Citibank Student Loan(s)

[jrsmom]

My daughter's BK7 was just discharged and closed That's the good news. The bad news is the collection agency for her Citibank Student Loans mailed collection letters to her the minute her BK closed. They want her to pay $3000 right now but she told them she could pay $500 right now and work on paying the amount she's behind. Sounds like once she's caught up, then she goes back to paying her regular payment. Is this generally the way it works? Is there something different she should be doing? She's finally back on her feet and she really wants to stay that way.

[AngelinaCatHub]

At this time, I think she has the tiger by the tail. I would have told that person that I would pay it as I can, $100 month minimum, and more if I feel like it. I know it is not a discharged debt, but what can they do to her if they accept her payment? 'Hub

[nkthen]

Perhaps there is a need to proof that she is able to pay the loan, or get a guarantor?

[treehugger1]

I'm guessing this loan was not a federal guaranteed student loan.

If it is a GSL, then she should ask about rehabilitation. Doa google search and you should get the US DOE site that explains rehabilitation. Sometimes when one is in default, one can go back to making original payments for several months and then the loan is "rehabilitated" and comes out of default. It is actually a pretty good program if one can afford to bring things up-to-date.

Now, this is only for GSL's, but it would not surprise me if Citi might have a similar private program. You have nothing to lose by asking. Sorry I didn't see this post earlier, but I'm currently exploring the consequences and
"make-up" deals should I have to default in the future on guaranteed student loans.

They can be a tough issue to deal with in BK proceedings. All of the atorneys I spoke with a couple of years ago (gosh, its been almost that long) told me to pay your secured AND pay your student loans.

Since then, i;ve learned that federal law restricts garnishment in lieu of payment for student loans at 15% of take-home pay. You should do some due diligence and see where it all stands for private vs guaranteed SL's.

[jacksmom]

Hi I'm new here Just starting the BK process...my attorney did not say for sure that the Citibank student loan could be discharged or not. It looks like from this thread that it may not be able to be discharged. Does anyone know for sure? I thought b/c it was a private lender it would be just like a credit card. Thanks!

[ansky0007]

Hi I'm new here Just starting the BK process...my attorney did not say for sure that the Citibank student loan could be discharged or not. It looks like from this thread that it may not be able to be discharged. Does anyone know for sure? I thought b/c it was a private lender it would be just like a credit card. Thanks!

You can thank the lawyers and doctors for this.... Student loans are not dischargeable.

[HHM]

Bottom line, when it comes to student loans, to bring any level of certainty to the issue the DEBTOR must file a motion in BK court to determine dischargeability regardless if the student loan is private, government etc.

Look at it this way, lets assume it is a dischargeable loan (note, the private/government loan distinction is meaningless, it does not matter, any loan for a bona fide educational purpose is non-dischargeable), the lender is probably not going to concede the point and continue to attempt to collect it against you, which would force you to reopen your BK case to contest it.