Hindered by a debt - how to deal with collection agency

[Anonymous]

Hi there.

I'll go ahead and save the circumstances behind how I landed in this situation, and just lay it out there.

I owe a debt to a university - I was in a bad place when I left school, and did not remember/find out about this debt until now - 10 years later. I just tracked down the collections agency that holds the debt and they were uncooperative, to say the least. They refuse to make a payment arrangement with me that I can afford. If it's not X amount or higher, they simply won't let me make a payment. They don't accept checks by mail, only electronic payments, so simply mailing them a check is not an option. In order to get them to process an electronic payment for me, I have to agree to one of their payment arrangements, which would not be in good faith because it is a monthly amount that I know I cannot afford.

I think I would be better off trying to save some money and present it to them as a lump sum payoff. I might try to get a loan, but don't think that will happen. I am trying to get my life in order and go back to school, but with what I can currently afford to pay monthly, it would take me YEARS to pay off this debt (which needs to happen before my transcript can be released).

The principal balance is $2,000, interest is currently at $1634.87, and there are $2227.52 in collections fees, making the grand total $5862.39. If I am able to save money and make a lump sum payment, they might accept something in the $4k range, which will still take me at least a year and a half or two years to save - so in the meantime, I wouldn't be paying the collection agency anything toward my debt.

Does anyone have any advice? I am not at all trying to running away from my debts. I messed up my life in my 20's, and have found my way back to a very good place over the past couple of years. I'm a good person, work hard, volunteer, and just want to keep moving onward and upward, but feel so hindered by this debt - I just don't know what to do. I have already trimmed all my other expenses to the bare minimum.

I'm sure someone will suggest this, so I also want to mention that I don't have a DH or any family members who would be able to help me.

Please, please give me any tips you might have on dealing with/negotiating with collections agencies.

Thanks in advance.

[Anonymous]

Can you ask to speak with somebody else in the collection agency? The fees are absolutely ridiculous b/c the collection agency already gets a high percentage of anything they now collect.

Also, I think 7 years is the statutory limit for having these things on your credit so what exactly are they hoping to achieve by not negotiating with you? I'm sure it has already been written off - with a tax deduction - by the university. I would do some research. Debt that is ten years old I think may not even still be collectible...I just don't know though.

[Anonymous]

I am not super familiar with the laws but this sounds like they are really taking you for a ride. I would document each and every time that you tried to make a payment of some sort and they refused it. Also, there might be a statue of limitations on how long after you incurred the debt they can try to go after you for. I'm not saying don't pay the principal back that you incurred. That is the right thing to do, but please educate yourself on what the laws are. Collections agencies get away with murder because people don't know what their rights are. This sounds really fishy to me.

[Anonymous]

Yes, the statute of limitations has expired and refusing to accept payment is probably illegal. If you want to pay back the principal, I'd contact the university directly.

[Anonymous]

I would not let them have EFT.
They can just suck the account dry. What would stop them?

[Anonymous]

Is the debt a student loan?

[Anonymous]

Anonymous wrote:Yes, the statute of limitations has expired and refusing to accept payment is probably illegal. If you want to pay back the principal, I'd contact the university directly.

Unless she has formally promised to repay recently. Then she may have started the clock again.

[Anonymous]

I've been there and know how horrible this feels. A couple of ideas. Have you tried contacting the school itself and offering them direct payments? Some creditors will take the debt back from a collection agency.

Have you tried asking for a supervisor or trying your chances with another person at the collection agency? Some can be incredibly nasty; some are helpful. And read up on your rights under the Fair Debt Collection Act so you know what they can and can't do.

You also could talk to a company like Consumer Credit Counseling Service. They're legit - not one of those that promises to make your debt go away if you just pay them $99 per month for the next year. They may have some ideas.

Lastly, take a look at consumerist.com and search for 'collection agency' or 'debt collector.' Or write them an email and see if they have any good advice.

[Anonymous]

OP here. Thanks for the tips, everyone. I thought it was fishy too, and called the university. They said I had to go through the collection agency - maybe I can try them again though.

The money is actually for a private loan from the university, not a Dept of Ed loan (I'm current on those).

The agency tried to tell me that the university already paid them the $2200 in collections fees, so they were not able to reduce those. The university paid you $2200 to collect a $2000 loan? Really?! Ha.

[Anonymous]

I would also call the university and make them aware of how much they are attempting to collect - and that they are not responsive to your offers. Do NOT just call someone in financial aid. This is not someone who cares (note: I know this as I worked in FA as a work study program) You need to talk to a manager of the dept OR someone like a Dean of Student Affairs.

[Anonymous]

Another thought...can you get something like a home equity line of credit to pay off the debt, and then pay that back in increments?

[Anonymous]

15:15 again. If the university won't take back the loan--and it's worth trying again to get them to-- I would definitely keep trying with the collection agency. Call at different times of day, keep asking for a supervisor, and don't give up until you get someone who can ok a reasonable repayment plan. They won't give up, so you shouldn't either. Keep reminding yourself that you are trying to do the right thing and try not to get too down on yourself for running up the debt in the first place.

Is it the same agency as in this story, by any chance? http://consumerist.com/2008/11/debt-collector-bullying-me-to-sign-affidavit-saying-i-can-pay-more-than-i-can.html

[Anonymous]

I would also look at your loan agreement (get a copy from your school if you don't have it) and see what it says about what you are responsible for if you default and the debt goes into collections.

[Anonymous]

If it has been 10 years since yo'uve made a payment you're likely past statute of limitations? I am no expert but this is off of the top of my head.

There's certainly something important to be said for paying it back because you owe it -- but I'd take caution as paying it can renew it on your credit if I recall correctly, so I'd want some sort of deal in writing or whatnot if you go to do that.

[Anonymous]

Anonymous wrote:If it has been 10 years since yo'uve made a payment you're likely past statute of limitations? I am no expert but this is off of the top of my head.

There's certainly something important to be said for paying it back because you owe it -- but I'd take caution as paying it can renew it on your credit if I recall correctly, so I'd want some sort of deal in writing or whatnot if you go to do that.

Yep. It has been a long time since I dealt with this, but I was in arrears all over the place when I left college, came to DC, and funded my job search by camping out on someone's living room couch and paying my bills with a credit card. I got a job, but it took years to pay down that debt.

some things I learned:

all debt is not equal
all debt is not legitimate (even if it seems that way).

if the school is holding on to your transcripts until your debt is paid, I would find out who is in charge of the transcripts and talk to them. There is probably an amount they wish to get, and they may accept it. Try again if you've tried already.

The debt collector may have purchased the debt from the university or even another debt collector. There are agencies that specialize in buying "old" (as in, past the statute of limitations, which is generally 7 years, and attempting to collect on it. If this is the case, and you make a payment, the clock starts over. Your recourse against these fools is limited, but the FTC has a complaint interface on its website (and loads of helpful info on debt, bad debt, chargeoffs, and what a collector may and may not do) that you can use.

There are also seriously fraudulent "debt" collectors. I do not currently have any bad debt, but I still get calls from time to time. A prime player in this market is portfolio recovery. They obtain old copies of credit reports and attempt to collect on debt they see listed. They do legitimate debt as well, but have been the focus of hundreds of FTC fraud complaints.

Even if it's legit, it doesn't matter if you pay or not, the debt has been bought and sold a hundred times and nothing you pay will go to the original creditor. It goes only to the debt collector. And sometimes, phoney debt collection agencies will claim to be collecting on a debt you have already paid. They are banking on the fact that you never paid it or you're such a screw-up you won't remember whether you paid or not. Sucks, doesn't it?

Anyway, I have nothing but sympathy for you here. Debt sucks, and mercenary debt collectors suck also. When Congress changed the bankruptcy laws a few years back, they made it easier for credit card and other lenders to get their money back without increasing any protections for consumers. Recent laws have reversed this trend some, but not enough.

Good luck -- and do your homework before you pay this. While it feels good to pay a legitimate debt, there's nothing good about keeping a bad debt collector in business.