Legal Question in Credit and Debt Law in Virginia
Student Loan fees and penalties
I went into default on my student loan back in 1985 after I married my first husband because of his drinking and drug problem.When we got divorced I attempted to set up a payment schedule only to be told that I HAD to pay the amount in full.I was a single mother making less than $8.00 an hour.This went on my credit report and during that time,there were no more penalties or fees added.The loan was paid down to a little over $1900 when it finally came off of my credit.(They took my federal income tax, which I had no problem with.)The minute this debt came off of my credit report,they started adding penalties and fees again.The loan is now back up to an excess of $3000.00! I have not worked a full time job since 1995, choosing to be a stay at home mom. I do not have a problem with paying the $1900 owed, but there is no way I can pay the penalities and interest they keep adding!We live on less than $35000 a year.What I want to know,is it legal for them to start adding the penalties and fees again after the debt came off of my credit report,when they weren't adding them when it was on my credit report?
2 Answers from Attorneys
Re: Student Loan fees and penalties
Whatever the applicable fees and penalties are with respect to a delinquent student loan, these fees may be added to the loan amount whether or not the item is on your credit report.
It would appear that you've played a passive role
in this matter, allowing your tax refunds to be intercepted as a means to paying off the loan.
You would probably be far better off by contacting
someone in the Dept. of Education or whoever is supervising the delinquent loan account and making some firm arrangements to pay under some installment type of arrangement that could possibly reduce some, if not all, of these fees and interest and, more importantly, that would allow the loan to be reclassifed as one in good standing and no longer reportable as delinquent.
The folks handling these kinds of delinquent student loan accounts quite often have considerable discretion in these matters but, obviously, have no incentive to exercise such discretion if they never hear from the delinquent payor.
Re: Student Loan fees and penalties
If the penalties and fees are correctly calculated in accordance with the loan documents, it is perfectly legal for them to collect them, and assuming this is a federal or federally-guaranteed loan, there is no statute of limitations on collection.
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