Allied Interstate and American Student Assistance

Do you know exactly what you owe?? Have you ever asked for a breakdown?? You will have principal, capitalized interest, current interest and up to 25% in collectio fees owing.

For the most part when I was in collections and an attorney called for a debtor, we NEVER gave the maximum settlement available. Why?? Because the maximum settlements available to us were for hardship.....paying an attorney to settle a debt is showing the collector you have additional money to pay an attorney.

What does your credit look like?? That will factor in on your settlment. Technically they do not have to settle off a dime...the entire balance is guaranteed and they can collect it all. They will generally waive some to all of the collection fees. They will not waive any of your principal balance and to waive any interest will generally require hardship.

Also keep in mind that you will pay taxes via a 1099 next year if they waive more than $600. So you could end up taking a hit on this too.

I am pretty sure from everything I have read that there is no SOL on student loans. But once it goes to a collection agency, does that change? I live in California.

They have not garnished wages but they have intercepted tax refunds (Dept. of Education) in the past. But on my credit report, the US Dept. Education entries show a zero balance, and say "Paid collection, student loan, colleciton status, educational, account closed because of repossession or charge-off, paid account was a collection account, insurance claim or government claim was terminated for default. So that was the US Dept. Ed entries.

The ones that are still there don't say anything about allied interstate, they only show AMERICAN STUDENT and AM-STUDAST. I have letters ready to go certified mail today to the three reporting bureaus to ask them to delete the double entries...they are each slightly differently named as above but clearly duplicates of the same loan.

Do I also need to send a letter to American Student Assistance?

I am not clear on the relationship of American Student Assistance and Allied. If the American Student Assistance lines on my credit report say what they say, why are they still reporting it to the agencies? It shows that they were reported 9/07 (well one version, American Student 8/07 and AM-STUDAST 9/07) so they are still reporting it to the bureaus even though it says that the account was closed and sent to collection.

The AMERICAN STUDENT lines say:
Placed for Collection
Educational
Collection Status
Account closed because of repossession or charge off
Account seriously past due date - assigned to collection
collateral -08 keycorp

Then the AM-STUDAST lines say:
collection account
student loan
collection status
deactivated by creditor 4/02

So...
1. Do I send the demand to validate letter to American Student Assistance or Allied or both?
2. Better for me to send it or my attorney friend?
3. I have an appointment to speak to a credit repair company called Credit Line. Can they do anything I can't do myself? I remember speaking with them a year or so ago and thinking they were extremely expensive.
4. If American Student Assistance entries say they have sent it to collection or deactivated by creditor 4/02, why are they still reporting it to the bureaus last month and this month? Or is Allied doing that?

Further advise would be helpful. I have borrowed some money to try to negotiate with Allied interstate but I'd sure rather not give them my money if I don't have to! I will still be in debt for a long time to pay it off but at least not to someone who calls and harasses me constantly.

Thanks so much to evreyone's advise so far...I really appreciate it!

Laura

I have asked for a current breakdown but have not gotten any response. About a year ago it was $125k.

My credit scores are in the mid 600s.

I keep hearing widely varied themes on the negotiation aspect...I have heard that they will settle for up to 50% of the amount and that they will only settle for nearly 100%. Is this variation due to different collection agencies or the fact that it's educational debt not consumer debt?

The total amounts have been charged off by american student assistance and now it is only Allied that is demanding payment. Does that mean anything?

Thanks so much for your input.

Laura

Posted: Tue Oct 16, 2007 10:06 am


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I am pretty sure from everything I have read that there is no SOL on student loans. But once it goes to a collection agency, does that change? I live in California.

Going to a CA doesnt change anything...the loan is still federally insured. Keep in mind that student loans are never sold to CA's.....Allied is a contractor on behalf of your guarantor.

They have not garnished wages but they have intercepted tax refunds (Dept. of Education) in the past. But on my credit report, the US Dept. Education entries show a zero balance, and say "Paid collection, student loan, colleciton status, educational, account closed because of repossession or charge-off, paid account was a collection account, insurance claim or government claim was terminated for default. So that was the US Dept. Ed entries.

The ones that are still there don't say anything about allied interstate, they only show AMERICAN STUDENT and AM-STUDAST. I have letters ready to go certified mail today to the three reporting bureaus to ask them to delete the double entries...they are each slightly differently named as above but clearly duplicates of the same loan.

Don't waste your money on the certified mail...it will come back verified. Amercican student assistance is your guarantor and they are legally entitled to report. It is really difficullt to understand how your credit lines are reporting without seeing them. Do you know what your actual default date was????

Student loan default basics....you have a lender...might have been Keybank. They lend you the money. American Student Assistance is your guarantor under the FFELP program....Federal Family Education Loan Program. If you do not pay, you lender files a claim with your guarantor. The guarantor pays the lender. You know have 2 negative tradelines which under the HEA (Higher Education Act)can both legally report for 7 years from the date that the default claim was paid. DOFD does not apply to student loans. Then if you do not pay for 7 or more years, the Department of Education will step in. They will pay off the FFELP lender and subrogate the loan and the 7 year reporting cycle starts all over again.


Do I also need to send a letter to American Student Assistance?

Since a CA is involved, all correspondance with be forwarded to the CA.
I am not clear on the relationship of American Student Assistance and Allied. If the American Student Assistance lines on my credit report say what they say, why are they still reporting it to the agencies? It shows that they were reported 9/07 (well one version, American Student 8/07 and AM-STUDAST 9/07) so they are still reporting it to the bureaus even though it says that the account was closed and sent to collection.

The AMERICAN STUDENT lines say:
Placed for Collection
Educational
Collection Status
Account closed because of repossession or charge off
Account seriously past due date - assigned to collection
collateral -08 keycorp

Then the AM-STUDAST lines say:
collection account
student loan
collection status
deactivated by creditor 4/02

So...
1. Do I send the demand to validate letter to American Student Assistance or Allied or both?
2. Better for me to send it or my attorney friend?
3. I have an appointment to speak to a credit repair company called Credit Line. Can they do anything I can't do myself? I remember speaking with them a year or so ago and thinking they were extremely expensive.

Waste of money.

4. If American Student Assistance entries say they have sent it to collection or deactivated by creditor 4/02, why are they still reporting it to the bureaus last month and this month? Or is Allied doing that?

Further advise would be helpful. I have borrowed some money to try to negotiate with Allied but I'd sure rather not give them my money if I don't have to! I will still be in debt for a long time to pay it off but at least not to someone who calls and harasses me constantly.

Thanks so much to evreyone's advise so far...I really appreciate it!

Lets put it this way....unless your attoney has experience in student loans and student loan collections, he is absolutely useless to you. When I was collecting, I spent endless hours explaining the law to lawyers who had no clue on the specialized reporting and rules of student loans and collections. You are also drawing attention to yourself. The collectors at Allied will see $$ signs and will start looking for employment and assets. Your balance is over the $100 threshold where student loans will sue.

I have asked for a current breakdown but have not gotten any response. About a year ago it was $125k.

Interest rates for loans taken out aroud 1995 were 8.25%. On $100k, (not calculting interest on your collection fees ...a guestimate here) you are accruing about $700 in interest a month. That would be another $8000 in interest, not even taking into account capitalization.

Have you called them and asked them?? They can get you a breakdown verbally very quickly.

My credit scores are in the mid 600s.

I keep hearing widely varied themes on the negotiation aspect...I have heard that they will settle for up to 50% of the amount and that they will only settle for nearly 100%. Is this variation due to different collection agencies or the fact that it's educational debt not consumer debt?

Forget about anything you have read on settlements with normal consumer debt. This is federal debt and the same rules do not apply. Your entire balance is guaranteed which means if they want to, they can collect every single penny if they want. They will as a general rule waive the some or all of the collection fees.

The total amounts have been charged off by american student assistance and now it is only Allied that is demanding payment. Does that mean anything?

The term "charge off" is irrelevant. Allied is simply the contractor assigned to collect your loan. They collect and garnish on behalf of American Student Assistance.

Thanks so much for your input.

Laura

I've now called American Student Assistance. I was told by the woman who looked at my account to fax an offer of settlement with what I could afford to the guy who is apparently the liaison to Allied. She says they usually settle for the principal amount. I faxed a letter as instructed with an amount less than principal. She said he would fax back a counter offer. I sent the first letter ten days ago, another two days ago...no response to either.

Any thoughts or ideas? Call and speak to him directly?

She did immediately fax me a breakdown of the total which is about $131,000. Is this sufficient to "verify" the loan or should I request something more formal?

Thanks again for your help.

Laura

I am assuming that it was done on their letterhead so that would be sufficent validation.

If you offer was really low ball, Allied probably threw it out. How much are you offering them? On a $131k debt, I really dont think that they would accept much less than say $110k. Then you also realize that you are going to get hit for taxes on the $21k next year??

I have a student loan amount of $11,000 with Allied, what should I offer them?? what is a good dollar amount???

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