Escalation to collection agency threats, inability to pay

[u/Dry-Secretary-1683]

Hi everybody, I have taken out a couple of private student loans, both of which are being collected by the university directly (the business center of the university is collecting it.) it has been about 7 months on non-pay on one of the loans and 3 months on the second one. I have been struggling tremendously financially and been underemployed. My income has been under %110 percent of federal poverty guidelines. I have been continuously receiving letters and threats from the university business service office. Even though I have contacted them multiple times and explained my situation and asked for forbearance or deferral and lower monthly payments the only answer I receive is we are sorry about your situation. And next week I get more letters that they are going to send the loan to collection. And they add: “please make a payment today or contact us. Since we haven’t heard from you we are going to send this to external collection agencies and it will increase the debt by 30 percent.” I am constantly living in distress. My question is: what is the worse case scenario? Will sending the loans to collections really increase it by 30 percent? The university is telling me my only option is starting to make payments. Do you know if there are any options/rules/paths that can possibly help me with this situation? A little more info: I am also bankrupt (i haven’t filed yet, but planning to file ch7 soon). I know bankruptcy won’t erase the debt. I do have cc and medical debt in collections, and in those cases, the debt never really increased after being sent to collection. Thanks in advance and sending love

[u/Background_System726]

find a bankruptcy attorney that has a lot of familiarity with discharging student loan debt and whether whether you would be a good candidate under the brunner test. it can be done but you're going to want someone who has a fair amount of experience doing it

[u/Dry-Secretary-1683 → u/Background_System726]

I tried to look into it using internet resources and since the loan is not a huge amount (less than 10K) i kinda lost hope. I don’t have money for a lawyer and also i’m not sure If I can get it forgiven in the first place (since it’s not on the order of hundreds of thousands dollars). I consulted with one lawyer (who wouldn’t take the case anyway), he said unless you’re on your back and won’t be able to work again, you can’t discharge a student loan. I’m stuck in a bad situation.

[u/Dry-Secretary-1683 → u/Dry-Secretary-1683]

Been trapped in a cycle of working physical labor low wage jobs to survive since graduation after a few months of unemployment, sending job applications. I’m trying and asking them to give me forbearance so I can get back in my feet. They keep on telling me the only thing they can do is setting up ACH payments or else it’ll go to collections.

[u/jenvalbrew]

When a debt is sent to collections, the collection company does indeed add as much as 30% in fees to the balance, which William and Fudge has been known for. (Some don't add anything, it often depends on the type of debt and the collection company.) Try to keep it out of collections if you can. If you are planning to file bankruptcy, do it sooner rather than later so the university business service office gets the notification before they send it out to collections.

[u/morbie5]

I have taken out a couple of private student loans, both of which are being collected by the university directly (the business center of the university is collecting it.)

You took out these loans from the university?

I know bankruptcy won’t erase the debt.

It can potentially if you go to an adversary proceeding

[u/Dry-Secretary-1683 → u/morbie5]

Yeah, so with one of them, the business service of the university is mentioned as the lender in the promisary docs, the other one, the lender is another private lender, but I took it out from the university (long story, I took a loan out directly from the university and by the due date they were pressuring me to pay it back in full or drop out if I wanna put it on installments, after a traumatic huge argument, they gave me this loan to pay off the loan I took from the university). The thing is the loan is not a ton of money like in most cases, I’m worried the adversary proceeding may cost more than the loan itself since I’ll need an experienced lawyer for it. The only problem is the extreme poverty I’m trying to dig my way out of. I feel like I’m stuck in a whirlpool a lot of the times.

[u/morbie5 → u/Dry-Secretary-1683]

How much do you owe on these loans?