Private Loan Default -- Dealing with CA

[JohnPaul251]

A collections agency contacted me about a forgotten student loan then went into default.

 

I have also asked them for information on the account. I acknowledge the debt, but I have questions about dealing with the collections agency:

 

1) Is it possible to negotiate a lump sum payment for less than the full amount? If so, how can I go about doing this? What % of the amount owed should I be willing to settle immediately?

 

2) I don't have the entire amount available, but I am interested in avoiding having to make monthly payments with additional interest if possible. However, if I have to, how do people usually negotiate monthly payments with a CA?

 

I don't have property, nor wages that they would be able to garnish. I'm not particularly concerned about the current bad credit, since it will be off before I will be interested in any additional financing.

 

3) Under these circumstances, would any sort of rehabilitation program be worth it for me?

 

Any information on how to handle this situation would be helpful!

[breeze]

What kind of student loan was it?

[JohnPaul251]

It was a private loan that was serviced through AES.

[evapor8ted]

You say "forgotten". How old are we talking? What is the DOFD from your credit report? When do you remember making the last payment?

[JohnPaul251]

The last payment I made on it was a couple of years ago when I consolidated my loans. I thought it was a gov't loan at the time. This one didn't go through and I didn't pay enough attention to realize that, eventually forgetting about it altogether. All that time I had been paying for my other student loans, and that one defaulted in the background.

[evapor8ted]

How many is a couple of years? Please provide state of residence as well. What is the name of the holder and the CA?

[JohnPaul251]

Thanks for the help, but I was seeking more generalized advice. I don't know if it's a good idea to put every single detail of my situation on the internet. Also, by "a couple" I mean two.

[ChrisAZ]

If you don't post your SS#, etc, then you are okay...

[hodap2001]

A collections agency contacted me about a forgotten student loan then went into default.

 

I have also asked them for information on the account. I acknowledge the debt, but I have questions about dealing with the collections agency:

 

1) Is it possible to negotiate a lump sum payment for less than the full amount? If so, how can I go about doing this? What % of the amount owed should I be willing to settle immediately? Since this is a private student loan, you can negotiate; however, they will not accept pennies on the dollar as they would rather sue you and obtain a judgement and then a wage garnishment (if you are not working, they will just leave the judgement until you are working). Most are willing to consider a 10% off discount (or more depending upon how old the account is and other circumstances from the original creditor) off of the total balance owed including collection cost, late fees, and any court fees as determined by your Master Promissory Note Disclosure Statement.

 

2) I don't have the entire amount available, but I am interested in avoiding having to make monthly payments with additional interest if possible. However, if I have to, how do people usually negotiate monthly payments with a CA? Most collection agencies will consider a lump sum payment towards a settlement agreement offer, such as down-payment 60% of the total balance owed upfront and then making the remaining 30% of the total balance owed over monthly payments and you equal 90% of the total balance owed and not the full 100% owed. You cannot escape owing interest, that is a given no matter what, so get that idea out of your head! You will need to find out what you owe as of this date, provide them with a lump sum offer, and then ask them to pay the remaining settlement amount over time - its that simple, the worst they can say is no or they will counter your offer. How much do you owe and how much (realistically speaking can you put down in a lump sum to your debt???)

 

I don't have property, nor wages that they would be able to garnish. I'm not particularly concerned about the current bad credit, since it will be off before I will be interested in any additional financing. If they obtain a judgement, then your credit will be ruined until that judgement is settled in full so realistically you are still gambling that the negative will fall off, but before it does, they would have sued you in court and a judgement placed on your credit - so really, you won't be able to finance anything until this is paid in full.

 

3) Under these circumstances, would any sort of rehabilitation program be worth it for me? Rehabilitation DOES NOT APPLY to private student loans, it is a consumer protection ONLY for federally backed student loans.

 

Any information on how to handle this situation would be helpful!

 

I think this is generalized enough since you don't want to divulge too much information to us on the boards, but I am here to help!

 

Good Luck!

Edited June 21, 2014 by hodap2001