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Business Debt/Student loan asking for 25% of income

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Expert: - 3/4/2007


Question
Dear Ms. Dunn,
I'm writing from New York. After a few years of hardship (unemployment, low-wage jobs, etc.) I finally got a job that pays $45,000 a year. I had recently used up all my student loan deferments, and I called them to discuss a payment plan. At the moment I owe them approx. $115,000, and they want me to pay around $1000 a month. I would like to do an income-sensitive repayment schedule, but the best they can offer me is 25% of my gross income, which is a prohibitive $899/month. While $45K a year might sound like a pretty good salary in most places, I live in New York City, and I'm far from living in luxury - over half my salary goes to my rent (and I live in a remote neighborhood in Brooklyn), plus after city and state taxes my take home pay is substantially less than my salary implies. I would like to pay Sallie Mae about half of that amount ($450/month), but the person I spoke with just said it wasn't an option, and reminded me they could garnish my wages. I'm afraid that if that happens I will go back to the desperate straits I was in before I got this new job. Is there anything I can do? Is their threat likely? Is it possible that I can negotiate for the amount I would like to pay? It's not that I want to avoid my responsibilities, but I really don't want to end up moving back to the ghetto. Thanks in advance for your advice.

G. Garcia

Answer
G., This is what I know about student loans and re-paying them, I have never doen collection of student loans but checked with my Credit & Collections Association to get you this information, I hope it helps!

I found out that the Department of Education, CAN garnish a tax return for multiple years until the loan is paid off.  Also, I found out from an attorney that is part of my group that he had a case about 20 years ago on an Illinois Guaranteed Student Loan. The State reduced it to a Default Judgment and the high powered LaSalle
Street lawyer for the State was happy to take nickles and
dimes in increments as payment.

I hope this answers your question or helps you at least a little, I would be happy to do more research if you have another question or if I didn't answer you completely.

Thank you! Michelle Dunn

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Michelle Dunn

Expertise

As one of the Top 5 Women in Collections, one of the Top 50 Collection Professionals, and winner of the Business Excellence award, I can answer any questions about debt, debt collection, improving business credit, creating a credit policy, enforcing a credit policy and collecting on past due accounts. I can also answer questions in regards to starting a debt collection agency since I have been a bill collector for over 24 years, started and ran my own collection agency for 8 years, and maintain my 12 year old Credit & Collections Association for members of the credit & debt collection industry. I am also the author of the popular and award winning book "Starting a Collection Agency, how to make money collecting money" now on it's 3rd edition. This book has won a the Writers Digest self published award as well as the New York Book Festival Award. I am a repeat contributor to the Wall Street Journal, and have been featured on NPR, CNN, as well as many other national radio and television programs. I have also been featured in national publications such as the Wall Street Journal, Forbes, Smart Money, MSNBC and much more. I have 17 published books to my name and am an accomplished speaker and consultant. I currently write 9 columns for newspapers, magazines and online portals worldwide.

Experience

I have over 24 years experience in debt collection, I started and ran my own collection agency for 8 years and I am the founder & owner of my Credit & Collections Association that I founded in 1998. www.credit-and-collections.com

Organizations
My Credit & Collections Association, I was also a member of the American Collectors Association and Plymouth Chamber of Commerce for 11 years. I am a member of many writing groups as well as my local Women Inspiring Women chapter. I am a member of Know More Media as an expert for their blog on business credit.

Publications
Business NH Magazine, Smart Money Magazine, MSNBC, CNN, Forbes.com, The Wall Street Journal, Home Business Magazine, Entrepreneur Magazine and website, many books, newspapers and television programs as well.

Education/Credentials
I have written 17 books in my collecting money series and one for Entrepreneur Press called the Ultimate Credit and Collections Handbook. My newest book is being published by John Wiley & Sons in May titled, The Guide to Getting Paid, how to weed out bad paying customers, collect on past due balances and avoid bad debt. This book is also being sold to many colleges as a text book.

Awards and Honors
My book Starting a Collection Agency, how to make money collecting money won an award from Writers Digest and the 2007 New York Book Festival in the "How to" category. I have won 2 awards from Dun & Bradstreet and Governor Jean Shaheen. I was nominated as one of the Top 5 Women in Collections twice as well as having been selected as one of Collection Advisor's Top 50 Collection Professionals by my peers.

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