Collection Agency is Preventing me From Finishing College - HELP!

Hello, first I would like to thank anyone willing to partake a little advice in advance, this will be a little long, but I really need some help.

I am a college student at a private university, and the cost of my tuition is covered by private loans and grants when available. I am a senior and I am expected to graduate this December, but I have one big, huge problem and I am going crazy.

A couple of years ago I received a private education loan for about $13,000.00 from a company called Education Finance Partners, a student loan company, with a full in-school deferment, common practice among college students. It is ironic, because it was the first loan I ever got. Anyway, all went well up until this last November. I had taken a semester off from school last spring which ate up my grace period, but as soon as I could get financially clear this last October, (I had to find a way to pay my school balance, I signed up for another loan), I asked for an in school deferment form from the university that I sent in to all my loan companies including Chase and Sallie Mae that proved I was back in school and therefore eligible for a full deferment again. All my other loan companies were courteous and processed it right away, and I thought it was all taken care of. <Sigh> OK, here comes the messy part.

I had also sent one to Education Finance Partners, the loan company that caused all these problems. The day I mailed the form in to them, I called them and told them that I had sent it and they told me that I would still receive calls from them asking if I could make a payment until the form had been processed and that could take several weeks. OK, fine, no problem. The thing is, the calls continued into late November. I answered them, always happy to re explain the situation, and they kept telling me to just ignore their calls and the bills. They just kept coming and coming but then near the end of November, they stopped. I thought, good, they received and processed the paperwork, its all taken care of. Wrong.

Out of the blue at the end of December I got a notice from my university that my most current loan, which was still pending (it needed a signature that got forgotten somewhere) had been withdrawn by the creditor. I had no clue as to what had happened. Finally, Sallie Mae, the company who had withdrawn the loan, set me up with a loan officer who was able to look into the problem. Apparently, Education Finance Partners (EFP) had defaulted me on my loan with them and had placed not only the default on my credit history, but reported me as being over 120 days or more delinquent, and this was the reason student loan companies could not approve me. I was furious. I tried calling EFP, but none of their numbers worked. Their web site stopped functioning. The company that handles their billing, ACS, had no idea what had happened, only that mysteriously my account had disappeared from their records and they could tell me no more. The only thing that ACS could even tell me was this: Education Finance Partners had gone bankrupt at the end of November, had been successfully sued for every dime they had due to bad business practices, they were closing their doors for good, and all of their accounts had vanished from the ACS system. They said all I could do was wait and hope for a letter from someone that would eventually be able to help clear it up.

I was outraged! Weeks later, the only phone number I could ever find for Education Finance Partners was for the law firm in New York that represented them in the civil case that they lost. The attorney said he was really sorry for what had happened and told me that since EFP had gone bankrupt, all of their assets would go up for sale and I would have to wait until that was cleared up and I would receive a letter saying that I owed the purchaser the money now when they got around to it.

Flash forward three whole months of worrying to the end of March. I finally get a letter form a company called MRS Associates (which I now know to be a collection agency) stating that I now owed a company called UBS over $17,000.00 due immediately. I tried calling all the phone numbers on the letter I got, and all I got was answering machines. To this day I have not been able to get a phone number that works for UBS, who is based in Switzerland by the way. So, just today, a rep from MRS calls me back finally and I told him I was actually really thankful to hear from him because I was worried about the situation and needed to clear it up right away. I explained everything that happened in the last 5 months and I told him that I had another proof of enrollment form/deferment form from my school ready to go as per what I had thought at least to be the terms of my loan contract and all I needed was a fax number so that I could send it to him. He told me that that was totally out of the question. He told me that UBS was the original bank and creditor that held the note to my loan, and that EFP was only a servicer and that UBS was now having to process all the loan stuff themselves. He said that it was my fault (what the @#@#&^!!!!!!!) that this had happened to me and that it was my fault the loan got defaulted. He said that there was no way UBS would even consider an in school deferment, and that they were demanding the full amount right away. I told him that there was absolutely no way I could do that, and he said that's fine, they would just sue my cosigner for it, my poor clueless dad. I asked them (I already knew the answer) if they were a collection agency, and he told me yes. He tried to tell me that he was the head of student loan servicing for HRS and that he had no supervisor I could talk to. I told him that I would like to talk to UBS about the situation and he flat out refused to give me their contact information. He told me that I would have to deal with him and I told him I thought the Fair Debt Collection Act guaranteed me the right to talk to the loan holder and he told me I was wrong and that he wasn't going to give me the info, and that UBS would be very mad if he gave it out to everyone he talked to. Frustrated, I asked him to give me 24 hours to talk to my dad about it, and he said that was fine, that I had to call him tomorrow to avoid legal action and that if he didn't hear from me he would just forward it to their attorney's office.

OK, now that that is all out, here is what I understand. As far as I know, I don't have to work with HRS and I should be able to directly deal with UBS, the loan holder. I know that the guy I talked to was a total prick, and pretty much lied through his teeth. My main concern is this; first, I did everything I possibly could from the get-go to do this right. By all rights, I should have been granted a standard in school deferment like I was for all my other loans, but because EFP couldn't keep from getting their pants sued off of them, I got screwed, but I need to fix this and soon. If I can't get a new loan by the middle of September, I can't graduate. So, I need to find some way to get UBS to accept a deferment as was entitled to me in the original loan documents; as long as I am enrolled at least part time in a degree granting program, I should be automatically eligible.

Second, how the hell do I deal with the HRS Associates company that is threatening to sue my unsuspecting dad? I am sick of the threats from this guy, but there is absolutely no way either I or my parents can afford this kind of cash that this jerk was demanding. Was I right in saying that by the Fair Debt etc. etc. I am entitled to obtain contact information on the loan owner? And how the hell do I get it out of him?

And lastly, is there a way to get the erroneous loan default taken off my credit report that was placed there by a company that doesn't even exist anymore? Right on my credit report it says that EFP placed the derogatory remarks saying that I was 120+ days past due and had defaulted, but they sort of ceased to exist.

Whew. That was a mouthful and a half. I thank you again for getting this far, and I would also like to add that in no way am I trying to get out of the loan, I just can't pay it until I am out of school, and I feel that I should be entitled to the protections granted to me in the original loan paperwork. Please, I will take all the help I can get!!!!

Frustratedly Yours,

Geoff Mosher

1. Challenge the EFP tradeline on your credit report, when they don't respond it should be dropped from the report.

2. Send MRS a Debt Validation letter. That whould get you the information that you need to contact UBS. And until they fully validate the debt, which more than likely they can't, they cannot sue.

Thank you Cellular! Should I even bother talking to MRS on the phone anymore?

Oh yes, and is anything they are doing illegal? As in threatening to sue my dad, and they insinuated that they would garnish his wages as well. He tried to tell me that he was going to give my account over to legal if I didn't fix this within the next 24 hrs. I would love to get this scumbag on a technicality and be able to harass him for once.

Actually you do not have the right to work with the current loan holder if the loan in placed in collections....there is nothing in the FDCPA that specifies that. Most CA's are hired under contract to do the work and since the holder has to pay the CA, they dont want to deal with the borrower.

Private loans are complicated. You may have messed yourself by leaving school....some private loans do not allow you to return and continue in school deferments. I have heard of it happening....some private loans require continuous enrollment. It all comes down to the working in the prom note. That is why you have to read the notes carefully.

Your father as a cosignor CAN be sued...in fact private student loans DO actively sue so this threat is real.

That said, the CA is violating the FDCPA by threatening to sue your father and garnishing wages, when they cannot or don't have the power to do so. Remember, a CA cannot even get to the point of garnishing wages until they have sued you (or your father) and won.

I would do as Cellular suggested and DV MRS. Maybe you can get contact information for UBS then. Did you ever get the first written dunning letter from them? They are required BY LAW to send that within five days of the initial contact. If not, there's another violation of the FDCPA.

I know student loans can be a different animal than regular loans when it comes to forcing payment; however, I would think the CA would still be bound by the FDCPA to provide that initial dunning letter regardless.

You might also check your credit report and see if UBS is now popping up on it. Maybe you can get contact information for them from it. If you ever get to talk to someone at UBS, be sure to mention how nasty, rude, and unprofessional the CA has been in dealing with you. You might also want to mention any violations of the FDCPA MRS has racked up. Tell UBS you aren't comfortable dealing with a CA that violates the law.

Keep us posted as to how this works out.

Ron....the OP got the initial notice from MRS plus they said they would refer this to a law office. Private loans sue as a regular course of business and it doesnt take much for the CA to throw it to a law office for suit.

Thanks for the help but now I am confused. I had thought that I had the right to "fire" the collections agency via this sort of letter:

[Your Name]
[Your Mailing Address]
[Your City/State/Zip]

Certified Mail, Return Receipt Requested # [Insert the Certified Mail Receipt Number here]

[Insert today's Date]

[Insert name of collection agent, if available]
[Insert name of collection agency]
[Insert address of collection agency]
[Insert City/State/Zip of collection agency]

REF: Account # [Insert either the original account number or the collection agency's account reference number here]

Dear [Insert name of debt collector calling--if available--here]:

You are hereby notified under provisions of Public Laws 95-109 and 99-361, also known as the Fair Debt Collection Practices Act, that your services are no longer desired.

You and your organization must CEASE & DESIST all attempts to collect the above debt. Failure to comply with this law will result in my immediately filing a complaint with the Federal Trade Commission and the [Insert your home state here] Attorney General's office. I will pursue all criminal and civil claims against you and your company.

Let this letter also serve as your warning that I may utilize telephone recording devices in order to document any telephone conversations that we may have in the future.

Furthermore, if any negative information is placed on my credit bureau reports by your agency after receipt of this notice, this will cause me to file suit against you and your organization, both personally and corporately, to seek any and all legal remedies available to me by law.

Since it is my policy neither to recognize nor deal with collection agencies, I will settle this account with the original creditor.

Give this matter the attention it deserves!

And have a nice day.


[Sign your name here]


[Insert your name here]

This came from http://www.bendover.com/adiosbottomfeeder.asp
and as far as I know, it is supposed to work, and effectively get rid of the collection agency and allow me to work with only the original creditor. I am going to send out a debt validation letter, but I am really confused by soaplady's answer; HRS told me they were handling it on the behalf of UBS, not that they had purchased it, so I thought that I still might be able to work with them. Please help clarify this!

Thanks!

No..you do not have any such right to "fire" a CA. You can cease and desist them but they can either recommend that suit be filed immediately because you are being difficult or the OC can pull it and place it with a new CA or law firm. The OC doesnt have to deal with you at all. So my suggestion when it comes to any private student loan is to not upset the apple cart.

LOl ok thanks, but then what do I do now?

About the only thing you can do it pay it off. Are you borrowing federal aid as well?

Yes I am. Pretty much where I am stuck is that there is no way I could ever afford this now, and as long as this is showing up as defaulted, I can't get another loan...

Not to sound overbearing, but I have been doing a lot of research about what we have been talking about and I even asked an attorney who specializes in debt collections and this is what he told me, and what I found. He showed me something very, very interesting. At http://www.ftc.gov/os/statutes/fdcpa/commentary.htm (The government site for the FDCPA), under section 1. Coverage (Sections 803(2, 5, 6), 811), it states that, "A student loan is a "debt" covered by the FDCPA; however, alimony, tort claims, and non-pecuniary obligations are not covered."

So yes, student loans are subject to the FDCPA and so are any affiliates that they may hire to collect debts or any company that has purchased a student loan. But there are some exceptions; first, it does not work if it is a government based or backed loan. Second, the collections agency must have been hired by the original creditor; if the collections agency actually paid for the account and they own the rights, then you have to work with them.

So, here is my general conclusion, please let me know what you think.

When EFP went out of business, all they were was a representative of UBS, the bank that actually sent me the money, so the loan never actually changed hands (this was told/admitted to me by HRS when I talked to them). And, by the admission of HRS, they never actually purchased my account; UBS hired them to process and try to collect it. So, I will send them a debt validation letter, and they must send me a reply stating why the debt is valid, and most importantly, the contact info of the company that holds the debt, UBS. If HRS continues to harass me, I can in fact send them the letter I posted, which technically does not fire them, but it prevents them from contacting me ever again, so one of two things will happen. 99% chance is that they will have to stop collections and just hand the file back over to UBS, who decides what to do with it, and a 1% chance that HRS tries to sue me, which is even less likely because they do not actually hold the rights to the loan and therefore they themselves cannot sue me r the cosigner, only UBS has that right.

So, I think I have some modicum of hope, and I am sure that once I talk to UBS, they will agree to cooperate since I am not actually trying to get out of the debt at all, I am just asking that the rights guaranteed to me in the original contract be honored.

Please, please let me know what you think and I will keep in touch and let this place know what happens.

Student loans like mortgages are bought and sold all the time. EFP was the servicer and UBCwas the OC.
This is common place with student loan practices.

You DV them they will provide you with a copy of the prom note and maybe the address of the UBS. And I repeat, MRS and all the CA's hired under contract....it is not likely that you will get to speak with anyone or they will immediately refer you back to the CA.

You should have a copy of your prom note. All of this could be moot if the deferment rules contained in that note do not allow deferments to resume if you take a grace period. A lot of private loans do require continuous enrollment.

Most attorneys are clueless when dealing with student loans.

And it is a 100% chance that they will sue you....this is just how private loans work. They sue as a regular course of business.

I had the exact same problem. I talked to the guy at MRS and he was a jerk. I was completely paranoid because my mom was my cosigner. Then I looked up the company that sent my account to MRS online. I found their number and told them what had happened and they were so nice. She is currently working on my account to try and get it back into deferment. She said it will be harder due to it having been sent to the collection agency but there was still hope. So for everyone out there please look at who sent your account to the CA and call and deal with them directly. Remeber the CA doesnt want you to contact them because they want their cut. Thats why they do not give you any info on how to contact the original account holders.

They are not permitted to give you information to contact the guarantor. Under the contract that the CA has with your lender, they get paid no matter what. Being a jerk doesnt qualify as an FDCPA violation. You are in default on a private loan.....there is no going back into deferment....thinks you had a lousy rep talking to youl.