Student loans....deal with off-the-grid living question.

[macerico]

Reading several materials I know this much so far.

1. Use of SSN can be eliminated.

2. The taxation of what is usually considered "income" is indeed illegal.

HOW DO ANY OF YOU DEAL WITH STUDENT LOANS?


In order to get payments I can afford on my low salary, I went to the U.S. Dept. of Education to consolidate my student loans with an "income contingent" repayment plan. ONLY THE U.S. Dept. of Education will offer that plan because if you can't even pay the interest, you only pay what you can. Private lending companies don't want you if you aren't even paying the interest each month.

Currently, Direct Loans (the lender) determines how much I pay a month off of what I report on the prior year's 1040 filing with the IRS.

Herein lies the concern. I can do everything to make the situation so I don't owe taxes. However, I'm sure Direct Loans won't believe that I'm making so little in FRNs.

If I pay on my loans (which I don't mind doing...I'm not seeking to avoid any honest debts), I have every reason to believe that since Direct Loans has my SSN that even if I stop using the SSN they can still link payments to it. So, if I report only 2,000 FRNs in "taxable income" to the IRS but make 3,000 FRNs in payment to Direct Loans, I can expect a red flag to go up somewhere. I base this purely on the idea that Direct Loans will equate "income" with "taxable income."

If I don't file a tax return, Direct Loans will requre "alternative documentation of income."

To eliminate paper trails, I've been keeping my credit cards at levels where they have no balance or can be paid off at the end of each month (only charge what I can afford). Student loans are a huge chunk of unsecured debt that I don't know how to deal with.

So far, my reading and knowledge tell me....

1. If I just drop off the radar (not maintain contact with the lender), they will declare my account in default, and since I have no bank account or tax refund, they will have a hard time finding me. This is the easiset solution that I see, but it means I can't make voluntary payments without making a "blip" on the screen every time I make contact.

2. I can make the payments I can afford, but I'd have to risk that it not only puts me back on the map, but that since I won't be able to adequately document "income" (esp. since I don't know what definition THEY will use), the lender could still find me in default.

3. I can seek a way to just get the loan discharged. Since all credit is essentially your paying for money created out of thin air, one could defend this, but I'm not sure if such a goal is realistic, and I'd consider it a little underhanded.

So, if anyone has experience or insight on this particular area, I'd appreciate the input. In every way to unplug, this is one of the major snafus.

It's the problem that this particular creditor works in partnership with the IRS that I'm not sure how is the best way. I'm not trying to avoid paying the debt, but I don't want any documentation of my "earnings" to be concluded as admission or proof of having "taxable income."

[wisper]

This last post reguarding student loans, got we wondering, can debts to the government itself be discharged, same as any other commerce?

If they can be discharged, is the same true for old tax debts? The irs?

[Judge Roy Bean]

Originally Posted by wisper

This last post reguarding student loans, got we wondering, can debts to the government itself be discharged, same as any other commerce?

If they can be discharged, is the same true for old tax debts? The irs?

Student loans are most often made by private entities but are low-interest loans (low risk) because they are guaranteed by the government, so when there is a default, the government cover's the lender's risk. That's why they can't be discharged in a BK case.

Old tax debts do have an SOL, but in the case of fraud there is no SOL.

[wisper]

Originally Posted by Judge Roy Bean

Old tax debts do have an SOL, but in the case of fraud there is no SOL.

I was just curious, no frauds, no problems! Actually, the reason for my curiosity, is my step son's dilema. An offer to settle an old account, was made several months ago and they just answered this month, referring him to another office in another state. I told him to respond to the new office and tell them that due to their lack of response and obvious bad faith, to give them notice of a 30 day deadline to accept or reject the offer. Then, take a different approach if they reject!

[truth4all]

Originally Posted by Judge Roy Bean

Student loans are most often made by private entities but are low-interest loans (low risk) because they are guaranteed by the government, so when there is a default, the government cover's the lender's risk. That's why they can't be discharged in a BK case.

Old tax debts do have an SOL, but in the case of fraud there is no SOL.

"but in the case of fraud there is no SOL."

That goes BOTH ways. Any fraud on the lenders part also has no SOL.

[macerico]

Okay, can we get back on topic? :wink:

My concern is basically this. If you have information to help me figure it out, say so, but don't get this off track.

I owe on student loans. I'm going to dump my SSN. I'm going to handle my own tax liabilities rather than let my employer (via the IRS) do it for me.

Problem is that since the student loan company is using the 1040 to determine how much I should pay, I need to be sure that what I document to them (which is exempt from taxation) doesn't get turned into something the IRS considers taxable. I'm not sure how to deal with this, and I wonder if anyone else has better information.

Macerico,

Are your student loans in default? If they are not, I can show you the best solution to your problem. If they are in default, there is a way but it takes a bit longer.
pf

[macerico]

No, they are in good standing. I just don't want to go through all the effort to get unplugged just to have Direct Loans plugging me back in again every time I try to make a payment in good faith. :(

If you want to take to PMs I'm fine with that.

[seeker]

If it can be posted within, it would be of benefit to many, I believe!

Thanks

Seeker

Ok, If your student loan(s) are not in default, try tto keep them that way.
Once in default, the borrower is subject to all kinds of collection practices that skirt due process.

At a minimum, to stay out of default, one need only make one payment every 270 days, that's it. The debt does not go away, but one can avoid all the "bad" consequences of a defaulted student loan.

If the loan is already in default, there is a rehabilitation process that requires 12 payments within a year and then the loan is taken out of default.

Hope this info will help.

pf