Frustrating situation with student loan / CA

Is this a Perkins loan?

With student loans, billing is merely a courtesy....you are expected to make the payments whether or not you receive a bill.

Student loans are awarded under prom notes.....since she has defaulted she is bound by the terms. She agreed to the collection fees and the negative reporting. She owes, principal, interest and collection/late fees. They didnt ruin her credit...,she did but not following the terms of the loan. Plus if this is a Perkins loan, that would be a federal debt which comes with its own consequences.

I suggest you pay up to minimize the damage. Plus cease and desisting a student loan is not a good thing.

Well that is not what I wanted to hear, but thank you very much for explaining it. What a racket, that should be criminal. They basically just made $680 off us for nothing at all. I will give them the big old middle finger salute, a check, and be done with it. Grrrr. >:(

It is not criminal....your wife borrowed with specific obligations. She probably could have defered the loan if she had done it timely.

Doesn't ECSI have any legal obligation to contact her or bill her? I just can't believe they can not do anything for 6+ months and then send it to collections. THAT is what is bothering me. I can't get to sleep I am so mad.

On top of that, is it legal for them to add nearly 50% to the balance in fines? Can we settle for a smaller amount (the original loan amount) or anything?

I find it hard to believe we have NO room for negotiation over this.

They probably did make attempts to contact her. Unrecognized phone numbers, letters more than likely went out....hate to say it, but people do hide this type of stuff from spouses. Without knowing the type of loan, or seeing the prom note, I cannot tell you exact time lines. Each type of loan has a grace period after the student leaves school....payment start immediately after that. Also, I am seeing that you contacted them 5 months after your move...that gap and any mail return during that period of time could have caused a default. When you called 7 months ago....did you not ask the status of the account? Where payments being made up until then?

As for the $680, some of that will be interest. There may be late fees. Then you have the collection costs which are usually a percentage of the balance which depending on the loan type may be mandatory. They may settle but considering the low balance, that may not be for much. You can ask but there is no requirement for them to do so.

My wife didn't hide this from me, that's a non-issue. And we are sure they had the correct contact information. When the account was handed over the GRC we got their letter and phone call straight away!

Apparently it is a tuition loan?

All payments were on time, and the account was in good standing up until we called to confirm the account info. At that point ECSI ... hosed us.

The balances are broken down like this:

$1500 principal
$40 current interest
$680 Current collection cost balance
$30 current other charges

I can understand late fees and accrued interest, but $680 in "collection costs" is what has me grumbling.

Collection costs at 45% of the principal balance seems a little sketchy to me.

Quote:

Do I have the right to ask for a detailed accounting of all fees that were assessed since Feb 2010?

you listed the breakdown above. How much more detailed do you want?

Quote:

Federal loans take 270 days to default.

FYI....if you know you are going to be late or are going thru a hardship, contact your lender. You could have gotten a deferment or forebearance without dinging your credit.

Now this is interesting to me. When GRC contacted me I spoke with them about the fees and it turns out they had included collection fees from a previous time when the account "magically" went into collections. That was about ... 4-5 years ago? Anyway, I spoke with the rep on the phone and let him know I would be asking for a detailed accounting of all fees because I was *not* going to be responsible for the collection fees that were (supposedly) already removed. We sent out a written notice to validate the debt, sent it certified mail, they received it Nov 8th, and so far we have not heard anything from them. No calls have been nice.

Correct me if I am wrong - if they cannot validate the debt within 30 days, does that mean they cannot collect it? That would be nice to not have to pay the "collection costs" mumbo-jumbo and just have the original balance - as intended.

There is no time limit to validate...they just cannot continue to collect until the validation has been done.

With student loans, the CA does NOT add the collection fees, the guarantor does. The guarantor does all the calculations. It is also possible to have collection fees added twice...with FFELP loans the guarantors will add it, then if your loan is subrogated by the DOE, subrogation costs up to added on top. (This is for federal loans.) Also, if you are not paying, your collection fees will increase as your balance goes up and is subsequently placed with new agencies.

Update:

I did some further research and discovered that a recent court case ruled in favor of the borrower on a loan when the collection agency sent a non-detailed balance as GRC has done to us.

Specifically, here is what I found:

[quote]Under the FDCPA, even if Joe hires a lawyer or law firm to collect a debt from you, the lawyer or law firm is still considered a collector and must adhere to the FDCPA.

What does a debt collector need to provide as debt validation?

> Proof that the collection company owns the debt/or has been assigned the debt. (Bob is legally entitled to collect this particular debt from you.) This is basic contract law. It is very difficult to get a judgment without a direct contract between collection agency and the original creditor.

> At a minimum, some account statements from the original creditor. If you really want to get sticky, you can pin them down on the amount of the debt by requiring complete payment history, starting with the original creditor. (How the heck did Bob calculate this debt? What fees/interest Bob has tacked on to this debt and how he determined these fees?) This requirement was established by the case Fields v. Wilber Law Firm, Donald L. Wilber and Kenneth Wilber, USCA-02-C-0072, 7th Circuit
Court, Sept 2004. *

> Copy of the original signed loan agreement or credit card application. (Your contract
with Joe establishing the debt between you.)[/quote]

* Here's a link I found to the actual case: http://cases.justia.com/us-court-of-appeals/F3/383/562/495218/

Also:

[quote]The Right to Validate Your Debt

Under the FDCPA, you are allowed to validate this debt, and the creditor (in this case, the collection agency) must show you proof that you owe the debt to the collection agency (not to the original creditor.)

The specific section of the FDCPA:

FDCPA Section 809. Validation of debts [15 USC 1692g]
(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

Plus, they must show proof positive that you owe them this debt. It's not enough to send you a computer-generated printout of the debt. There is an opinion letter from the FTC to back this up:

http://www.ftc.gov/os/statutes/fdcpa/letters/wollman.htm

Nor can they ask you to pay for digging up records of your debt:

http://www.ftc.gov/os/statutes/fdcpa/letters/krisor2.htm

So, if a creditor can't validate a debt:
They are not allowed to collect the debt,
They are not allowed to contact you about the debt, and
They are also not allowed to report it under the Fair Credit Reporting Act (FCRA).
Doing so is a violation of the FCRA, and the FCRA states that you can sue for $1,000 in damages for any violation of the Act.

The opinion letter from the FTC which clearly spells out that a collection agency CANNOT report a debt to the credit bureaus which has not been validated:

http://www.ftc.gov/os/statutes/fdcpa/letters/cass.htm

It also states that you can sue in federal or state court. So if you have them on a violation, then you have damages of $1,000 for the incident plus damages. Small claims court, anyone?[/quote]

As it turns out, GRC has refused or is unable to provide details about the loan balance, detailed charges, and other figures. As they have done this in writing, it appears they have violated the law by not providing a detailed statement to us - and I have that from them in writing. I have since contacted them (always in writing and via certified mail) every month for 4 months and they have completely stopped trying to collect on this loan EVEN THOUGH it was made explicitly clear we would pay the original loan balance. We only disputed the collection costs, and made it clear that we wanted an accounting to ensure the collection costs were not from the previous time the account was accidentally put into collections by ECSI and then removed.

I have kept a print out of the court case and related documents, as well as the documentation to and from GRC. I have also spoken with a lawyer and he's agreed that GRC has violated the law by providing non-detailed figures on the loan. He says we can sue them and will win, period, as it's a blatant violation of the law. He says we may even make substantially more money than the original loan balance, which would be nice. I have opted not to follow this path as I am not a litigious person, but if GRC decides to come after me then I will take legal action against them for violating the law.

So, folks, with that in mind, do your homework and seek professional legal assistance and you may have a good outcome.