Help me settle with student loan debt collection

[PSUgirl]

I will make this short but try to share all necessary information. I took out a student loan for half of my school and waitressed to pay off the rest while I was attending school. My greatgrandfather passed awhile while I was in school and my mom said she would pay off my loan per his request with the money he left our family. This never happened and I went into default. I found out about this debt about 2 years ago when I tried to rent an apartment and was denied for a low credit score. This is my only debt I i have never owned a credit card.

My loan has been assumed by Account Control Technology, Inc and when I spoke with them nearly two years ago they said my credit report would be cleared and I would have many fees/penalties removed if I linked to my bank account and made 9 consecutive monthly payments. I linked the account as they asked.

I called earlier this month just to make sure my credit has been restored and I find out they stopped withdrawing from my account in Septemper of last year and I'm back in default.
With penalties I owe just over $17,000, I was told by a supervisor of this company that they would likely accept $13,500-$14,000. I told her the truth and that I have no home, car or any other asset in my name and my bank account has $8,735 in it. I offered her all that account has and he kind of laughed and said they won't accept anything that low. She told me she had to call the Deprtment of Education and she will call me back in an hour with a total payoff amount. This call never came, two days later I called back and she said she never got in touch with Dept of Ed but she will try again today. I still haven't heard back. I'm 24 years old, married in October 2013, my husband wants this taken care of and though he doesn't have a large amount of money he will pay the difference so we can be out of debt.
I'm sorry this is so long but I don't know what to do or who to contact and hope someone here can help. I'm trying to settle this debt and I keep going in circles and don't want to just wait by the phone as interest accumulates until someone calls me back. I hope I've come to the right place for help or direction.

[snafu]

Student loan debt is nearly unique in that it cannot be discharged, not even in bankruptcy. It's your name on the documents and you will need to pay whatever sum you can negotiate with Collections. Meanwhile I presume the penalties continue to escalate and the amount owed increases.

[kyoko]

I am very, very sorry to hear what you are going through...! I am not sure why they stopped withdrawing from your bank account after September, but did you make a payment for 9 months? You contacted them almost two years ago, starting your loan rehabilitation and the auto-payment stopped last September, so I am not sure if you made it 9 months.

If you completed that 9 months consecutive payments, you should have 9 years and 3 months to pay off your remaining balance.
If you could not make that 9 months period, then unfortunately, I think only option you have is to pay in full (or whatever the collection agency agreed upon).

[PSUgirl]

Thank you both for replying. I'm getting the run around from ACT rather than answers. Is it possible that I speak to the guarantor of the loan or someone else to get answers? If so does anyone know how I can find the name of the guarantor? Does anyone know how I can find the amount of the original loans? Or how I can find out what is owed in interest and principal without fees or penalties?

Thank you again for your reply help.

[kyoko]

I am not familiar with guarantors of student loans, but I found the website that lists some guarantors in the US.

http://www.finaid.org/loans/guaranteeagencies.phtml

Hope it helps.

[dczech09]

Why are they willing to accept $13,500 to $14,000 instead of the full $17,000 balance. Student loans are insured by the Federal government, so they cannot be settled for less. I would have to assume that the $3,000 to $3,500 difference is late fees and other charges which can be written off? Not sure. I just find it strange that they are willing to settle for a lesser amount on a student loan.

With that said, I am not surprised that they laughed at your $8,735 offer. This is a Department of Education student loan, which means that it is not bankruptable, dischargeable, and cannot be settled like a traditional unsecured debt could be. Why would they accept $8,735 when the government has insured the loan and they will get AT LEAST the principle and interest back? Do you see what I am saying?

So yeah I would have to guess the $13,500 to $14,000 figure that they said that they would accept is a principle plus interest figure, but does not include any fees and late charges.

Why did you give them electronic access to your account? That was a huge mistake. First of all, you are still responsible for making payments. So if they do not draw the money out, you need still need to make sure a payment is being sent to them. Ultimately, it is your responsibility to pay the debt; not theirs.

Also, I am concerned about that "deal" that you made with the collector. You gave them electronic access to your account so that they would agree to remove the derogatory remark from your credit report? Did you get this in writing? Also, is the collection agency the one who put the remark on your credit report? If I were a betting man, I would have to believe that it was the Department of Education that put the remark on your credit report (not the collector). This means that only the Department of Education (or the credit bureau) has the power to remove that remark from your credit report. If this is the case, then the debt collector has no power to remove the credit remark. That means they lied to you and you got screwed over.

The morals of the story...
1.) Do not trust anything a debt collector says, unless it is in writing.
2.) NEVER give them electronic access to your account because they will mess with you by either taking more money than you agreed to, or not taking any money at all so that they can slap you with late fees.
3.) The only entities that can remove derogatory remarks from your credit report are the ones who put it their, and the bureaus themselves. Third-party debt collectors USUALLY do not have this power. This is not always true, but usually these debt collectors do not have this power.

I hope you learned something from this...

Now onto the matter at hand!

You owe the money. You will not be able to settle for pennies on the dollar since this is a student loan debt that we are talking about. You may be able to get the late fees and additional charges removed, but that is it. The principle and interest will likely stay.

You MIGHT be able to negotiate a reduction in accrued interest, or an additional 10% settlement off the top, but that is EXTREMELY difficult and almost not worth attempting on a $17,000 loan balance. My guess is that you will have to pay the principle and interest for sure, but you may be able to get rid of fees.

Talk to the student loan debt collector and get on a payment plan. Unless you have enough money to settle for the $13,500 to $14,000 figure like they asked, you will probably have to go on a payment plan. Unfortunately, a payment plan will mean interest and ultimately paying more money than the settlement amount that they were willing to accept.

Once a payment plan has been negotiated and agreed upon, GET IT IN WRITING! Do not give them electronic access to your bank account and do not trust them to take the money out of your account automatically. You will need to watch over this like a hawk and make sure your payments are being made on time. They will not do it for you, as you have experienced.

If you have any questions, feel free to reply. You have a mess on your hands, but you can fight through it. Luckily, you really do not owe that much. There are many people in worse situations! So be happy!

[LizfromtheBronx]

Back in 2008, I had dealings with ACT for my (then) in default student loan. They called and offered to enroll me in their loan rehabilitation program, which consisted of an upfront payment, 9 months of additional payments, and then at the end of the period, my loan was transferred from the collection agency to an actual lender, and the "default" was removed off of my credit report. My loan was about $10k, the initial payment was $500-something, and the monthly payments were $200-something. About 8 months in, I received paperwork from my new loan provider (I believe it was Nelnet, then Sallie Mae took over after I consolidated), letting me know who had taken over my loan, and what my new monthly payment would be ($65.33).

It sounds like you were never transitioned into a new lender (ie, your loan did not come out of default). If I am recalling correctly, I did have to sign a new loan agreement with the new provider, so perhaps you missed that crucial piece of mail? I didn't find ACT all that easy to get in touch with via phone, but they did send me all documents by mail, which I prefer anyway.

With that said, if you can borrow the difference from family to make the settlement, then that's your best course of action. Otherwise, I would suggest trying again to get someone on the phone at ACT, and asking if you can be considered for the program again (not sure if it's still around but can't imagine it wouldn't be). After your 9 months of payments, and then establishing a new lender, you can then throw the rest of the $$ you have at it via normal channels.

[PSUgirl]

If you have any questions, feel free to reply. You have a mess on your hands, but you can fight through it. Luckily, you really do not owe that much. There are many people in worse situations! So be happy!

these are some hard truths you shared and I tank you for that.

I cannot personally pay the $14,000 but with family help I can. I would much rather pay back family (who won't be hurt by this loan to me) than these collectors.

Do you suggest I close this bank account and open a new one to protect myself or is it too late for that?

Since the Deprtment of education is the guarantor, is it at all possible to deal with them directly if I can pay the principal and interest debt in full? Or must I deal with the ACT collectors only at this point?

Thank you again for your help. I can't wait until this mess is over. It's so stressful.

[PSUgirl]

It sounds like you were never transitioned into a new lender (ie, your loan did not come out of default). If I am recalling correctly, I did have to sign a new loan agreement with the new provider, so perhaps you missed that crucial piece of mail? I didn't find ACT all that easy to get in touch with via phone, but they did send me all documents by mail, which I prefer anyway.

Thank you for your reply. It's good hearing from someone who has experienced ACT. But now I'm worried that I never received this letter or the more likely scenario that I did and threw it away. Since many months have passed since then must I start over again or might they just send me another letter giving me a new lender?

With that said, if you can borrow the difference from family to make the settlement, then that's your best course of action.

I am very lucky and this is an option. But when I talk to ACT the supervisor says they will call me back with a settlement in full offer after they talk to the Department of Eduction. Three phone calls have taken place over the past week+ and I'm being told they still haven't been able to talk to the Dept of Ed. Can I settle this with anyone else, such as the guarantor ?

[dczech09]

these are some hard truths you shared and I tank you for that.

I cannot personally pay the $14,000 but with family help I can. I would much rather pay back family (who won't be hurt by this loan to me) than these collectors.

Do you suggest I close this bank account and open a new one to protect myself or is it too late for that?

Since the Deprtment of education is the guarantor, is it at all possible to deal with them directly if I can pay the principal and interest debt in full? Or must I deal with the ACT collectors only at this point?

Thank you again for your help. I can't wait until this mess is over. It's so stressful.

Borrowing money from family is generally ill-advised. However, it may not be a bad idea to get out from under these guys. The problem is you will be under someone else- some one who you may be close to...

You may be alright since this is a student loan debt collector/loan servicer. If this was a third-party debt collector, then I would absolutely close the account. But since this is ACT, you should be in the clear. They may not abuse you if you get on a WRITTEN plan. If you can get on a written plan and you get it done through automatic payment, that would be preferred. However, if they abuse you, close the account. Also, do not trust them to pull the money automatically. As you have experienced, they may "forget" to draft your account as planned. You need to make sure they are getting the monthly payment.

You may want to talk to the Department of Education. See if you can make payments directly to them, or at the very least settle on a payment plan with them. They are the guarantor, so ultimately they are the boss. ACT is essentially a contractor of their's; Department of Education is still the puppet-master. So try talking to them, set up a payment plan, and if you must make your payment to ACT, then you will need to stay on top of them to make sure they don't screw you over again.

"Fool me once, shame on you. Fool me twice, shame on me." Remember that when dealing with ACT.

[PSUgirl]

Borrowing money from family is generally ill-advised. However, it may not be a bad idea to get out from under these guys. The problem is you will be under someone else- some one who you may be close to...
.

I have heard horror stories about such a thing but I think my case is slightly unique because the family member has more than enough to help and won't be breaking their bank to help. We also have a great relationship. I will work my butt off to pay them back ASAP because I don't want any potential future relationship problems.

[PSUgirl]

You may want to talk to the Department of Education. See if you can make payments directly to them, or at the very least settle on a payment plan with them. They are the guarantor, so ultimately they are the boss. ACT is essentially a contractor of their's; Department of Education is still the puppet-master. So try talking to them, set up a payment plan, and if you must make your payment to ACT, then you will need to stay on top of them to make sure they don't screw you over again.

"Fool me once, shame on you. Fool me twice, shame on me." Remember that when dealing with ACT.

Great advice I won't let them fool me again!

Am I correct in understanding that the Dept of Ed has not sold my loan to ACT, but its just that ACT is being paid to help the Dept of Ed collect my money. Is that likely what I'm dealing with? Thank you again.

[dczech09]

Great advice I won't let them fool me again!

Am I correct in understanding that the Dept of Ed has not sold my loan to ACT, but its just that ACT is being paid to help the Dept of Ed collect my money. Is that likely what I'm dealing with? Thank you again.

Yeah they are a third-party collector. Basically they are a contractor for the Department of Education. They do not actually own or guarantor the loans; they just handle collection calls. Here is a link:

https://www.accountcontrol.com/education.php

[PSUgirl]

Thanks dczech

[PSUgirl]

UPDATE:

Over the course of the past month I have spoken with 3 different supervisors working at ACT. The first one told me she needed to contact to Dept of Ed to find the exact total they would settle for. I realize this is a federal student loan so I was only trying to get some fees and penalties reduced from the total amount due.
I called back a week later and was told it could take 3-7 business days. I still didn't hear back and so I called to talk with a different supervisor, she told me that I must stay talking to the same original supervisor and she couldn't help but the other lady would call me within 48 hours.
That Didn't happen, so I again called and spoke with a new supervisor. This man told me no paperwork was ever filed and he will take care of it. My main fear is that this will never be solved. Does anyone know of any way I can directly deal with the guarantor? Or how I can better receive a total payment amour? Also I fear I'm continually accumulating interest and penalties over this last month of phone tag, aren't I?

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