New student loan risk: arrest and jail?

[OHMomof2]

Mounting student loan debt can feel like a prison sentence, but for one Houston man, his outstanding loan from the '80s landed him in an actual jail cell. Seven armed U.S. Marshals arrested Paul Aker at his Houston home last week over an unpaid student loan from 1987, Aker told Houston’s Fox 26. The loan amount—before interest—was $1,500.

Authorities placed Aker in handcuffs and hauled him down to federal court, where he was placed in a four-by-four jail cell for about an hour and then taken to a judge to work out a payment agreement. Aker claims he never received any notice about the loan.

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U.S. Marshals plan to serve warrants to between 1,200 to 1,500 people in the Houston area. More arrests are expected.

http://www.esquire.com/news-politics/news/a42193/man-arrested-for-student-loan-debt/
http://lawnewz.com/crazy/us-marshals-are-rounding-up-people-with-late-student-loan-debt/

[thumper1]

There has to be a less expensive and more efficient way to deal with this.

[SouthFloridaMom9]

What the crap?

:-L

[OHMomof2]

Tax refund withheld/wage garnishment/passport hold type-stuff seems more appropriate and effective.

[Erin_s_Dad]

According to Green, the federal government is using private debt collectors to reclaim outstanding student debt. With a judge’s permission, those collectors can in turn use the U.S. Marshal Service to track down those who owe money.

If the loans had been sold to a debt collection agency then the gov’t normally isn’t involved any longer. I don’t know what judge allowed the agencies to use the Marshal’s Service but…

[thumper1]

How much did it cost them? More than the amount of the loan??

[Pizzagirl]

There’s a story out - can’t link to it but I think it was NYTimes - suggesting that the reason was that he threatened deputies, possibly with a gun. So let’s not jump to conclusions that this is happening to “regular” people

[Pizzagirl]

http://mobile.nytimes.com/2016/02/17/us/viral-student-loan-nightmare-is-not-what-it-seems-authorities-say.html?_r=0&referer=https://www.google.com/

Here’s the article from the NYTimes.

[twoinanddone]

From a CNN story:

Here’s what typically happens after someone misses a payment:

After 90 days, a loan becomes delinquent, and possibly damages the borrower’s credit score.

But it’s not considered to be in default until 9 months go by without payment. By this point, the borrower should have heard from the lender several times. But if the borrower still doesn’t pay, a collection agency steps in, which will also probably contact the former student.

The borrower’s wages can be garnished and the government can withhold a tax refund.

The collection agency can then sue the borrower, though it doesn’t have the authority to arrest them. But if the debt is still ignored and the person fails to appear in court, then a judge could issue a warrant for arrest. That’s where the U.S. Marshals could come in.

According to the story, he failed to comply with court orders for the debt, and a bench warrant was issued and was being served. He claimed he didn’t know who the US Marshals were so went in his house to get a gun. Um, who doesn’t know who the Marshals are? They have badges, they have jackets that say they are US Marshals.

Now it is surprising that this collection agency is suing on small debts in federal court. Federal court costs more and it usually takes longer to get through the system.

[bookworm]

This story was just on NBC. As twoinanddone wrote, he received many letters and phone calls about the loan. He stated he wouldn’t go to Court. He threatened the police officers who came to his house, so they sent the marshals.

[OHMomof2]

From the NYT story, which says nothing about him not being arrested if he hadn’t had a gun, resisted, whatever:

So for the millions of Americans who may worry that the authorities will show up with handcuffs to collect old student debt, Mr. Aker’s arrest is hardly typical — as long as you respond to the government’s requests to pay up.

So the marshals WILL come if you ignore (or do not receive) these letters from private debt collectors/attorneys?

agents had been trying to collect on Mr. Aker’s debt since 2012

It amazes me that this is what federal marshals are asked to do, given the things they could be doing. Who pays them? The private debt collector attorneys? The federal government?

plans were afoot to arrest 1,200 to 1,500 more people who had failed to repay federal student loans. According to the marshals, about 1,500 people in Houston had been identified as having missed court appearances to address their outstanding federal student loans, and that has resulted in arrest warrants.

Apparently they WILL arrest people who owe student loan debt.

[TomSrOfBoston]

Are they being arrested for not paying their loans or for failing to appear in court? Some people bury their heads in the sand and hope the loans will just go away.

[InigoMontoya]

Private debt collectors cannot send out federal marshals. Private debt collectors can, however, sue people who refuse to pay their debt. Once it is in the court system, a judge can send out marshals if warranted (such as when summonses are ignored). At that point it is a lawsuit just like any other lawsuit over unpaid debt. Why shouldn’t people be arrested if they have been given a court date to appear where they could present their side of the case and they fail to appear?

[OHMomof2]

It’s only a problem if they haven’t been properly served notice of that court date (as the guy in the OP claims), and if they will actually go to jail over a debt.

[saillakeerie]

If US marshals showed up at my door with respect to a court date for which I was never served, I would not threaten them with a gun. From what I have read, it does not appear the guy went to jail over a debt. He ignored a court order and threatened law enforcement with a gun. Had he gone to court on his own, I doubt he would have been jailed. Even if he was unable to pay the debt. Interesting that garnishments, tax refund withholding, etc. were apparently unable to settle the debt. Wonder if the guy is filing tax returns and paying his taxes?

[kelsmom]

I also saw the NBC piece this morning. This is not your typical case of someone who didn’t pay his loans … there is more to the story.

While I don’t think sending U.S. Marshals to deal with overdue loans is a good thing (and again, there seems to be more to this story than just sending out Marshals to collect on overdue loans), I do have to say that I just do not understand why some people refuse to deal with the federal loans they promised to repay when they signed the MPN. The guy didn’t owe all that much, although it’s a whole lot more now with interest.

[SouthFloridaMom9]

I’m still wondering what happened to garnishments.

I, too, am queasy about this story (though I certainly understand the consequences of failing to follow court orders, appear after being duly served, etc.). It will only fuel the fire when it comes to shady debt collectors.

[Hunt]

I think I read the guy is self-employed, so there may be no way to garnish his wages. And you can’t hold up his tax refund, if he’s not getting a refund.

The takeaway is that if marshalls show up to enforce a court order that you don’t know anything about, be cooperative. If you can show that you in fact never were notified, the judge will be angry at the debt collector, and may cut you more slack than otherwise.

[OHMomof2]

^ exactly. Why no garnishment? W-2s were surely filed.

It does happen that people don’t get any notices to ignore. Especially if they move.

[kelsmom]

I am very, very well aware that people sometimes do not get notices - I deal with this often with my students. However, in this particular case, the info in the new piece indicates that the man DID get specific notifications that he did receive (at least in recent years). And I reach out to our grads who are behind on repayment (I get lists from the feds) … I KNOW the addresses and emails are correct … but they continue to ignore their obligation to repay their loans. I give them step-by-step instructions to contact their servicer/s, apply for income-driven repayment, etc … but they ignore it & keep their heads buried in the sand.