Dear Heather,

I have a consolidated FFEL loan that I took out in 1997.  The orginal loan amount was just under $22,000.00.  I made payments for some time, after the death of my youngest son I let them go into forbearance for many years.  I take full responsibilty for this poor decision.  I started payments again 2 1/2 years ago.  I am on a gradutated payment plan.  Currently my payments are $506.00 a month with a scheduled increase due in Nov. of this year.  To date I have paid a total of $19,000.00, with only around $700.00 paid to principal.

Months ago I called OSLA and asked if I could make principal payments first…..The CSR that I spoke with told me NO- interest MUST be satisfied first.  HMMMM at the current payment schedule I will have paid off over $100,000.00 in an orginal $22,000.00 because of the interest i allowed to build up during years of forbearance.

I am currently in good standing with OSLA and payments are up to date. Recently I called the Ombudsman office here in OKC to see if they would call my lender (on my behalf)  to seek a term of settlement on my loan.  I offered to pay $30,000.00 on a $55,000.00 balance.  The lady I spoke with at the Ombudsman office just happened to be the same office that is my guarantor.  She told me the lender probably wont settle because the loan is backed by the Fed. Gov.  and the lender OSLA knows if I default they will be paid-regardless.

OSLA has offered me income based repayment-I cant do that because my husband makes a good living and they would want to include his income on my repayment calculation.  I had this debt long before he and I were married. They also offered to rehab or re-consolidate my loans.  All of which put me in position of longer indebtedness to them- plus long term will cost me even more money.

So here are my questions:
If I allow my loan to go into default in hopes to settle with the guarantor, and a settlement is NOT reached…

What liability does this have on my husband in the event a suit is filled and judgement against me given? 

We do not live in a community property state.  The debt was mine before we were married.  The home we live in is in his name only and purchased before we were legally married.  His bank accounts do not reflect my name on them anywhere.  There is no income of my own to garnish, nor is there a tax refund to grab, because he always owes, but we do file joint (all his income).  At this moment i feel i am what collectors call- collection proof.  I personally dont have any assets aside from my motorcycle. 

My next questions are:

What happens in the event he passes and I inheirit his home, can they force me to sell- to settle the debt?

What about any SS I would be entitled to as his surving spouse, can they take that?

Also, he owns oil and mineral rights…..can they take those from him to satify my loan?

What about when they start coming to me—-when he passes away I stand to recieve those benefits.

I want to do the right thing here…..I cant pay the entire $55,0000.00 and was really hoping to settle with the lender.  Going in to default on purpose seems like the only course of action for me in hopes of regaining my future and clearing this debt.  I’ve heard of the guantor settling for the principal balance plus some interest, with 50% of the interest and all collection fees waived.  Thats do able for me!

HELP I’m really afraid. I’ve struggled for years to keep myself in good standing on this loan….now I’m seriously thinking about defaulting just to reach an agreement/settlement.  Its a huge gamble.
Mosty I want to know my actions years ago, cant harm my husband or touch the things he’s worked so hard to accomplish.

Any advice would be helpful and YES I KNOW YOUR NOT MY ATTORNEY :)
sincerely
Sonya

Sonya,  I’m really sorry but I just can’t advise you about your particular circumstances. 

Default is bad!  Really, really bad.  Borrowers have lots more options before default than after.  My favorite site for information about this is http://www.studentloanborrowerassistance.org