Consolidated student loan still showing up on credit report, getting collection calls

In My Humble Opinion
1

History
I consolidated ALL of my student loans 4 or 5 months ago, and had filed for bankruptcy, which was discharged in March 2010. I know those two things aren’t necessarily related, but it’s to point out that I have scrubbed out all my bad debt. I’m getting real credit card offers now, not just the prepaid kind–mixed blessing, but I’ll take it. Every debt I still owe post-BK (car, student loans, and a modest capital one card) is in repayment, with good standing. Or so I thought.

The Problem
A debt collection agency left me a voice mail today, and said I have an outstanding student loan debt in the amount of $788. The only debt that was even close to that is the Perkins loan I had, which was $760 right before consolidation (all of my other loan amounts are substantially higher, $2k+). The National Student Loan Database website, which I just checked, shows that ALL of my loans (including the Perkins) are owed $0, and the consolidation loan is the only one still outstanding–with which I’m in good repayment standing. The Perkins was the only of my loans that had officially gone into “Default” status, which I didn’t rehab prior to consolidating. I know it should still show up as a default for 7 years, but it’s listed on my Transunion credit report (which I just pulled tonight) in “past due”/“collection account” status, in the amount of $788. The date it was opened also matches the original date I took out the loan, May 2006, so I’m quite sure this loan is the problem.

All 7 of my student loans were federal (so I know it’s not a private loan mucking up the works). Some were subsidized Stafford, some were unsubsidized Stafford, and one was the subsidized Perkins. I consolidated all of them and made absolutely sure to include the defaulted Perkins loan (I even had to choose a special payment plan when I took out the consolidation to make sure the defaulted loan could be included). So this issue should have been resolved back when I consolidated, right?

I left a voice mail on the number the collector provided, telling him that I don’t owe this debt, and why. And I sent an email to the https://loanconsolidation.ed.gov people telling them about the issue, and asking them what I should do. I tried to open a dispute on Transunion’s site, but it says they need me to call them to file a dispute. I’ll do that if I have to, but I would rather resolve this at the source. It seems like someone somewhere (maybe at the university level?) failed to get the memo that this debt has been consolidated. And now it’s adversely affecting my credit, which I have only recently been able to get into good standing.

Why do errors like this happen? And what can I do to expedite the situation? I wasted a good amount of time (prior to my BK) talking to debt collectors on the phone. I have low hopes that talking to this one would get me anywhere. Thanks in advance for any advice. I wasn’t going to be able to sleep tonight without venting this.

2

Debt collection agencies will lie, cheat, & steal to try to collect money. If the debt has already been paid or consolidated, they will probably be able to keep any money they collect.

Don’t waste any time talking to them, or trying to convince them of anything. At most, leave them a message (once!) saying “I do not owe this debt; it has already been paid. Do not contact me again about this.” Then don’t speak to them any more.

3

Not bad advice, but that doesn’t get it off my credit report either. I’m going to have to pursue it with somebody.

It’s not just a matter of a shady debt collector who doesn’t actually have a case (I’ve read those horror stories), but a debt collector who thinks they have actual grounds because my credit report says they have actual grounds. grr :mad: I have no intention of paying them squat because I don’t owe them squat. But I do need to get this reversed somewhere, and they seem like the logical place to go.

4

Errors like this happen because there is nothing to stop them from happening. The appeal process, which you are about to wade into, is long, tedious and frustrating to the extreme max. The credit agencies don’t really have any reason to be particularly meticulous, since everyone trusts them at their word.

I had one of the agencies actually record me with three credit files - all linked and including some guy in Quebec. They would not, no matter what, admit that somehow this was an issue. It took weeks of phone calls and faxes for me to prove that I was the owner of that Social Insurance Number and that they needed to remove his debt.

Good luck. My best advice? Once you finally get through the “hold” and get a real live person, demand to speak to a supervisor and get their name and direct line and fax number.

The deal only with them

5

One thing I find odd about this situation is that I was under the impression that federal student loans weren’t sent to debt collectors since the federal government has much surer means to collect the debt at its disposal such as wage garnishment, keeping your tax refund, etc.

6

The likely reason it’s on your credit report is that debt collector PUT it on your credit report. Don’t even bother dealing with the debt collector. Chances are it bought a bunch of old debt from different creditors for pennies on the dollar and is just trying to collect whatever it can. Collection agencies are well aware that some of the debts are legally unenforceable. They will try to leverage payment anyways by screwing with your credit report in the hope that you will just pay the debt to clean up your credit.

Deal directly with the credit reporting agency. I’m in Canada, so it may be different in the US, but you can likely file a dispute with the agency online or by fax. Once you provide documentation that shows the debt has been paid, it will be removed from your credit report. Be persistent - it’s a pain in the ass and it does take time.

7

Thanks a lot :slight_smile:

I will have to shuffle some paperwork to find my documentation, but I’m sure I have something that delineates all the loans I consolidated. It seems like it should be a fairly open-and-shut case.

8

I also worry that this has been falsely reported to all three credit bureaus, but I’m not even sure I can pull all three reports just yet (you only get one free report per bureau per year). Should I send the dispute paperwork to all of them, just in case?

9

Request your credit reports first. I had an issue with an incorrect entry on my Equifax report which didn’t show up on the other reports. Creditors don’t always report to each agency. Don’t make work for yourself if you don’t have to. Also, once you order your credit report, there’s a reference number assigned, and its easier (procedurally) to deal with the agency once you have a file and a reference number.

10

I’m pretty sure I got my free Experian report (at least) already within the last 12 months. I’m not planning to pay for it.

11

If you file a dispute with the credit bureau, it’s actually the collection agency/creditor that has to provide the cproof that you owe them the debt. If they do not do so within the time required (usually 30 days, I believe), it will come off your report. Chances are pretty good that this agency will either be too lazy to actually find the documentation, or they won’t be able to prove that they own this debt.

This might not stop them from submitting it on your report again and starting the cycle all over. I’m not sure how you deal with that issue. They’re scum and will do anything they can to squeeze a few bucks from you even if it’s not owed.