11 U.S. Code § 523 - Exceptions to discharge | U.S. Code | US Law

34 CFR § 682.405 – Loan rehabilitation settlement. | CFR | US Law

§ 682.405 Loan rehabilitation settlement.

(a) General.

(1) A warranty company that has a fundamental program settlement should enter right into a loan rehabilitation settlement with the Secretary. The warranty company should set up a loan rehabilitation program for all debtors with an enforceable promissory be aware for the aim of rehabilitating defaulted loans, aside from loans for which a judgment has been obtained, loans on which a default declare was filed below § 682.412, and loans on which the borrower has been convicted of, or has pled nolo contendere or responsible to, against the law involving fraud in acquiring title IV, HEA program help, in order that the loan could also be bought, if practicable, by an eligible lender and faraway from default standing.

(2) A loan is taken into account to be rehabilitated solely after –

(i) The borrower has made and the warranty company has obtained 9 of the ten qualifying funds required below a month-to-month reimbursement settlement.

(A) A qualifying cost is –

(1) Made voluntarily;

(2) In the total quantity required; and

(3) Received inside 20 days of the due date for the cost, and

(B) All 9 funds are obtained inside a 10-month interval that begins with the month wherein the primary required due date falls and ends with the ninth consecutive calendar month following that month, and

(ii) The loan has been bought to an eligible lender or assigned to the Secretary.

(3)

(i) If a borrower’s loan is being collected by administrative wage garnishment whereas the borrower can also be making month-to-month funds on the identical loan below a loan rehabilitation settlement, the warranty company should proceed accumulating the loan by administrative wage garnishment till the borrower makes 5 qualifying month-to-month funds below the rehabilitation settlement, except the warranty company is in any other case precluded from doing so below § 682.410(b)(9).

(ii) After the borrower makes the fifth qualifying month-to-month cost, the warranty company should, except in any other case directed by the borrower, droop the garnishment order issued to the borrower’s employer.

(iii) A borrower might solely acquire the advantage of a suspension of administrative wage garnishment whereas additionally making an attempt to rehabilitate a defaulted loan as soon as.

(4) After the loan has been rehabilitated, the borrower regains all advantages of this system, together with any remaining deferment eligibility below part 428(b)(1)(M) of the Act, from the date of the rehabilitation. Effective for any loan that’s rehabilitated on or after August 14, 2008, the borrower can not rehabilitate the loan once more if the loan returns to default standing following the rehabilitation.

(b) Terms of settlement. In the loan rehabilitation settlement, the warranty company agrees to make sure that its loan rehabilitation program meets the next necessities always:

(1) A borrower might request rehabilitation of the borrower’s defaulted loan held by the warranty company. In order to be eligible for rehabilitation of the loan, the borrower should voluntarily make at the very least 9 of the ten funds required below a month-to-month reimbursement settlement.

(i) Each cost have to be –

READ:   11 U.S. Code § 523 - Exceptions to discharge | U.S. Code | US Law

(A) Made voluntarily;

(B) For the total quantity required;

(C) Received inside 20 days of the due date for the cost; and

(D) Reasonable and inexpensive.

(ii) All 9 funds have to be obtained inside a 10-month interval that begins with the month wherein the primary required due date falls and ends with the ninth consecutive calendar month following that month.

(iii) The warranty company initially considers the borrower’s affordable and inexpensive cost quantity to be an quantity equal to fifteen % of the quantity by which the borrower’s Adjusted Gross Income (AGI) exceeds 150 % of the poverty guideline quantity relevant to the borrower’s household measurement and State, divided by 12, besides that if this quantity is lower than $5, the borrower’s month-to-month rehabilitation cost is $5.

(iv) The warranty company or its brokers might calculate the cost quantity based mostly on data offered orally by the borrower or the borrower’s consultant and supply the borrower with a rehabilitation settlement utilizing that quantity. The warranty company should request documentation from the borrower to substantiate the borrower’s AGI and household measurement. If the borrower doesn’t present the warranty company or its brokers with any documentation requested by the warranty company to calculate or affirm the affordable and inexpensive cost quantity, inside an inexpensive time deadline set by the warranty company or its agent, the rehabilitation settlement offered is null and void.

(v) The affordable and inexpensive cost quantity calculated below this part should not be –

(A) A required minimal loan cost quantity (e.g., $50) if the company determines {that a} smaller quantity is cheap and inexpensive;

(B) A proportion of the borrower’s whole loan stability; or

(C) Based on different standards unrelated to the borrower’s whole monetary circumstances.

(vi) Within 15 enterprise days of its dedication of the borrower’s loan rehabilitation cost quantity, the warranty company should present the borrower with a written rehabilitation settlement which incorporates the borrower’s cost quantity calculated below paragraph (b)(1)(iii), a outstanding assertion that the borrower might object orally or in writing to the cost quantity, with the strategy and timeframe for elevating such an objection, and a proof of every other phrases and circumstances relevant to the required sequence of funds that have to be made earlier than the borrower’s account could be thought-about for repurchase by an eligible lender or task to the Secretary (i.e., rehabilitated). To settle for the settlement, the borrower should signal and return the settlement or settle for the settlement electronically below a course of offered by the company. The company might not impose any circumstances unrelated to the quantity or timing of the rehabilitation funds within the rehabilitation settlement. The written rehabilitation settlement should inform the borrower –

(A) Of the consequences of getting the loans rehabilitated (e.g., elimination of the file of default from the borrower’s credit historical past and return to regular reimbursement);

(B) Of the quantity of any assortment prices to be added to the unpaid principal of the loan when the loan is bought to an eligible lender or assigned to the Secretary, which can not exceed 16 % of the unpaid principal and accrued curiosity on the loan on the time of the sale or task; and

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(C) That the rehabilitation settlement is null and void if the borrower fails to supply the documentation required to substantiate the month-to-month cost calculated below paragraph (b)(1)(iii) of this part.

(vii) If the borrower objects to the month-to-month cost quantity decided below paragraph (b)(1)(iii) of this part, the warranty company or its brokers should recalculate the cost quantity based mostly solely on data offered on a type accepted by the Secretary and, if requested, supporting documentation from the borrower and different sources, and should contemplate –

(A) The borrower’s, and if relevant, the partner’s present disposable revenue, together with public help funds, and different revenue obtained by the borrower and the partner, comparable to welfare advantages, Social Security advantages, Supplemental Security Income, and staff’ compensation. Spousal revenue just isn’t thought-about if the partner doesn’t contribute to the borrower’s family revenue;

(B) Family measurement as outlined in § 682.215(a)(3); and

(C) Reasonable and mandatory bills, which embrace –

(1) Food;

(2) Housing;

(3) Utilities;

(4) Basic communication bills;

(5) Necessary medical and dental prices;

(6) Necessary insurance prices;

(7) Transportation prices;

(8) Dependent care and different work-related bills;

(9) Legally required little one and spousal assist;

(10) Other title IV and non-title IV student loan funds; and

(11) Other bills accepted by the Secretary.

(viii) The warranty company should present the borrower with a brand new written rehabilitation settlement confirming the borrower’s recalculated affordable and inexpensive cost quantity inside the timeframe laid out in paragraph (b)(1)(vii) of this part. To settle for the settlement, the borrower should signal and return the settlement or settle for the settlement electronically below a course of offered by the company.

(ix) The company should embrace any cost made below § 682.401(b)(1) in figuring out whether or not the 9 out of 10 funds required below paragraph (b)(1) of this part have been made.

(x) A borrower might request that the month-to-month cost quantity be adjusted because of a change within the borrower’s whole monetary circumstances solely upon offering the documentation laid out in paragraph (b)(1)(vii) of this part.

(xi) Except as offered in paragraph (c) of this part, through the rehabilitation interval, the warranty company should restrict contact with the borrower on the loan being rehabilitated to assortment actions which can be required by legislation or regulation and to communications that assist the rehabilitation.

(2)

(i) For the needs of this part, cost within the full quantity required means cost of an quantity that’s affordable and inexpensive, based mostly on the borrower’s whole monetary circumstances, as agreed to by the borrower and the company. Voluntary funds are these made instantly by the borrower and don’t embrace funds obtained by Federal offset, garnishment, revenue or asset execution, or after a judgment has been entered on a loan. A warranty company should try and safe a lender to buy the loan on the finish of the 9- or 10-month cost interval as relevant.

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(ii) If the warranty company has been unable to promote the loan, the warranty company should assign the loan to the Secretary.

(3) Upon the sale of a rehabilitated loan to an eligible lender or task to the Secretary –

(i) The warranty company should, inside 45 days of the sale or task –

(A) Provide discover to the prior holder of such sale or task, and

(B) Request that any shopper reporting company to which the default was reported take away the file of default from the borrower’s credit historical past.

(ii) The prior holder of the loan should, inside 30 days of receiving the notification from the warranty company, request that any shopper reporting company to which the default declare cost or different equal file was reported take away such file from the borrower’s credit historical past.

(4)

(i) An eligible lender buying a rehabilitated loan should set up a reimbursement schedule that meets the identical necessities which can be relevant to different FFEL Program loans of the identical loan sort because the rehabilitated loan and should allow the borrower to decide on any statutorily accessible reimbursement plan for that loan sort. The lender should deal with the primary cost made below the 9 funds as the primary cost below the relevant most reimbursement time period, as outlined below § 682.209(a) or (e). For Consolidation loans, the utmost reimbursement time period is predicated on the stability excellent on the time of loan rehabilitation.

(ii) The lender should not contemplate the acquisition of a rehabilitated loan as entry into reimbursement or resumption of reimbursement for the needs of curiosity capitalization below § 682.202(b).

(c) A warranty company should make accessible to the borrower –

(1) During the loan rehabilitation interval, details about reimbursement plans, together with the income-based reimbursement plan, that could be accessible to the borrower upon rehabilitating the defaulted loan and the way the borrower can choose a reimbursement plan after the loan is bought by an eligible lender or assigned to the Secretary; and

(2) After the profitable completion of the loan rehabilitation interval, monetary and financial training supplies, together with debt administration data.

(Approved by the Office of Management and Budget below management quantity 1845-0020)

[59 FR 33355, June 28, 1994, as amended at 60 FR 30788, June 12, 1995; 64 FR 18980, Apr. 16, 1999; 64 FR 58965, Nov. 1, 1999; 66 FR 34764, June 29, 2001; 67 FR 67080, Nov. 1, 2002; 68 FR 75429, Dec. 31, 2003; 71 FR 45707, Aug. 9, 2006; 71 FR 64398, Nov. 1, 2006; 73 FR 63254, Oct. 23, 2008; 74 FR 56000, Oct. 29, 2009; 78 FR 65815, Nov. 1, 2013; 80 FR 67237, Oct. 30, 2015; 81 FR 76080, Nov. 1, 2016; 81 FR 76080, Nov. 1, 2016]