Bankruptcy, School loans, and collector offers...please help

[lightingbird]

What is the name of your state? Missouri

One of my patients got a contact the other day from a collection agency named Pioneer. They let him know that hes loan was in default and they were at the last stage before they start to garnish his wages. He paniced. He called them back and they gave him some sort of offer that would let him make payments of $250 a month for 9 months to avoid this. Also at the end of the 9 months, hes defaulted school loan would drop off of his credit report and a new payment plan would be set up with an independent loan company.

Questions.

1. Does this sounds about right?
2. He told me hes gotten this type of call before over the years regarding this situation and they never garnish him. According to him, they stated that he had 24 hours to decide before they proceeded. Can you garnish him? Stating as high as 15% of his wages.
3. The offer they made to him, what exactly happens at the end of the 9 months? He is mainly concerned that after the 9 months he is locked into paying $250 a month which he really can't afford that he will be stuck in the same amount for years just to fall back into the same situation. He was told the rate would drop dramatically but no amount was given for after the 9 months.
4. Can a bankruptcy help him with this issue?
5. Is there any legal thing that he can do such a hardship to stop possible garnishments or deal with his large school loan.
6. Finally, this one I'm really curious about, collectors that make offers such as stating only paying half of the acutal bill will close the books. How can they do that and is that legal?

 

[boswd]

Bankruptcy does not cover student loans

do not have your patient ignore this, Student loans do not have to follow the rules of other loans, if they are about to garnish his wages, rest assured they will.

What is sounds like Pioneer is offering is as rehab. This is very common with defaulted student loans. If he makes on time payments of the agreed upon amount, Pioneer then moves the loan from default statust to in good standing.

I'm not sure what your patient's financial situation is but $250 a month is a very very good deal and if he can he should take it. If not he should see if his student loans can qualify for the William D. Ford Direct loans program. http://www.ed.gov/offices/OSFAP/DirectLoan/about.html

They may offer him wage contigent options, which may be a lot cheaper. If he chooses to go this route, he must do it ASAP for it takes up to 90 days to go through, This turns the loans over to the US Dept. of Education and during this time Pioneer cannot persue the debt. USDE should contact Pioneer but he should follow up on it, to make sure.

But what Pioneer is offering does sound reasonable and the rehab program is his best bet.

You have to tell your patient to not mess around with Student Loans, not only does it kill your credit report, then can be as aggresive as they want to be since they do not have to go through the courts.

 

[timhlk]

Yes they can garnish his wages, which is quite embarrassing for his employer to see. Take the rehabilitation plan they are offering, that is a great deal