Posted on Sep 25, 2013

A lady came into my west Houston law office for a consult about student loans. She had a job but did not make much money and had a young child. But she owed $75,000 or so on federal student loans, which were in default.

She had tried to apply for income-based repayment (IBR), but the collector told her that since she was in default, she could not apply for IBR. This is just wrong. She can. She can't if she is being garnished, but being in default and not being garnished, she would still qualify for consolidation into IBR.

The collector told her she had to pay $800 per month for 9 months to rehabilitate the loan prior to even applying for IBR, which is just not necessary.

Debt collectors that collect student loans, even federal loans, commonly lie to borrowers. Why? Because they make more money that way. Their commission is higher if they put the borrower on a payment plan.

By the way - making misrepresentations to collect a consumer debt by a 3rd party debt collector is a violation of the federal Fair Debt Collection Practices Act (FDCPA). You may be entitled to money damages from a debt collector for lying to you. Has this happened to you?

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J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization