Debt Collection Policy

by Nicole
(Tampa, FL, USA)

I had a student loan in 2005 for 30,000. In 2006-2007, I had to leave school. When I was able to come back, the loan company stated I needed to pay about $700 right away in order to not be sent to collections. I paid that in March 2007. The next month, they said I needed to pay another $700 in order to stay out of collections. I did that. The following month, they said I needed to pay $350 in order to not be sent to collections. I paid it and was sent to collections anyways in June of 2007. Last year, my credit report stated it would be off my credit report in 7 years, which would be in 2014. I was still a student and could not afford to start paying. I was also incredibly upset that I was told I would not be sent to collections when I was anyways. I basically wasted $1700 I could have used while still in school until I could afford to pay. I recently looked on my credit report, and I saw a new date for delinquency, which is June of 2010 (Which would mean that it will be on my record until 2017 now). Can they legally do this? I though thought it would not show negatively on my record after 7 years. I have read that if I start contacting them, they will start a new date on my credit report. I am not sure where to go from here.

Comments for Debt Collection Policy

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Feb 14, 2011
Student loan debt collection

Unfortunately, as we've said before, student loans (along with tax debt) are among the worst kinds of debt to have in collection.

However, third party debt collectors who collect student loans are required to follow the federal Fair Debt Collection Practices Act. It's possible that some of your rights under that law were violated. If, for example, the debt collector misrepresented the status of your debt, then that could be a possible violation.

We would recommend you at least talk with a consumer law attorney to see whether the collector has broken the law. You can talk with a consumer law attorney with experience in debt collection cases. Learn how to get low cost or FREE legal help with your debt collection problem here. There is no fee unless you recover, so it doesn't hurt to find out whether the collection agency is acting properly here.

As for your credit report, collection accounts may be reported for seven years and 180 days from the date you first fell behind with the original creditor. Contacting a collector or paying on a debt does not change that. If the collector is changing information to keep the account listed negatively on your credit report for longer than it should be, then the collector would be breaking the law. Ask the attorney about this as well.

One thing I would encourage you to do is to gather every record you have of this debt and start keeping meticulous records of your payments, statements, correspondence and phone conversations. (You can use our Free Debt Collection Worksheet for taking notes during phone conversations.)This is essential. Student loans often mushroom inexplicably when they are in collections, and you need to try to stay on top of this as much as possible.

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