Q: Can Pioneer Credit Recovery garnish my wages for student loan debt?

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06/Pioneer Credit Recovery can garnish your wages for federal student loan debt that's in default. They don't need to sue you first. Because they're acting as a debt collector for a federal student loan, they get to use the government's administrate wage garnishment powers.

With those powers, they can garnish your wages if you default and fail to set up a repayment plan.

Who is Pioneer Credit Recovery, Inc.?

Pioneer Credit Recovery is a debt collection agency that handles collection services for Navient and other government agencies.

They do not own your student loan.

They did not buy your student loans.

They're not a scam.

Your loans were sent to them after you defaulted so they can handle collection activities.

Because they're a debt collector, Pioneer must follow consumer protection laws like the Fair Debt Collection Practices Act (FDCPA), which means they can't harass you with phone calls. If they do, you can report them to your Attorney General, the Consumer Financial Protection Bureau (CFPB), and the Better Business Bureau. You can also hire a law firm to sue them for violating consumer protection laws.

Can Pioneer Credit Recovery take my tax refund?

Pioneer likely won't be the company that takes your income tax refund for a defaulted student loan. That will probably be the guaranty agency that owns your loans.

You can find out who will take your tax refund for student loans by visiting studentaid.gov.

The website has information about all the federal student loans you ever borrowed.

Options for getting out of default

You have three options for getting your loans out of default with Pioneer Credit Recovery:

  1. Negotiate a settlement
  2. Apply for loan consolidation
  3. Enter into the loan rehabilitation program

Settlement

Pioneer will accept student loan settlement offers. But the offers they'll accept won't be cheap. They'll be expensive.

Federal student loan settlements are typically for around 85% minus collection fees.

You can try offering less than that, but in my experience, those offers will be rejected.

Loan consolidation

Applying for loan consolidation gets you out of default in about 2 to 3 months. It also lets you choose your loan servicer. So if you were unhappy with your previous servicer, you could choose a different one to handle your student loans going forward.

Finally, consolidation will change the type of loan you have from a Federal Family Education Loan to a Direct Consolidation Loan. The benefit of changing an FFEL loan to a Direct Loan is that it will qualify you for the Public Service Loan Forgiveness program.

Loan rehabilitation

Pioneer offers the loan rehabilitation program to student loan borrowers who have not defaulted on the same loan before.

Under this program, you can bring your loan back into good standing by agreeing to make 9 monthly payments. Also, you may be able to get some of the collection fees waived.

If you have an active wage garnishment, you will need to make 5 monthly payments plus let the garnishment continue, before the garnishment stops.

The monthly payments are calculated either using your last tax return or the Loan Rehabilitation Income and Expense Form.

Your monthly payment can be as low as $5 per month.

After you complete the loan rehab program, your loans will be sent back to a loan servicer.

Once there, you'll be able to set up a repayment plan and qualify for loan forgiveness programs.

COVID-19 considerations

In response to the coronavirus pandemic, the Department of Education suspended collections on federal student loans it owns until September 30, 2020.

Unfortunately, this doesn't apply to the federal student loans Pioneer is the debt collector for.

The reason why is because the loans it has are not owned by the Department of Education. They're FFEL loans owned by a guaranty agency.

Pioneer Credit Recovery contact information

Here's the contact information for Pioneer:

Phone: 800-836-2442

Fax:

Mail: Pioneer Credit Recovery, Inc, Arcade, NY 14009

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I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

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