Student Loans: Am I Screwed?

Factual Questions
1

Like many people I paid my way through school via financial aid provided by the government. I racked up about $10,000 in loans which I was to begin paying back 6 months after graduation. I foolishly choose to start and the very bottom of my field (PC Support) when I should have gone straight into networking, and my technical degree from the school is in “Computer Servicing Technology.” This isn’t worth much to an employer. I had lots of trouble finding a job at all, let alone one that would afford me enough spare money to pay back my loans, and I defaulted. This was back in 1999. Things eventually worked out for me, I got a decent job in networking and make about $45,000 a year now, enough to start paying back those loans. Unfortunately it gets ugly now.

After defaulting on the loans the original creditor passed the debt to a collection agency called National Asset Management (http://www.nam-inc.com/). The people that I have dealt with there simply must be among the most rude, obnoxious, and demeaning people I have ever had the displeasure to converse with. Keep in mind that they had no way to contact me, I was certain to keep my number and address away from them because I know how collection agencies can get (used to work as a collector until I couldn’t take it anymore). I called them in good faith and asked to resume making payments, I offered to do $150 a month, $50 more than I had originally been required to pay. Not good enough. To make a very long and frustrating story shorter, they would not allow me to get on a repayment program unless I gave them the following:

Personal information about my neighbors, friends, and relatives (just in case I run out of the country I guess).

The keys to my newly opened bank account and permission to withdraw $150 a month on the same day every month. I am not payed on the same date each month, so this is highly impractical.

A “deposit” of twice my regular monthly payment.

The very first invoice I get from them is…TWICE WHAT WE HAD AGREED ON. The ONLY reason I caught it is because I do not now and have never trusted collection agencies. If I had not checked the invoice they would have processed their automatic withdraw and bounced their check and whatever other checks I had out there. This would have cost me a small fortune in fees. I can’t really deal with my “account manager” directly as she is a raving lunatic. She is incapable of having a conversation or disagreement without yelling, screaming, and carrying on. They simply DO NOT LISTEN, and DO NOT CARE. I called her manager to complain, and he also did not listen or care. Completely uninterested in what I had to say.

I filed a report with the PA Attorney General though I don’t think that will accomplish anything. I am also contemplating filing a complaint with the BBB, but I don’t see that accomplishing anything either.

All I really want to do is deal with another party and not the collection agency. Do I have any recourse? Have they done anything that is illegal? They really have me by the balls because Student Loans are one of the very few exceptions PA makes when it comes to wage garnishment, they can attack my paycheck and tax returns directly. In fact, I was told that unless I get on this repayment program, the conditions of which are listed above, I would be sued and my wages and tax returns garnished. Now keep in mind I’m not trying to get out of paying this back, I desperately want to so I can finally improve my credit and buy a house, but dealing with these people has me so stressed I don’t know what to do next.

I would GREATLY appreciate any legal advice I can get. If there is some way to exact revenge on these people that would be great too, but really I just want to pay my loan back without the rediculous requirements they are asking of me. Most importly I don’t want the automatic withdraw to happen anymore, I just want to send them checks so that if there is a mistake, it is mine. Thank you very, very much in advance for any advice!

2

  1. Never make any payments to a collection agency. Ever.

  2. Contact the original creditor, and tell them you wish to make payments directly to them. 9 times out of 10, they will be glad to do this, as they get more money from you than they do from the collection agency.

  3. Write a letter to the collection agency telling them that you will be making payments directly to the original creditor only, and that their services are no longer required. They are legally prevented from ever contacting you, by mail or phone, regarding this debt again. (Well, they can contact you once, for the express purpose of acknowledging your letter, but they cannot try to collect the debt).

Everything you need to know is in the FAIR DEBT COLLECTION PRACTICES ACT

For a step by step guide on how to deal with collection agencies, get BACK OFF! The Definitive Guide To Stopping Collection Agency Harassment, it has loads of great tips and form letters you can use.

3

I concur with Fear Itself. I once had a collection agency after me (it was my fault; I had a debt that I simply forgot about.) Once I learned of the debt I contacted the original creditor to pay them, and informed the collection agency of this fact. Never heard from them again.

4

If you are dealing with PHEAA, I just finished paying off my student loan with them. I defaulted and dodged them for a number of years until I got in a position to pay regularly (wrong, yes, but…). Anyway, I got into a program whereby you pay $100/month for 12 consecutive months, and your account goes back into good standing, and you get a little more leeway and possibly lower payments. Be careful, though. If you are 1 day late with a payment, you have to start over. Remember, it’s not when they recieve the check that matters, it’s when they process it, so be sure to mail it in at least 7 days before it is due. I wound up being 2 days late, and having wages attatched. That was OK, I guess. They get I think 10% of your gross pay after other deductions (taxes, medical, social security, etc), and you never have to deal with them as long as you get regularly scheduled paychecks.

5

[hijack]
Let me just say that I can’t stand companies that use pictures like this on their website… especially when they’re in a really shady business.
http://www.nam-inc.com/AboutUs.asp?authID=713014756

My sympathies are with you, uh, Bongmaster, for having to deal with such scum.
[/hijack]

6

How dare they come after the Bongmaster!

You should send your sidekick, Reefer-Boy, to deal with them.

7

If all else fails, bankruptcy is an option. You cannot have the debt erased, but you can request a court-mandated payment program and be shielded from further collection efforts. Contact a lawyer.

This is not a disaster. I had to use this route and still managed to buy a house at a greater price than the mortgage officer initially thought I could manage (their underwriters liked how I had managed to salvage my credit rating after discharging the debt).

8

Thanks for the info guys, I really appreciate it. I mentioned I used to be a collector, so I am very familiar with the FDCPA, but I don’t know that it applies in this case. They of course tell me that I can no longer deal with the original creditors and must deal with them, that’s where I’m kind of stuck. Calls to the original creditor get referred to the collection agency.

I’m not too sure about the percentage of my pay that they could take, but it would probably be greater than what I am paying now, plus I would have to deal with the issue here at work and I don’t want anyone here to know including the payroll person.

I’d also like to avoid bankrupsy, I am very close to salvaging my problem areas through disputes (you’d be amazed at how easy it is to have negative items removed from your credit report).

“You should send your sidekick, Reefer-Boy, to deal with them.”

Alas, Reefer-Boy has been sidetracked by the evil Bank System Bandit, he’s fighting Bounced Check Man right now. :wink:

“pay $100/month for 12 consecutive months, and your account goes back into good standing”

They will let me do $150 a month assuming I abide by their silly requirements listed in my first post. I mean really, like I’m going to give them my neighbors phone number and address. Please. I grabbed a few from the phone book at random, stupid asses.

“Let me just say that I can’t stand companies that use pictures like this on their website… especially when they’re in a really shady business”

Yeah, the mission statement should probably read:

NAM was created to achieve the following goals. Our mission is:
• To provide a cut-throat work environment
• To establish strong-arm partnerships through less effective communication
• To achieve maximum collection performance through no real leadership, no training, continual education in harassment, and advanced technology
• To provide you multiple service options such as rudness and foolish requests

Thanks again for all the info guys, if anyone has more to add I’d love to hear it.

9

Actually, they don’t. Regardless of to whom you make the payments, the original creditor has already assigned the debt to the collection agency. The original creditor is required by the contract to inform the collection agency of any payments made on the debt and the agency still gets its contracted fee.

10

Hmm, that explains their reluctance to deal with me directly. I was hoping to deal with someone else on this…even another agency if necessary. Sigh.

11

Bongmaster, I’m going to share your issues with my wife after work tonight. She worked for quite a few years for collection agencies dealing with defaulted student loans, and I have no doubt that she’ll have some good advice for you.

One thing I can tell you, based on my vicarious participation in her career, is that your experience is not atypical. For some reason, the collection agencies that collect on defaulted student loans have some of the scuzziest people in an already scuzzy industry … Part of this may be the nature of the business. I think (but the Mrs. will need to confirm) that you can’t, in this case, bypass the agency and go to the original lender. The bank that made the loan has already been paid off by the federal government. The owner of the debt is now officially the Dept. of Education, and I’m sure you can imagine how interested they are in dealing with the individual debtors. The collection agency knows this, and general policies at those places are to go massively strong-arm on the student loan defaulters. :frowning:

I’ll be back later with some verified info and professional advice …

12

Actually, if you can somehow get back to dealing with the Dept. of Education, I would definitely do so. My student loans are consolidated through them, and although I’ve never been seriously delinquent, I’ve found them to be quite professional and humane to deal with if you are upfront about explaining your issue and are dealing with it honestly.

A few years back I needed a brief forbearance after a bad accident and hospital stay; I was so busy trying to pay off medical bills (long story; basically, I was uninsured on the date of the accident) that I got a bit behind on my student loan. They were quite forgiving once I talked to them about it, and gave me a retroactive forbearance, such that it appeared that I’d never made an unexcused late payment.

13

I don’t see why you can’t get out of this mess by just refinancing/consolidating your student loans. By doing this either through the government or any number of companies, they would pay off your student loan debt and you’d start fresh with payments to them. The additional bonus that interest rates are so incredibly low right now, you’d most likely end up saving a lot of money in the process.

Good Luck!

14

However unfair your situation or how rudely the collection agency may be, the bottom line is they are going to extract the money from you.

They don’t really care about a friends phone number, your grandmothers madian name or you personally. All they really care about is the money.

So your focus should be to do that. Either in payments or by getting a loan elsewhere. You apparently lived on much less income not so long ago, so bite the bullet and go back to that level as much as you can. If you got a 20% pay reduction, could you still live? If so, then make those changes and apply the reduction to the loan. A cheaper apartment, no cable TV or cell phone etc etc.

Such a move will be painful of course but they’ve got you by gonads. You got to deal with the situation as it is, not as you wish it to be.

15

“Bongmaster, I’m going to share your issues with my wife after work tonight. She worked for quite a few years for collection agencies dealing with defaulted student loans, and I have no doubt that she’ll have some good advice for you.”

I would really, really appreciate that, thank you!

“Actually, if you can somehow get back to dealing with the Dept. of Education, I would definitely do so. My student loans are consolidated through them, and although I’ve never been seriously delinquent, I’ve found them to be quite professional and humane to deal with if you are upfront about explaining your issue and are dealing with it honestly.”

Oh I completely agree, the original creditors were a joy to work with. Vey professional and understanding if a bit firm, but thats perfectly ok by me. If there were a way to take it back to them I’d be there in a hearbeat.

“I don’t see why you can’t get out of this mess by just refinancing/consolidating your student loans.”

Hmm, you’ve got me thinking now. I’m still knee deep in cleaning up the rest of my credit, but its improved quite a bit since I started. I don’t know if I’ll qualify for any loans though, but you’re making lots of sense. I could certainly check into that, thank you.

“Such a move will be painful of course but they’ve got you by gonads. You got to deal with the situation as it is, not as you wish it to be.”

True, true. But at the same time I have a fair amount of other debt I am trying to get out from under as well, so the love has to be spread around a bit. Good advice though, theres got to be some things I can cut back on until I get through this.
Thanks again for all the help guys!

16

After I had defaulted on my loan, a collection agency called for me. My dad answered the phone, explained that I wasn’t home at the time, and asked if he could take a message. The agent asked who he was talking to, and when my father identified himself as my father, the agent began to lecture my dad on how I should be taught to be more responsible with my commitments and money matters. My dad said “You don’t even know the kid! You don’t know his situation, how can you judge him?” Then the guy said “Well, if it was up to me, he would not have gotten the loan.” My dad, very calmly, said “If it weren’t for accounts like his, you would not have a job, would you?” and hung up.

17

Qualifying to consolidate your student loans is a lot easier than doing so for other things, such as a car or home. Those who do consolidate student loans deal with lots of graduates who have terrible credit all the time, so I’m sure this could work great for your situation.

18

Bongmaster,

I too worked as a collection agent for about 3 months.

You should know how they operate! Fear Itself is right in saying to never pay a collection agency any money.

IME, Monty is also right in that if you pay the company directly, the collection agency still gets their fees.

What to do? Well, unless you need to clean up your credit right now maybe just make payments to yourself until you’ve accumulated the full amount. You will then be in a better ‘bargaining’ position.

Even if you need to clean up your credit, paying it off probably won’t help as much as you think. You still haven’t paid a debt for a long time and your credit won’t revert to sparkling just because you started paying on it.

19

I have to ask-has no one here ever thought of a deferment?

My own student loan is now on a deferment until I find a job.

20

The deferment option was exhausted long ago, remember this was back in 1999, its 4 years later. I’m going to look into the consolidation loan option, its starting to sound really good, especially if I can qualify. Does anyone know a good company to look for something like that?