Someone's dodging loan payments

[masondoggy]

Ruthie:

I became embroiled with collection agencies once, andf I learned a couple of valuable lessons you might want to pass on.

1. All they want is their money. They aren’t “out to get you,” they don’t want to punish you. All they want is their money. Explain your circumstances, and tell them when you can begin to pay, and how much you can pay every month, and they will leave you alone, assuming that you keep your word.
2. Sit down and budget. Figure out an amount that you can afford. Then offer them a payment of half that amount. This gives you wiggle room, since they will want to dicker it up.
   You might want to confront your friend with the fact that his defaulting on a student loan drives the interest rates up for other needy students. Also that defaulting on a loan is stealing.

Collection agencies don’t care what your circumstances are, and most of them habitually break and disregard the law. It is very risky to call them up and make an offer over the phone. Any agreements with a collection agency MUST made in writing, because they do not follow through on their word most of the time. (it is also very important to get in writing that once you pay, the account will be removed from your credit report, a paid collection is still very damaging to your credit and will not help your credit score to just pay it)

It is also very important to never talk to collection agencies over the phone. Every correspondence needs to be in writing. I can’t stress this enough. I hate seeing people get drug through the mud with some of these shady companies, and believe me, it happens. Offering to pay a percentage is a good idea, and collection agencies accept it all of the time, but it must be in writing. If it isn’t in writing, many collection agencies will just turn the remainder of the debt over to another collection agency only for you to find months down the road that someone else is coming after you for the rest of the debt. This happens all of the time, and that’s why it’s so important to have everything in writing, and all agreements signed by an authorized person from the collection agency.

An even better avenue is to go directly back to the original creditor and deal with them. Sometimes they won’t accept your money, but often they will.

 

[ABalch]

I believe that you mentioned that this person is hiding his debt from his fiancee? If that is true, depending on the state that they are living in, after they marry she can become as responsible as he for the debt. A number of states have various community property laws that would open property in her name, such as a car, house, etc. to collection to satisfy his debts. If he is hiding his debts from his fiancee, what else might he be hiding from her. If these are federally subisdized student loans for college, then the IRS can and will start taking any and all refunds that he is due on his taxes to pay off the loan. Depending on how long he has been in default on his student loans, he may still be able to straighten it out with the company holding those student loans.