20 AAC 15.970. Delinquency and default

(a) A loan is delinquent if a loan payment is one or more days past due. When a loan payment is

(1) 30 or more days past due, the borrower and cosigner, if any, will be notified;

(2) 60 or more days past due, the institution of attendance will be notified.

(b) For the purposes of authorizing collection action under AS 14.43.145 , a loan is considered in default if

(1) a loan payment is 180 or more days past due;

(2) neither the borrower nor the cosigner, if any, complies with the applicable reporting requirements of this chapter; or

(3) the borrower or cosigner, if any, has falsified any information on the loan application or information required under AS 14.43 or this chapter.

(c) To prevent default under (b)(1) of this section, the borrower or cosigner, if any, must pay the delinquent amount before it is 180 days past due.

(d) Repealed 3/1/2002.

(e) A borrower and cosigner, if any, who has defaulted under (b)(1) of this section is no longer considered to be in default status for the purposes of

(1) repealed 3/15/98;

(2) repealed 3/1/2002;

(3) taking a permanent fund dividend under AS 14.43.145 (a)(2) if, on the date of the taking, enough of the interest and principal due is voluntarily paid so that no payment is more than 179 days past due, calculated as if the loan had not been accelerated;

(4) calculation of an institution's default rates under AS 14.43.120 (d), if enough of the interest and principal due is paid so that no payment is more than 179 days past due, calculated as if the loan had not been accelerated; or

(5) issuing an order to withhold and deliver under AS 14.43.145 (a)(3) if

(A) all costs of collection, and the interest and principal that would have been due if the loan had not been accelerated, are paid; or

(B) the borrower or cosigner, if any, has submitted proof that the person is current on payments and has made complete and timely payments for the six most recent and consecutive months, under a payment agreement that person has reached with the commission or its agent collection agency.

(f) If a person has cosigned a loan that is in default, the commission will claim the permanent fund dividends of both the borrower and the cosigner. The commission will give priority to taking the permanent fund dividend of the borrower to satisfy the defaulted loan before taking the permanent fund dividend of the cosigner.

(g) For the purposes of determining, as a basis for eligibility for a loan, whether the borrower has defaulted on a loan previously awarded by the commission, a borrower will be considered not to have defaulted on the loan if the borrower has made full payment on the loan, including all interest and collection costs, and if a person who satisfies the requirements of AS 14.43.172 (c) cosigns for the new loan. The borrower's payment of the loan under this subsection must have been predominately voluntarily paid.

(h) For purposes of this section, an amount is not voluntarily paid if it is the proceeds from an order to withhold and deliver, involuntary wage assignment, or involuntary taking of the borrower's permanent fund dividend.

(i) Information regarding the status of a loan may be reported to credit bureau organizations.

(j) Notwithstanding a determination of default, the commission may continue to make available to a borrower alternative repayment schedules, loan deferment, and loan forbearance options subsequent to the 180th day of delinquency, but not later than the 270th day of delinquency. Once a loan has become 271 or more days past due, the borrower may not receive these options, except as provided in (k) of this section.

(k) Once a loan has become 271 or more days past due, the commission may require the borrower to enter into and comply with a loan rehabilitation payment agreement, in order to regain eligibility for alternative repayment schedule, loan deferment, and loan forbearance options.

History: Eff. 12/4/96, Register 140; am 3/22/97, Register 141; am 3/15/98, Register 145; am 9/23/99, Register 151; am 4/20/2000, Register 154; am 3/1/2002, Register 161; am 7/1/2002, Register 162

Authority: AS 14.42.030

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