Arrangements Worked Out With Collection Agency
Posted on: November 5, 2008 by Matt
Shortly after I mailed back a note to the attorney general’s office (like one business day) I received a package in the mail from the collection agency that holds some of my old private student loans. The package included a cover letter with contact information from what appears to be a partner in the firm and all transactions on my account since it opened.
I decided to pick up the phone and call the partner at the firm and discuss my situation. I spoke with him and he was actually somewhat helpful. We discussed my situation with regard to the interest on the accounts as well as how much I could afford to pay. Finally we came to an agreement that works for both of us on a new payment amount of $250 per month. This will allow me to cover the interest on the account as well as apply money to the principal – which will reduce the debt (my real interest). During the discussion I was also offered a settlement amount of $13,705 if I could pay before November 28.
While the offer is tempting I am probably looking to decline a settlement at this point in time for a few reasons. First – the loans show up as active collections on my credit report. I may pay them monthly but most banks have not been willing to work with me to try and pay this off. Second – I do not want to have the settlement show up as a negative either. While I would LOVE to have the collection folks out of my life for good, I do not want it to appear that I am willing to take money and then not pay it back especially since I hope to own a home someday. So while the settlement offer is tempting I think that I am going to have to pass due to lack of $13,000 and how it could impact me in the future.
Have any of you had any similar experiences? Were you able to settle a debt in order to get out of collections? If so how did you manage to get the money to clear the debt up?
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TagsBudget, Collections, Debt, Debt Reduction Filed Under: Budget, Collections, Debt, Debt Reduction, Student Loans
$22,000 for $13,000 I’d find a way to take the settlement. You’re instantly $9k better off. That will have a larger impact on your prospect of buying a house than you current credit score, wouldn’t it?
Family, friends, banks?
On top of the instant $9k improvement in your net wealth you may even get a lower interest rate somewhere.
Credit scores can be repaired, making up a $9k hole may be more challenging.
Just my 2cents
Dean -
I know, it is a great deal and saving $9K would be great! My family does not have the cash to help out and I have not had much luck with banks.
Plus I owe the money and am not sure how I feel about not paying it back in full. I had no problem spending someone else’s money for what I wanted but then can not pay it back?
I think that sometimes doing the right thing might not make the most sense or be the easiest path but will be the most rewarding in the long run.
It is not often discussed, but many times collection agencies are willing to settle for a lower fee. This ensures they get their money in a lump sum and also gives you the opportunity to pay less money. Try negotiating something like this, it can save you thousands of dollars!