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: April 7, 2009 by Matt
I was reading a post by Frugal Dad this morning that asks what your biggest financial mistake was. I started to think about it and my list is fairly long as I have made a lot of mistakes. A quick search through the old memory banks and I can easily think of a few highlights:
- Squandering my inheritance from my mother’s estate. I was in college and what is a poor college kid to do with $11,000 but buy beer and other stuff they do not need? I excused the spending by saying the money reminded me of my lost mother and that I needed to spend it before financial aid for next year. In retrospect – I was 18 years old and probably should not have been given the money. I had no clue on how to even manage small amounts of money – bad choices were made.
- My first car: It worked for me and the price was right but the car was in pretty poor shape. It was the last purchase I made with the money from my mother’s estate. I do still think fondly of that old heap though.
- My most recent car: I am still paying for a SUV that I financed through a now ex-girlfriend. She is nice enough to allow me to continue paying her and not find other financing so I can not complain too much but I do look forward to August when I will send in the last that I owe her.
The list goes on and on. However – I think my biggest mistake so far has to be allowing my student loans to default. Not just one or two of them but ALL OF THEM. There really was no need to get into a situation where my loans were defaulted. I could have called and arranged deferments when I was having trouble getting up and running while first out of college but I did not.
The primary reason I did not call my creditors and make arrangements: I was afraid. My grace period had just ended and I managed to miss my first payments to all my creditors. I then stopped getting the mail, opening the mail and even looking at my billing statements. I was afraid that since I could not pay I was going to be in some sort of big trouble and that people were going to yell at me or something. I really had no idea. In hindsight I know it seems silly and that I have certainly taken the more painful of the possible routes.
Making the mistake of ignoring student loans has lead me to my current situation with a large amount of student loans in collections (roughly $20,000 for one creditor) so I am still paying for my mistake. In addition I had 3 other sets of loans go into default as well. However – these other 3 sets of loans were federally backed (not private like the ones in collections) and had rehabilitation programs available. So currently the other student loans that I have are now in good standing or paid off – amazing what happens when you do not ignore your problems.
Naturally – if I could go back in time and start over again I would have called all of my creditors and been up front and honest with them. Things probably would have worked out much better. I was young and immature and made poor choices that I now get to clean up the mess from. However – if you are out there and just starting out or are now finding yourself in a similar situation due to the rough economy: Please learn your lesson from my mistakes – call your creditors and make arrangements. It may save you a lot of headaches in the long run.
Tags: Budget, Collections, Crazy, Debt, Debt Reduction, Extra Income, Family, Personal Finance, Savings, Student Loans Filed Under: Debt, Debt Reduction, Planning, Student Loans
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