I have a defaulted student loan, that is currently being garnished by diversified credit services. $1k down, $2k more to payoff. But I have a quick question, when the whole garnishment incident started, it was because they DEMANDED that I give them either my bank account or another bank account to draft payments from. I offered OVER AND OVER again to mail in payments, they said NO!!!! Either give us an account, or we will garnish- well, I got a credit union account but it was too late- they had finalized the garnishment. Also, since they started the garnishment, I sent over a fax (I have the confirmation) to DCS and my credit union stating DO NOT DRAFT MY ACCOUNT!!!! They drafted anyway, and caused over draft fees that I had to pay. Do I have any rights in this instance? Or should I just leave it alone??? If I have some rights, what should I do??? By the way- my location is GA, DCS is out of CA
I feel for you - believe me I do. This student loan crap (collection power) in my opinion is way off base. As long as its a government secured loan, they seem to have the rights to grab your money however they see fit - stepping on your rights in the process. All I can say is if you have any marks on your credit reports pertaining to it, then I would definately utilize my one right (loan rehabilitation) they HAVE TO allow you to participate in it, and it will purge any and all negative marks on your credit reports. I am not exactly sure what the procedure is once you have already been garnished, but I believe there is a process which will allow you to do to this. ANYONE WITH MORE INFO PLEASE HELP OUT THIS PERSON!!!!!! Thanks, Sal
I am not a licensed attorney. Any suggestions provided herein are not to be construed as legal counsel. Their requirement that you provide them with an account to make autodrafts from finds no legal authority. This requirement is probably a violation of the Fair Debt Collection Practices Act and would be sufficient to void the garnishment, except if the garnishment was pursuant to a court order. Guaranty agencies and their 3rd party collection agencies must allow you an opportunity to enter into a repayment arrangement. If you made a written offer to enter into such a payment arrangement and they denied you, then their activities are not in compliance with rules outlined in the Code of Federal Regulations. Usually, loans are taken out of default through consolidation loans. There are three types generally available. Those are 1) regular FFEL consolidation loan, which requires a series of 6 monthly on-time payments prior to the loan being consolidated by a lender of last resort, usually the guaranty agency or its sister corporation, 2) direct loan consolidation, which requires a series of 6 on time monthly payments or an income sensitive payment plan with no required prior payments, 3) rehabilitation loan which requires 12 on time monthly payments prior to consolidation, but is supposed to remove all derogatory references from your credit report (who can say if this really happens, or what that exactly means). In any case, usually guaranty agencies and their collection agencies will overcharge you on collection fees. The regs state they can charge up to 18.5% of the principle and interest, but don't state what the exact amount is. However the Financial Parterns website of the DOE includes an email to collection contractors which lists the amount as 11.1% since July 1, 2002. Who could have guessed. I can tell you right now that the Washington State guaranty agency is charging approximately 18.1% or more on consolidation loans, hence the imminent filing of a class action lawsuit. However, on rehabilitation loans it looks like the borrower does not have to pay any collection fees at all. According to the statute the guarantor keeps 18.5% as an incentive and returns only 81.5% to the DOE. However, it looks like the DOE is requiring guaranty agencies to return 100% to them and retain an additional amount for their collection fees 11.1% or so. In any case, I don't know if you are allowed to get a student loan out of a wage garnishment by loan rehabilitation or other types of consolidation or not. To get the loan out of garnishemnt, you would probably have to get the court to set aside the garnishment based on their failure to accept your payments by check. However, I've heard that some guaranty agencies manage to get garnishments without actually going to court through what they call administrative wage garnishments. So, you may have to request an administrative review (in writing) from your related guaranty agency (if it was an FFEL loan underlying the default). Also, you are entitled to a copy of your student loan file, which you should request via certified mail. Email me if you know of anyone who paid collection fees on a rehabilitated student loan. Thanks.
thanks so much for your information. No, I was never summoned to court, they sent a wage garnishment form to my employer. Is there some type of attorney that I can contact in the state of Georgia, or an agency that can give me some real answers. I've attempted the "phone" run around before, and was basically told that CA can do what they want in order to collect the debt. Wonder if there's any case law regarding a CA demanding a debtor supply a bank account for payment AND drafting payment after debtor sent faxed confirmation stating not to draft the account (which caused over draft fees). I just don't like the way they HANDLED me, like I was nothing, and the "we're going to do WHAT we want"- attitude. Drafting my account took the cake. And prior to getting the account, they were telling me to use a family member or friends account... ssshhheeesshhhh!!!!
If they took money from your account with out permission, you case is no longer civil...it is criminal. I would call the police and get a police report. Have the manager of the CA arrested. If they took more than $500 it is grand theft. They need a court order (Judgment) to garnish your wages. I would have an attorney contact your employer and have the garnishment stopped. I am sure if the CA manager is sitting in Jail, you can get a deletion and settlement of the debt if you promise to drop the charges.
Depends on what kind of collection agency it is. Some guaranty agencies are state agencies and actually have state power such that it could put a lien on you bank account. However, it sounds like this one is a private collection agency. You should check them out and see if they are private or state run. If you can provide written evidence that you sent a regular check payment to them which they refused to cash, you would have a definite cause of action. In their notice to you (do you still have it?), what is the collection fee rate they stated?
As many people can attest, I have had many a problem with collection agency that work on behalf of student loan institutions. One huge help is a book called Student Loan Law. The book is meant for lawyers but it is an easy read. In my case, the ca was asking for a payment larger than I could rsnbly afford. It turns out that by law, they cannot force you to pay more than you are able. In my case, they wanted more than my unemployment check. I then quoted the CA the law as set forth in the student loan law book and they backed off and accepted a substantially lower payment from me. It seems to me that you may have a similar ground to stand on. You can order the book from The National Consumer Law Center (a non-profit) Go to their website at: www.consumerlaw.org Tel. # 617-542-9595 The book costs around $70.00
