In 2003 I got a 2 short term student loans at an APR of 8%, for a combined total of $1200. I was supposed to pay it back in a month but never had the money to pay it back. I want to take care of the debt but i have some hesitations. I haven't been reported to the credit bureaus yet but i see that a year ago the collector pulled my credit. Lets fast forward to last week. I sent the collector a limited cease and validation letter in which i asked them to prove that they are allowed to collect this debt. Anyways they send me a letter asking for twice the original loan (interest & fees) and they also sent me copies of the original loan papers i signed. My question is that do they have to prove that they can collect the loan for the school? Also i asked for the breakdown of the fees which i didn't receive. Since they are not reporting me to the credit agencies I figure that I can pay the school back and forget the collector so i dont have to pay the 30% fees but the school said no. I want to make sure that when i do pay the loan they don't report me to ruin my credit.

What should i do???????? Any advice will help.....

Obviously you have talked to the school and they have indicated that the CA is collecting on their behalf....no other proof is really required.

On the breakdown....the CA should be able to get that easily buy calling the school. You need to ask specifically for it.

When schools hire CA's, it is usually done under contract. That contract will stipulate that the CA gets paid no matter who you send the money to during a specific time period.

On the reporting....I would be more concerned with the school reporting, which they have right to do at any time.

what is the best way to get them to settle? also is there a way to get the account back in the hands of the school. the manager in the school finance office said no but i heard of cases where the account can be trasferred back to the school for about $50. I am dealing with Willams n Fudg

I also wanted to ask... If they loan is still accruing interest as of today at the 8% i don't see why i have to pay the collection fees plus the interest. Can they do this? Is this legal? They way i see it is that i am accruing interest and i will pay the school the total loan amount in full of $1600 (of which $400 is interest for 5 yrs) without the collection fees of 30% which would make it a grand total $2200. Plus i haven't been reported to any credit bureaus so I am assuming that i am still accruing interest and the loan hasn't defaulted. It was supposed to be a short term loan that needed to be payed back n 2 months but the contract states the following:

For the value received ($1200) with interest of 8% per annum beginning in 2003 in case of default of payment of any installment of principal or interest, all payments and the balance of principal and interest in full become due and payable. The borrowers agrees to pay all attorney's fees and other reasonable collection costs and charges necessary for the collection of any amount not paid when due. The makers of this note hereby jointly and severally waive presentment and protest of the non-payment of this note.

Late charge: if the payment is late, you will be charged an additional day's interest for each day the payment is late.

Any lawyers here that can chime in????????????

You dont need a lawyer to explain this. Schools generally operate as non profits and as such can charge you the cost of collections. If the school you attended was a public school, it would be deemed public debt, subject to state tax return offset. And yes, your loan is in default.

Emergency loans are basically short term institutional loans. You agreed to the terms when you borrowed the funds. When I worked in FA, short term loans were never settled on, as the funds in this pool were very limited. Like all other direct school debt, your transcripts are frozen until all funds are paid. You are required to pay the full interest and because they had to hire a CA, you pay those costs too. The school won't take a loss.

No, the school will not recall the debt from the CA unless they have sufficient cause. (Ususally documented proof of FDCPA violations.) Generally when we had FDCPA violation recall, we simly assigned the account to another CA. The school is bound by a contract with the CA to pay them collection fees on all funds collected.

This CA did a hard pull of my credit report last year. Since I am not applying for a job or credit with them, they legally shouldn't be able to pull my credit right? I am going to use this and tell them since they illegally did a hard pull of my credit I want to settle the debt at 70% of what they are asking for.

Any advice on is this is a good step??????bb

You are grasping at thin air. They had valid cause to pull your credit....it is not illegal for CA's to pull your credit when collecting on a debt.

Lynn... thanks for all the info... how do you think i should go by setlling this account?

Lynn, how do you think i should ask for settling this account then? about the CA pulling my credit i read on multiple sites that they cant do a HARD pull... not sure but i am going with what you say....

I DID IT...

I got the school to recall this account from the CA because they violated a C&D letter. Now I am going to pay the school the money because this saves me $800. This hasn't been reported so I will take care of it before it does.

Lynn you should probably not give out anymore advice since you speak so negatively. Lucky for me I was persistent and if you gave this advice to someone that wasn't, it would probably have not turned out the same as it did for me.

One more thing i forgot to add was that I got the hard pull of my credit report as well....


YES.... Persistence is the key my fellow credit friends....

Lynn doesn't speak negatively, she tells it straight. You may not like it, but it is the way it is. IF, you succeeded as you claim, you were very lucky and 1 in a million.