I was one of the many folks who let his student loans go into default and just put it out of his mind as long as he could get away with.

Then the holders of my defaulted loans (a collection agency, I suppose, but one that I now see is described online by a reputable website as “a non-profit” and “an advocacy organization”) started garnishing my wages.

Eventually, I set up an in-house hardship payment arrangement with them whereby I would send a great heap of personal financial information to them every six months and they would tell me what I needed to pay for the next six months.

This did not bring my loans out of default but it did seem to satisfy this organization for many years and the payments were manageable.

I was not then and am not currently in the financial position to pay whatever would constitute a full monthly payment on the biggest of these loans.

Recently, I noticed that the organization had stopped sending me monthly payment coupons for one of the loans.

I continued to send payments anyway.

Three weeks ago, I received an offer to refurbish my loans. They cite probable monthly payment figures which I could only pay with help from members of my extended family.

I received no payment coupons related to the old arrangement in November.

I guess I am wondering what my options are at this point. I have not yet called this organization to discuss refurbishment but I have many questions.

Can defaulted student loans be consolidated and would that be a way to bring these payments into a more manageable range?

Are there other ways to lower these projected payments?

If I choose not to sign these papers, what would be this organization’s likely course or courses of action?

I must say I have always been treated fairly and sanely by this organization. There have never been anything like threats or untimely and impertinent phone calls. 

Would this organization ever consider a settlement for some fraction of the full amount (again this option would depend on a generous relative)?

Can I trust the probable payment figures they are citing?

Sorry for the length of this. I just want to have as much knowledge as I can before I call them.

Thanks for your web site and your help

Steve,

I can’t advise you about your personal situation because the rules governing attorneys require that I first associate with local counsel in your state.  I can only provide general legal information.  I recommend that you use the resources I provided in another thread to find a qualified attorney in your area. 

So, for the general legal information:

The two main post-default repayment programs for federal student loans are consolidation and rehabilitation.  Make sure you understand the pros and cons of each option.  As for rehabilitation (that what it’s called, not refurbishment, but close), the main item to negotiate is that monthly payment. Loan holders sometimes tell people they have to pay an amount that is more than what they can afford.  But the law says borrowers only have to pay what is reasonable and affordable. There is no minimum amount that the lender must charge. 

The source you need is the National Consumer Law Center’s Student Loan Borrower Assistance website: http://www.studentloanborrowerassistance.org
Start by carefully reading all of this: http://www.studentloanborrowerassistance.org/default-and-delinquency/repayment-get-out-of-default/

Good luck!