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I was in the student loan business for years. Unless this is a new policy instituted in the last 6 months, it is the case.
OP, if you are still listening, I suggest that you gather the pedigree information on your loans.
Try to get the following-
1. Number of loans (sometimes called 'disbursements).
2. Original amount of each loan.
3. Interest rate of each loan.
4. Default date of each loan.
5. Loan servicer of each loan.
6. Type of each loan (public or private, then type of public loan- usually Stafford or Parent Plus)
7. Guarantor on each loan (they may tell you Department of Ed, Sallie Mae, USAA, etc….that's not these are all essentially the federal government but it matters because you need to be able to call or write to the correct place to sort this out)
As to the garnishment of the loans themselves, I would suggest the federal rehabilitation program. It takes about 10 months to complete, but after 4 months your garnishment will stop. Tell them you want to do a rehabilitation based upon "reasonable and affordable payments" (the verbiage matters). FYI, the lowest possible payment is $5/mo, no matter what they tell you. BUT the first 4 payments will have to include the garnishment PLUS the rehab payment. So it will cost you more initially only to have your payment go down in time.
As to the 1099, the most likely situation is that you have multiple loans, 1 or some of them were forgiven and others were not. That's why you need the pedigree info on each loan.
Give almost no credence to the phrasing used by the OP's in threads.
Even when they have the facts almost all are self serving and will stack the Q
and either innocently or even deliberately leave out pertinent data.
When it comes to student loan repayment, individual situations can get fantastically complex.
Multiple loan servicers, bundled loans, multiple disbursements at different interest rates, offsets applied unevenly to different loans, etc etc….
Once a borrower gets into a rehab program the level of complexity multiplies. It used to be my job to figure these things out. Trust me, in a room full of smart people only 1 or 2 of them could unravel what was going on.
That's one of the reasons the situation is so screwy. 90% of those that actually work for the loan services don't have the skills to figure out how the status of these loans.
What doesn't make sense to me though is the long delay (25 years) between the debt being cancelled and the 1099-C being issued. Can you please clarify the timeline, OP? When was the 1099-C actually issued? Did you file your tax return in a timely manner, but could not pay?
I can probably answer this question as well.
1099s on forgiven debts are a relatively new phenomenon.
I NEVER saw them at all until a few years ago. They started popping up on large debts in certain sectors, like credit cards, probably 10 years ago or so. Then over the next few years other types of debts began to be included.
In other words, 25 years ago there was no such thing as a 1099 on a forgiven debt.
There are many threads on this forum started by people who probably felt smug about walking away from debts years ago (car loans, student loans, credit cards, etc). Many of them simply assumed that some type of 'debt statute of limitations' would cancel their obligation to pay. Then, these folks show-up here with "woe is me, this is totally unfair" stories," looking for ways to permanently escape responsibility for loans/debt that they willingly took-on and promised to repay.
I guess there is a large sub-culture in America that 'thrives' on 'taking advantage of, or beating the system' --- some for generations. Somehow, they often seem to imagine that those of us who pay our own bills (and theirs!) don't mind and are sympathetic to their self-induced plight. (Go figure!)
There are many threads on this forum started by people who probably felt smug about walking away from debts years ago (car loans, student loans, credit cards, etc). Many of them simply assumed that some type of 'debt statute of limitations' would cancel their obligation to pay. Then, these folks show-up here with "woe is me, this is totally unfair" stories," looking for ways to permanently escape responsibility for loans/debt that they willingly took-on and promised to repay.
I guess there is a large sub-culture in America that 'thrives' on 'taking advantage of, or beating the system' --- some for generations. Somehow, they often seem to imagine that those of us who pay our own bills (and theirs!) don't mind and are sympathetic to their self-induced plight. (Go figure!)
It is the banks and lenders that are beating the system.
They lend money that they don't have with no risk to them whatsoever in exchange for compound interest. In many case, they get free assets if the loan goes back. So now they have risked nothing to gain something tangible.
I can probably answer this question as well.
1099s on forgiven debts are a relatively new phenomenon.
I NEVER saw them at all until a few years ago. They started popping up on large debts in certain sectors, like credit cards, probably 10 years ago or so. Then over the next few years other types of debts began to be included.
In other words, 25 years ago there was no such thing as a 1099 on a forgiven debt.
There was, though. I've been doing income taxes since the late 80s, and saw them then.
There was, though. I've been doing income taxes since the late 80s, and saw them then.
OK. Well I won't say you are lying. Just that I was in the student loan business for 20 years and I never heard of a 1099 on any type of debt whatsoever until 10 years ago. I find it hard to believe that they were universally applied when I worked in the industry for 10 years and never even heard of them.
OK. Well I won't say you are lying. Just that I was in the student loan business for 20 years and I never heard of a 1099 on any type of debt whatsoever until 10 years ago. I find it hard to believe that they were universally applied when I worked in the industry for 10 years and never even heard of them.
Here is an online version of 1994's 1099-C Cancellation of Debt, from the IRS website. Old forms and publications are only available back to 1994.
I was in the student loan business for years. Unless this is a new policy instituted in the last 6 months, it is the case.
OP, if you are still listening, I suggest that you gather the pedigree information on your loans.
Try to get the following-
1. Number of loans (sometimes called 'disbursements).
2. Original amount of each loan.
3. Interest rate of each loan.
4. Default date of each loan.
5. Loan servicer of each loan.
6. Type of each loan (public or private, then type of public loan- usually Stafford or Parent Plus)
7. Guarantor on each loan (they may tell you Department of Ed, Sallie Mae, USAA, etc….these are all essentially the federal government but it matters because you need to be able to call or write to the correct place to sort this out)
As to the garnishment of the loans themselves, I would suggest the federal rehabilitation program. It takes about 10 months to complete, but after 4 months your garnishment will stop. Tell them you want to do a rehabilitation based upon "reasonable and affordable payments" (the verbiage matters). FYI, the lowest possible payment is $5/mo, no matter what they tell you. BUT the first 4 payments will have to include the garnishment PLUS the rehab payment. So it will cost you more initially only to have your payment go down in time.
As to the 1099, the most likely situation is that you have multiple loans, 1 or some of them were forgiven and others were not. That's why you need the pedigree info on each loan.
PM me if you need more help.
What are the salient differences between rehabilitation and consolidation of student loans? Bot sound like the borrower is going to take a 20 percent hit.
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