge can make the CA accept a certain payment a month. But the monthly payment must be enough to cover the interest and a percentage of the outstanding balance. If the balance owed is $10,000 and the interest rate is 5%, the minimum payment requred to cover just the interest is around $110 a month. If the $50 a month is not enough the cover the interest, the loan will never be paid. If the CA does obtain a judgment and garnishes your husband's wages, they can take up to 25% of his after tax wages. The CA can only collect through garnishment the amount of the judgment only, not a penny more.

And I will add a little warning about Creditnet.com. Some of the information they put out is not true, some of it is pure lies. They claim if you send a creditor any amount, the creditor cannot contact you. That is pure horse pucky and that info can get you in more trouble than you have now.

thank you Racer. My husband just started a full-time job today - I will contact the CA in a couple of weeks once my husband receives his first paycheck to see how much I will be able to send and hopefully we will be able to come to some form of resolution with them. Believe me - they are more a pain in the neck to deal with - so I'd rather get it paid off then have them haunt us for the next several years. I think I will apply for a loan to pay it off. thank you everyone for your help, it is most definitely appreciated.

[Ladynred]

Whatever you do, get ANY payment agreements in WRITING, otherwise the CA can deny ever having any such 'agreement' and come at you again for the full amount or other huge payment demands. If you're going to do any negotiating, send your proposals in writing, certified mail, and accept only a written, signed agreement from them as well.