Debt collection while deployed

[romadison]

What is the name of your state? Kentucky

My son is on active duty in Baghdad and he was in default on a students loan before he left. He won't return until May 2006. I have been receiving phone calls from a third party collection agency regarding the loan. I called them after receiving a letter (dated 10/31) addressed to my son, age 28, with our home address. He hasn't lived at home for 10 years and we've moved since then. I am not his power of attorney, so I cannot get any information in repaying this loan without his signature. The collection agency says I need this taken care of by Friday (although the letter stated 30 days before any action would be taken). Now he tells me that part of the Uniformed Military Code will get Matt into huge trouble if this is not taken care of by Nov. 18
934. ART. 134. GENERAL ARTICLE
Though not specifically mentioned in this chapter, all disorders and neglects to the prejudice of good order and discipline in the armed forces, all conduct of a nature to bring discredit upon the armed forces, and crimes and offenses not capital, of which persons subject to this chapter may be guilty, shall be taken cognizance of by a general, special or summary court-martial, according to the nature and degree of the offense, and shall be punished at the discretion of that court.
Am I unnecessarily being pushed to act quickly this third-party collector?
Thanks!

[noobie]

What were the type of student loans? Were they Stafford or Govt Guaranteed. You have rights to have these loans put in deferment up to 24 months total. What this means is those loans can be put on hold for repayment. You need to contact the school where the loans were used and talk to the default management department. They should have the forms to fill out and send to the lending agency(s) to put them in deferrment, if he hasnt already used up this 24 months. Once they are in deferrment, they will come off of the loan default list..

[fozzy2]

Did you co-sign for the loans? If you had you probably would have been told about it by now. If you did not, then you are not legally obligated to do anything. They are contacting you only because you are easy to find and they hope you will influence him to pay. You can give them your son's address, tell them you have nothing further to do with the matter, and tell them not to call you again.

Does your son know he is in default? There can be some nasty pitfalls for military people who default on loans --- but being charged under the UCMJ is not usually one of the (unless they can prove out and out fraud, and not just a failure to repay). For example, if he defaulted on any government guaranteed loans then he may be subject to a Treasury "offset." This means if he is ever supposed to be issued a check by the Treasury they will deduct what he owes until he has paid off. The Treasury normally only deducts from what they call 'vendor payments'. What this means is that a military person will be sailing along, getting pay, etc. and think their default is forgotten. And then they file a travel claim after a PCS move, or to get repayed for their use of a government credit card......and get little or nothing. In addition, being in default on a loan might be a bar to re-enlistment (it is policy not to originally enlist people who are in default).

The collection agent is probably trying to rush you into paying for your son, even if you are not legally obligated. I'd say just inform your son of the matter and wash your hands of it. If you co-signed the loans, however, then they will start coming after you....

[badapple40]

He has the right to defer interest over a certain percentage while deployed or even suspend or defer the entire loan repayment while deployed.

It is called the soldier's and sailor's civil relief act. I would politely tell this collection agency that your son is deployed and where they can reach him, and tell them to please send him a letter so he can invoke the act and halt their activities.

You may also want to respond in writing telling them to cease and desist any further communications with you under the federal Fair Debt Collections Practices Act.

[fozzy2]

I think the kicker is that the loans were in default prior to deployment. Normally I don't think you can apply for deferment while in default, and I'm not certain the SCRA would permit it either. A lot of programs won't touch/deal with a loan in default. For example, you are not eligible for various student loan repayment programs if you are in default. The problem is that the loan is probably federally gauranteed -- and we all know that the government gets to play by a different set of rules.

In addition, the interest rate caps don't apply to federally guaranteed student loans (about the only kind made). But now that I think of it, I wonder if a loan resold to a third party would still not qualify for the interest rate cap, or since the gov. has already written it off....but that is a tricky technical question.

Anyway, this is between your son and his creditors. Unfortunately, one of them might be Uncle Sam.

[csporluck]

What are they going to do, Send him to Iraq?

[fozzy2]

Originally Posted by csporluck

What are they going to do, Send him to Iraq?

Keep him in Iraq and not pay him? ;-)

[romadison]

Yeah, as his mother I must say if they really want to punish him they can bring him home and make him work it off. He won't be facing any IEDs at Ft. Campbell. I kid! Having his wages garnished isn't the end of the world.