Question:
I took out stafford federal loans when I was an undergrad(1990-94) that were
subsidized. All of the loans were through citizens bank. I then went on to
graduate school and sent in a defferment paper when I entered graduate
school as well as my address at the new school. I graduated in Dec 1998
thinking I would have 9 months to begin making payments. I actually planned
on paying the entire 18000 or as much as possible to avoid interest.
Well, I called citizens bank after getting a job and they informed me my
loan had been sold to EFS services. So I called EFS services and I was told
they had no record what so ever of my loan. I scratched my head and didn't
know where to go. Then in may 1999, I applied for a corporate card for my
job and was rejected. I got a copy of my credit report and wham, I had a
claim against me (apparantly filed with the IRS as well) for 18667 (667 I
guess for fees). This company was called USA Funds. I called them and
explained my situation and what happened and offered to pay. They told me I
was now in the hands of a collection agency they turned me over to and they
wouldn't deal with me any furthur. I then wrote them a letter clearly
stating what had happened and that I should be deferred until August of this
year. They sent me a letter stating to contact the collection agency again!
So I called the agency. They told me I now owe 27500 or so. Ouch!!! I
explained to them and a manager there. They told me pretty well to screw
off and pay the money. I've been in contact with them several times since
to no avail. One guy told me to take them to court if I don't like it but
they'll garnish my tax return for the rest of my life if they have to.
Anyways, My first job is now gone as it relied on me getting a corporate
card (a travelling job). This new job requires a security clearance that I
may not get because of my poor credit.
What can I do? Is a settlement for a lower agreed amount possible? I could
probably pay the entire 18667 if given the chance to settle.
Help and I may hire you to help me out of this or would appreciate any
referrals in the tucson AZ area!!
Answer:
I think you're in fairly good shape. If you can afford it and if
you know who to pay, One option is to pay the amount you think
you owe. Make sure you include all interest up to the date of
payment. That will take the wind out of their sails by removing
the original debt and interest from the case. The collection
agency will be reduced to fighting over the collection charges
and interest on those charges. You have a defense to those
added charges. Some collection agencies will lose all enthusiasm
for a case that has a viable defense. They like to collect on
the easy cases and clear winners. The way to deal with them
after the payment is to write a clear letter describing your
defenses. That might chase them away. If they keep after you
with dunning calls and letters, just keep sending them copies of
your letter.
Don't misinterpret the above. I am NOT saying don't hire an
attorney. I am suggesting ways to handle the matter if you
decide to do it on your own. Hiring an attorney would be the
BEST way to proceed.
On your security clearance application, make sure that when you
are asked about debt, you annotate this one as a disputed debt.
That will tell DIS or whoever that you are not a person that is
so far behind in legitimate debt that the Russians could bribe
you.
