What Are a Student Loan Co-Signer's Options After Default
My question involves collection proceedings in the State of: Minnesota, but the collector and servicer are in PA.
2001 my husband (at the time) did a debt consolidation "smart" loan with Sallie Mae and I co-signed. In 2004 we divorced and the debt was assigned to me through J&D. I put the loan in forbearance. The ex-husband filed bankruptcy (BK). Months later I received a collection call from Sallie Mae stating the whole balance was due and because my ex hasn't paid I needed to pay. No mention of the BK was made. I was told that my forbearance request was denied--the last letter I ever had from them said it was granted. I could not meet their demands. No further calls were made until 2007. While at work, someone from PHEAA/AES called me to make a settlement offer. They wanted a HUGE lump sum to make a monthly payment that was reasonable. I didn't have that kind of cash lying around and I couldn't afford the higher monthly payments for the offer with a lower lump sum. I told them I could afford $100.00 per month and made that for a number of months to avoid wage garnishment. Back then the lady called me even after I told her to stop calling me at work. She would call the front desk even to see if I was in the office after she initially left a voicemail.
Approximately six months later I get a letter from PHEAA/AES stating they have not received payments and were going to potentially take our tax refund. I wrote a letter demanding an accounting of payments I've made (they cashed the checks every month). I got something many months later that didn't make any sense and hadn't heard from them since, even after I stopped paying them (because I wasn't going to send money if they weren't getting it or applying it correctly). In approximately 2008 I tried to "refi" the loan through the Dept. of Education. Any time they tried to verify the account they were told it did not exist. The Dept. of Ed. told me that because it has a co-signer it is a private loan and they don't work with private loans. The debt continued to bounce around between PHEAA, AES to NCO. Every time I tried to remedy it or make payment arrangement I was told they couldn't speak to me about it because I wasn't the ex. I finally gave up and eventually my ex mentioned they were garnishing his wages and taking his tax returns. So I figured they'd leave me alone; however, they still reported on my credit report. They report two accounts, despite there is only one--a consolidation.
In approximately 2012 my ex husband went to prison. In August 2013 I received a letter from PHEAA stating the Dept. of Ed. owns the debt and they were going to capture any tax returns I receive. I had the ability to object and request a review hearing. I made my objection, and requested a number of documents from them. According to their letter, once I received documents from them I had 15 days to make an official request for a hearing. I received no response. They captured taxes anyway. Because I'm re-married we had to file an injured spouse. I sent another letter again demanding documents. I finally get a response, but don't receive even half of the documentation I asked for, nor answers to my questions about how they consider the debt a federal one rather than private (this debt does not show up on my national registry) amongst others. In that letter I was told to contact the new servicer/collector, Premier. When I called them they told me they could speak to me because (a) I wasn't the ex; (b) I wasn't the ex's current spouse and (c) the ex didn't sign something to give them permission to speak to me. For clarification I asked, "so, you consider me the co-signer yet you cannot discuss this with me despite the fact you collect from me and report on my report." There was no mistaking my identity (even though my name has changed).
After having chased this debt around for about 10 years I thought perhaps making some type of settlement negotiation with them would be the best option, but I can't even do that because they refuse to speak to me. When they do, it has only been because I've mentioned I have an attorney or complained to the Ombudsman. Over the years I've written legislature, complained to attorney generals, the FTC and the Ombudsman to no avail. The collectors all pretend to want to help, but then go back to ping-ponging me back and forth and have only provided vague information and a document here or there that does not make any sense. I'm at my wits end. I've tried to pay, I've tried to negotiate to no avail.
Recently, after another complaint made to the Ombudsmen, someone from PHEAA called and told me that they can speak to me, that she can make it so the collector/service can talk to me, but the only help she can offer is to rehabilitate the loan. HOWEVER, in order to do that they need to have the ex sign paper work in order for this to happen and then financial disclosures from both of us be made to determine what the monthly payment will be. MY EX WILL NEVER DO THIS. She stated that she wouldn't be able to do anything then--not even negotiate a lump sum settlement. I was also told that this was based on new legislation that was just put into place in July 2014. I don't believe anything these people tell me because they have lied to me and/or told me inconsistent and/or opposite information for the past ten years (7 with PHEAA).
So, despite the fact they consider me co-signer, report on my credit report and take our tax return refund, but can't work with me individually, what can I do to protect myself and my husband? What am I suppose to do? They continue to rack up fees after fees (that I don't believe I should have to pay).
Re: What Are a Student Loan Co-Signer's Options After Default
Consult a bankruptcy attorney and see if this debt can be discharged in bankruptcy.
If it can't, you are stuck with it.