Author Topic: Defaulted private student loans - Could I be garnished for the rest of my life?  (Read 2230 times)

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sixfiguregrad

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Here is my situation:

-Only work part-time
-No car
-No driver's license
-Facing 2 private student loan judgments ($30K + $56K...kept loans in forbearance hence the high amount)
-No money for debt settlements
-Live with a parent
-Didn't finish graduate school
-IBR ($0/month) for the federal student loans (over $55K because of accrued interest)
-Several bankruptcy attorneys tell me it's impossible to declare bankruptcy

I live in Virginia. My understanding is that:
- a judgment can last 10 or 20 years
- it accrues interest
- it can be renewed
- I'd have to pay attorney fees, court costs, plus post-judgment interest on top of what I defaulted on

The $56K has been sent to Asset Recovery Solutions. Does anyone have experience with them? How can I find lawsuits from them filed in VA?

flaccito

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Who are the student loan creditors? A little more info would help.

Flyingifr

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In theory they could garnish you for the rest of your life, subject to State laws and the Federal Consumer Credit Protection Act's restrictions. Federal law exempts the DISPOSABLE income (gross minus required deductions) of 30 times the Federal Minimum Wage (totaling $217.50) per week, and they can take 25% of whatever your net pay exceeds that by. This is a "per employer" rule, so if you have two jobs each netting $215.00 per week, neither can be garnished. State laws may restrict that further. Some State laws do not permit wage garnishment at all, but Virginia is not one of them.
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Debtors Exams are the perfect place for us Senior Citizens to show off our recently acquired Alzheimers.

Founder of the Credit Terrorist Training Camp (Debtorboards)

kevinmanheim

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Considering the $ amount involved, and the interest that can be added to a judgment, you probably cannot afford to even pay the monthly interest. If that's the case, the size of the judgment will continue to grow.

Consider talking with a bankruptcy attorney skilled in eliminating student loan debt in a Chapter 7 filing. It is possible.

You need a plan to eliminate these debts, not pay them down or deal with garnishment for decades.
« Last Edit: February 17, 2017 12:18:54 PM by kevinmanheim »

Bruno the JDB Killer

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IBR ($0/month) for the federal student loans (over $55K because of accrued interest)

You will never get rid of a federal student loan unless you become totally disabled. They cannot be discharged in BK, and they don't even have to take you to court to collect. They can just start taking things, if you have any. There is no SOL on them, either.

Didn't finish graduate school

Why not?
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

CleaningUp

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Given the age that you seem to be...not yet in "peak earning years", and with a graduate degree, I'm not sure a bankruptcy judge would go along with you.

Far better to get into one of the work-out/debt reduction plans that the federal government offers so that you have some consistency in the situation for planning for your future.

Here's a question that has always come up in my mind when situations like yours are presented...

Why would you have even considered taking on that much debt prior to your finding out how employable your might be in the marketplace?

And please don't give us the excuse that you were naive or sold a bill of goods.  The minute you turned 18, you were entitled to sign a contract for yourself, and with that right came the onus for you to understand the exact terms and conditions of that which gets your signature.

Another point...If your parents guaranteed your federally-backed education loans, they can be required to honor the guarantee.

It would seem to me that it is best for you and your future to get this matter into a manageable situation before it destroys any chance of you ever having a reasonable, and comfortable, future.

1965Comet

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Here's a question that has always come up in my mind when situations like yours are presented...

Why would you have even considered taking on that much debt prior to your finding out how employable your might be in the marketplace?

And please don't give us the excuse that you were naive or sold a bill of goods.  The minute you turned 18, you were entitled to sign a contract for yourself, and with that right came the onus for you to understand the exact terms and conditions of that which gets your signature.


LOL at the idea that 18-year-olds are not "naive". 

I have a similar situation to the OP, but my problem was graduating from law school just in time for every NYC law firm to start firing people back in the 2008 economic debacle.

Your question might make sense if the OP pursued a grad degree in English after 2008, but I don't see where he ever said what he studied...

BrokeBob

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There are many reasons why the student loan bubble has gotten so big:

1. Tuition keeps going up, up, up! 
Lots of factors here, including less funding of public institutions by various governments.  Public universities were a few hundred dollars a semester back in the day, and long, long ago they were free. 

2.  Salaries, adjusted for inflation, keep going down, down, down!
Even though young people today are better educated, young people in 2014 made about 20% less than they did in 1989.  Those of us old enough to have been working in the 1980s remember that the job market was already worse than it had been in the 1960s.  Two generations of declining wages so far.

3.  Very few opportunities for people without degrees, so there is more supply than demand.
Lots of reasons for this, hopefully the Trump Administration's (*) proposed reforms of the H1-B scam will help.

I knew a guy who had never been to college who was assistant manager of a pizza place in a college town.  The people who worked under him were college graduates from the University of Wisconsin -- one of the top public universities in the US.  They were working **** jobs to pay off their student loans.

4. The rent is too dang high!
Housing costs are unbelievable.  My wife's family moved to NYC in 1980, and apartments like the ones they rented in the Lower East Side are now going for 10x or more what they were back then.  Hey, I remember a summer in the early 80s when I paid half the rent for a $90 a month apartment in Honolulu, and $15 a month for a bus pass.  I spent a summer away from college working minimum wage in a store in Waikiki and still saved up money for college.  Can't do that anymore.

5.  (This is a big one!)  Lots of people are not finishing their degrees, or else finish after switching schools at least once. 
This is partly due to there not being any job opportunities for people without degrees.  People go to school, find themselves way over their heads, and wind up with the debt but no degree.  This happens to a LOT of people. 

6.  Pie in the sky dreams,
encouraged by shady colleges and loan givers at times. 
Many young people have no idea what they want to do with their lives.
My son is lucky.  He knew what his major would be before his senior year in HS, so he went to a college where he could go through in 4 years and get an engineering degree.  Having a few AP credits helped as well. 
I have a daughter at U Wisconsin, and the engineering majors there go through in 5 or more years(**).  That is because they take lots of general intro courses to see what they really want to do, and by that time it takes an extra year to graduate.
What happens to the people who change their mind?
They transfer, they take forever to graduate, they often don't graduate. 

7.  Scam universities.
We all know about them.  Get the loan and give **** in return.

8. Scam financial aid and banks.
To some extent the student loan program is a complete scam whereby the US government subsidizes the banks at the expense of the students.  Not a joke.

9.  Young people are often confused. 


(*) Trying to keep politics out of this.  Anything I said about Mr. Trump I said on political forums using a different nomme du internet.  I am merely stating some people in his administration are trying to reform the H1-B system, which would be good for workers.  There are also Democrats who want to reform the H1-B system.  Good luck to all of them in both parties. 

(**) My daughter doesn't study engineering, but she has friends who do.  She also found a way to get through school with zero student loans, but she wants to be a doctor which would mean $100k+ student loans for med school if she gets in. What happens if she goes to med school but washes out?  That happens, and lots of would-be doctors wind up with HUUUGE student loans and no MD. 
« Last Edit: February 17, 2017 04:17:09 PM by BrokeBob »

BrokeBob

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Sorry to add onto a post, esp. such a long one.

Back in the old days, I used to teach college level classes, first as a TA and later as a professor. 

What I taught the most was Organic Chemistry. 

For those who don't know, this is the class that weeds out a very large number of pre-meds.  So, inevitably, lots of pre-meds hated me.

A very, very large number of my former students are NOT doctors now.

A few never wanted to be doctors.  For example, some wanted to be dentists.
Some changed their minds completely.  For example, one pre-med decided to be a minister.
Many, many, many of them washed out of the pre-med program. Actually, I think MOST of them washed out. 
A few made it to med school and washed out there.
There was one well-publicized case of a guy who got his MD but was later convicted of a felony, which ended his medical career. 

Anyway, these were all students who had a plan to take on student loans for a high-paying career down the line. 
Except most of them never got to their goal.

We claim to value the entrepreneurial spirit in this country, and to some extent we do. 
The trouble is, most of the time it leads to failure. 
If the failure is a business, often times the solution is bankruptcy, either personal or business, although that option is not what it used to be.
If the failure is educationally related, the powers that be have decided bankruptcy is not an option. 
I disagree with that, but that's the way things are. 

Nothing I say on this forum will change things. 

What we CAN do is what we do with people with other types of loans.

When people come here with problems with a CC loan or phone bill or whatever, we don't castigate them and say why did you get yourself into that mess.  We give them advice.

So, we need to give advice to the OP, rather than questioning his judgment.

The best advice is for him to do what he can to make some arrangements to pay off the debt.  That may not be possible.  At this point it may be late enough that any arrangements they are willing to make would cripple him financially.  If that is the case, he may find a judgment against him.

Other options would be to try to open up a lot of credit cards and lines of credit, and get the student loans into something unsecured.  Then go the BK option.  Hard to do, but much less painful if he can pull it off.

Bruno the JDB Killer

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So you think committing fraud against credit card companies is the way to go?  It's too late for that anyway, but it's a rather poor plan.

Finding out the reason for default is  part of formulating a plan. Most people who have these loans don't seem to have one. All we hear is that despite racking up 100K in loans, they managed not to finish school. Somebody has to pay for that, and it shouldn't be the taxpayers. Personally, I don't think the government should be financing anybody's education.
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

1965Comet

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Most people who have these loans don't seem to have one. All we hear is that despite racking up 100K in loans, they managed not to finish school.

Now that makes no sense.  If they managed not to finish school, the reason they defaulted seems pretty clear (i.e., they can't pay them). 

BrokeBob

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So you think committing fraud against credit card companies is the way to go?  It's too late for that anyway, but it's a rather poor plan.

That is correct.  I should've said that it would've been better to have unsecured debt, but probably way too late for that now.  There are ways it could've been done without fraud.  I apologize for my previous statement.  It was wrong in this context. 


Finding out the reason for default is  part of formulating a plan. Most people who have these loans don't seem to have one. All we hear is that despite racking up 100K in loans, they managed not to finish school. Somebody has to pay for that, and it shouldn't be the taxpayers. Personally, I don't think the government should be financing anybody's education.

Usually, government subsidized education pays off many dollars in future taxes for each dollar spent.  If you disagree with that philosophically, that is a different matter.  Usually the taxes paid by increased earnings pay off the money spent many times over.  There would be ways to work out a system of either reorganizing the way student loans are done, or reworking the tax structure, so that the people getting the education will pay the money back in a better fashion, but that is way beyond the scope of this forum. 

However, a lot of the money going to education these days is being flushed down the toilet. 

A lot of what causes the large student loans is young people who have no idea what they are doing, and many of them are prone to predatory schools and lenders, but that again is beyond the scope of this forum. 

CleaningUp

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Question becomes, if someone racks up $100K in loans on a dream, does he have enough judgment to understand what we are trying to teach here.

Getting in touch with reality is one of the first steps, and that, more often than not, requires a wake-up call or a two-by-four.

When the borrower comes to grip with the idea that he has to accept some of the responsibility for the mess he is in, then he can a) understand the depth of the mess, and b) begin to do something about it.

BK'ing ones way out of student debt by taking on unsecured debt is a sure fire way of creating a much larger mess that will take longer and more effort to resolve...

Assuming you can get the unsecured credit.
« Last Edit: February 18, 2017 12:11:09 AM by CleaningUp »

flaccito

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Quote from: CleaningUp
BK'ing ones way out of student debt by taking on unsecured debt is a sure fire way of creating a much larger mess that will take longer and more effort to resolve...

Assuming you can get the unsecured credit.

This is the main problem right here, most of the college kids being churned out in recent years have huge college debt - but are stuck in low paying/part-time McDonald's type jobs.

To get any decent credit lines, you need to at least have a solid income to begin with, which these kids don't have obviously. I don't think those $8/hour jobs will qualify for much more than $1000-$1500 credit lines. A far cry from the $50-$150k in unsecured credit that would be needed to even attempt such a "strategy" via BK.

Best solution is prevention: never take out student loans, it is just such a dangerous debt in these economic times. Even something like back-taxes seems "easier" to deal with, because at least the IRS actually settles debts and works with debtors. IRS also has some semblance of due process and usually provides notice ahead of taking action, but student loan companies just start garnishing their debtors without any notice or court order. It's strange times we live in when the IRS (of all entities!) is actually "friendlier" than the student loan industry  :vbrofl: 

CleaningUp

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However, a lot of the money going to education these days is being flushed down the toilet. 

A lot of what causes the large student loans is young people who have no idea what they are doing, and many of them are prone to predatory schools and lenders, but that again is beyond the scope of this forum. 



It's not the colleges and universities that are doing the flushing.  They are the receptacle into which the money is poured.

It's the borrowers with big dreams and no funding that are the ones doing the flushing.  And as for my remark of a person 18 years of age being deemed qualified to enter into a contract is not just a sweeping statement, it is the law.  And if the parents and the schools haven't done the job of preparing their now 18-year-old kid for the consequences of his signature, then that's a problem for society...

Now THAT is something that is beyond the scope of this board.  WAY, WAY, WAY beyond it.

And I disagree.  Part of what this forum does is to try to teach debtors how to handle themselves going forward.  Ask BrokeBob if this forum hasn't helped him get himself out of a world of hurt and get back on the right track.  That subject underlies everything that we say.