Posted on: May 30, 2009 by Matt
As many of you know – I have some student loans that have been in collection / defaulted for about seven years now. So far I have been unable to locate a rehabilitation program for them and have been pretty much at the mercy of one nasty debt collector. They yelled, cursed and degraded me in order to get payment and I am fairly certain that they had violated the Federal Fair Debt Collection Practices Act.
So when I received letters in the mail last Saturday noting that my loans had been reassigned to another collection ageny I had some mixed emotions. I was disappointed because it appeared that I would now be dealing with the original lender once again but glad that I no longer had to deal with the folks from the previous agency. I was also a bit frustrated due to the amount of digging I had to do in order to contact somebody at the correct location. I had already called the previous collection agency, the processing company and the original lender and thought I had been given the correct place to mail my payments – then I received the letters noting I had someone else to call.
Earlier this week I placed a call to the new collection agency. Much to my surprise – they were courteous, professional and really easy to work with. They did not once accuse me of anything and were glad to work with me on a payment schedule. They were more than happy to honor my previous arrangement and even offered up a couple of pleasant surprises.
First – they noted that there had been a rehabilitation program that was offered up until about a year ago. The program ended due to the economic crisis but may become available again. I had been asking if there was any possible way to get these loans back into good standing for five years and was repeatedly told no but I could settle in full if I paid up $18,000 in cash. I found it a little frustrating that I had been lied to for so long and was a bit angry but I can not change the facts now. On the flip side they also said that should the program become available that they will submit all on time payments made as eligible for the program. That means if the program kicks off a few months down the road again I could be rolled into an automatic rehabilitation and have my loans back in good standing. Of course I do not expect anything yet but the folks over at the collection agency sounded a little hopeful that the economy was headed in a positive enough direction that they have heard a little buzz about the possibility.
Secondly – the new agency will send out monthly balance sheets! It might seem like a standard practice to get a monthly statement for your debts but for some reason the old agency would not send them. If I was to call and request them they would usually say they would send something but it normally would not contain complete records if it arrived at all. I discussed options for additional payments and was told that it was ok to have the normal payments applied and to mail back extra with any of the statements provided to have the additional payment applied to that particular loan.
Given the change in collection agencies I am cautiously optimistic that I can work something out and pay these debts down! Right now the loans I have in collection have followed me along like some form of financial leprosy and I will be happy to see those debts disappear! After paying them off I will be down to my last two student loans which are both in good standing and then will be (hopefully) debt free!
Posted on: May 26, 2009 by Matt
Well I was hopeful that my student loans in bad standing were on the upswing and I may be able to work with somebody to get them back into good standing. However – over the long weekend I received letters from a new collection agency notifying me that they will now be processing the account. I was discouraged and frustrated and started to wonder yet again if I would ever be able to get these loans out of my life. I am really not sure how to put the entire ball of feelings I have about these loans into words but rest assured it is not pleasant.
I discussed the issue with my girlfriend and she helped me get through the despair of having the student loan mess once again. It seems that I have been paying money to these folks for 7 years (while working with a collection agency that would not provide monthly statements or balance sheets) and that the debt has not gone down. It sucked any positive attitude I may have had right out of me but we were able to talk it through to a point where I could see some positives. The biggest of the positives: the new agency seems to send out monthly statements that show my balance and interest.
So all said and done I believe that the new plan will look something like this:
- Call the new agency and set up payment arrangements based on what I can afford.
- Call the original lender again and make another attempt to get back into good standing.
- Continue to make minimum payments on the account(s).
- When I am able to pay extra – apply the extra to the account with the lowest balance and attack that debt.
Of course the process would go quicker if I had some extra income but currently taking another job or working extra hours and trying to make more would mean less time with my family. I do plan to put any income from the blog here back into debt repayment but other than that I will not be pursuing additional employment so I can still spend time with my family.
What would you do? Can anyone else out there think of another option that I might be missing?
Posted on: May 5, 2009 by Matt
Shortly before leaving for vacation I received a check back in the mail from the student loans I have in collections. I opened the letter and discovered that back in March my payments started to be rejected. I was nervous anyway just because I had not seen the payment post in my bank account but now I had confirmation.
I called the number for the servicing company and was referred back to the original guarantor of the loan. I then called the original loan holder and left them a voicemail as well as the collection agency that had been processing my account. I was hopeful that something had changed for the better and I may now be able to work out a rehabilitation program with the original lender to get my life back on track.
While we were away on vacation (see the photo, not taken by me but in the area we were – lovely place) I received a voicemail from the original lender noting that they no longer use the processing companies I had been working with and that I should now send all future payments to a new address. I have since returned their call and left another voicemail inquiring about possible rehabilitation options and am waiting anxiously to hear back.
If we are able to work out an agreement to rehabilitate the loans I think I may just be overjoyed. These loans have followed me around for about 7 years now in a state of collection or default and I have not had any options to rehabilitate them like a federal loan. I know it is my fault for messing up and letting the loans get to the point they are at but do want to clear them up. I guess now about all I can do is wait for my phone to ring – if it does I may post an extra update here to let everyone know how my luck turns out. I think my current attitude is of cautious optimism.
Tags: Collections, Debt, Debt Reduction, Future, Goals, Personal Finance, Planning, Student Loans Filed Under: Collections, Debt, Debt Reduction, Student Loans
Posted on: April 29, 2009 by Matt
Shortly after exhausting my inheritance from my mother’s estate I discovered credit cards. However – I had no clue how they worked or how they could effect my financial future. The only comparable reference to how I felt that I can think of came from an episode of the TV show Undeclared (the only episode I remember seeing even). In the scene one of the students is running back to his friends, huffing and puffing while yelling something like “Guys!! They’re giving money! Money they’re giving it away!“ If you have any interest in checking it out just watch the first 50 seconds or so over here at YouTube.
I think that pretty much sums up my impression of how credit worked. I knew that the credit card folks expected to get their money back plus interest but I did not really take credit cards seriously. So I somehow managed to secure two credit cards and maxed them both out within the span of my junior year. I somehow managed to make a minimum payments for a while but eventually stopped making any payments at all.
Eventually I was sent off to collections for the two credit cards that I could obviously no longer use. I stopped answering my phone and stopped checking my mail. I was terrified that I was going to jail or they were going to track me down and send the police for me. I really had no idea what would or could happen so I just avoided all of the uncomfortable situations. I got to the point where I checked my mail about once a month – usually after the mail room called and left me a message that the box was overflowing.
After about a year or so the calls stopped and the mail became less frequent so I thought I was in the clear. After a couple of years in the work force I began dealing with all of my bad and defaulted debts. Most of the debt was student loan related but there were still the lingering balances for the two old credit cards. I made arrangements with both companies and paid them off in full but the damage had already been done. Luckily – the bad credit card debts have since fallen off of my credit report so the negative information is no longer listed.
I lived in complete fear of credit cards and taking on any new debt for a couple of years after my experience with credit cards in college. The whole series of events could have probably been avoided if I had taken the time to educate myself and understand what I was getting into. My father tried to explain but simply told me that I should not have a credit card and got frustrated when I asked the obvious “Why not?”. He was unable to explain how credit works or how bad debts can carry on through the rest of your life. His flustered answer was along the lines of “because it will effect your credit”. I know he had the best intentions but the explanation seemed obvious to me at the time – I mean that was the point of credit cards right?
I believe the lessons learned here include that credit cards are not to be used lightly, not repaying debt can have serious long term ramifications on your future plans, do not spend money you do not have and communicate with your creditors. I still work on practicing some of these items (hence my current credit card having a balance – which is going down quickly) but have worked really hard to ensure that I do not get back into yet another cycle of harassing collection calls.
Posted on: March 25, 2009 by Matt
With all the economic stimulus talk buzzing around lately I thought I would take a minute and put my one little wish out there with all the other ideas. While I believe there are a lot of great areas the stimulus package will address the one that I do not believe is listed that I would (selfishly) add would be a forgiveness or rehabilitation program for privatized student loans.
I am sure that I am not the only person struggling with paying off old student loans that fell into bad standing. Federal loan programs offer several methods to get back into the good graces of your lender but the private programs leave you in collections and generally unable to get back into good standing. I have yet to find a program that will work with you to get your private student loans out of a collection or default cycle and removed as bad debt on your credit report.
I am not saying we should just waive all the bad debt – I took the loans and made a mistake and want to repay the debt. I would like however to have a program to get the loans back into good standing and off my credit report. With the loans in good standing with a reasonable payment the $20,000 I have in collections would not be such a source of stress in my life and it certainly would not prevent me from moving forward. There are all sorts of programs coming up for people behind on their mortgages – why not something for those that would like to get other aspects of their lives back on track?
For me - getting the private loans I have rehabilitated would allow me to move forward with several other areas of my life. Right now these loans are the primary reason that I am unable to look into buying a house (they are the only negative item on my credit report). My job is steady, I pay my bills on time or early and am in otherwise good standing. However having the $20,000 in a negative report on my credit report inhibits me from moving forward.
Anyway – I do not expect anything to come of my little rant but if a program did come up I would certainly be excited! In the mean time – I will just continue to work on repaying the debt as quickly as I can. It will take a long time but it is my next big obstacle to overcome while working towards my goal of owning a home.
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