Sarah has $40k+ in student debt that went into default after she got sick and had to spend a lot of money on medical care. She’s been paying it off, but one of the companies that owns one of her loans, NCO Financial, has told her that unless she signs a legal document that says she can pay $260 a month, they’re going to place her account back in collections and start harassing her even more than they are now (they’re already calling her daily at home and work)…
Now, she can’t pay $260 a month and doesn’t want to sign this document, but is looking for advice about whether she should or not. I haven’t heard about this kind of affidavit so I’m just going to throw that part out to the readers, but I do know that collection agencies are not allowed to just keep calling you at your home and work to get you to pay. That’s a violation of the Fair Debt Collection Practices Act. Inside, Sarah’s story and what she can say to NCO to get them to stop calling.
Sarah writes:
I’m 27 and graduated with about $40k in student debt. Around the time my loans went into repayment, I got very sick and had to pay a lot of medical bills and ended up going into default on my student loans. Since then I’ve been trying to dig my way out of the hole. I recently rehabilitated my Sallie Mae loan. I’m in a rehabilitation program with collection agency Windham Professionals– I’m paying $335 a month for nine months, not a small amount on $38k a year. I’ve got one other loan with a collection agency, NCO Financial.
I’ve been making payments on time to NCO for 27 months, long enough that my debt should have been rehabilitated months ago. Here’s the thing. They want me to sign a statement that says I am able to afford to pay $260 a month should my loans be rehabilitated, triple my current payment. I can’t afford that. I sent them a letter three months ago explaining that I have a chronic medical condition that requires me to pay hundreds of dollars in prescription copays each month, and therefore I cannot afford another $260 a month. It’s on record. Now they’re telling me that if I don’t sign this (false) legal document, they will never rehabilitate my loan. In fact, they told me that if I keep paying the amount I’m currently paying, they’ll place me back into collections and step up their harassment. Repeat: I’ve been making my payments on time for 27 months! One representative told me that they’re doing this to all of their victims– er, customers– because the company is in trouble. Guess they took on too many toxic debts… seems to be an epidemic!
I’m concerned that if I sign the document, I’ll be held liable for the $260. Furthermore, I’ll be signing a legal document that is (a) false, and (b) contradicts a statement I’ve already put on record. If I don’t sign the document, though, I’ll continue to be in default and may be subject to further penalties. Meanwhile, NCO is harassing me with daily phone calls to my work and home numbers.
My questions for you and your readers:
1. Is this legal? If not, do I have any recourse?
2. What happens if the company goes out of business?
3. What should I do? I could:
(a) sign the document, pay the triple amount, and stop taking my medicine and paying my rent;
(b) continue to pay the current amount, in the hopes that external circumstances (the election, the company going under) intervene; or
(c) stop paying anything, since they’re telling me that the consequences will be the same whether I pay the current amount or nothing at all.I’m at a loss here… has anyone faced a similar situation?
Next time they call, say this:
“I am requesting that you not contact me by phone in the future. I do not want to receive any more calls from you at home or at work and am asking you to communicate with me only in writing.”
If they give you static, say this:
“The Fair Debt Collection Practices Act requires that you stop phoning me at home and at work once I request that you do so. I intend to send you a certified letter tomorrow putting my no contact request in writing. If you continue to phone me, then I will file a complaint with the FTC and the attorney general.”
Then send them this letter by certified mail:
Date
Your Name
Address
City, State ZipDebt Collector’s Name
Address
City, State ZipRe: Account Number
Dear Debt Collector:
Pursuant to my rights under federal debt collection laws, I am requesting that you cease and desist communication with me, as well as my family and friends, in relation to this and all other alleged debts you claim I owe.
You are hereby notified that if you do not comply with this request, I will immediately file a complaint with the Federal Trade Commission and the [your state here] Attorney General’s office. Civil and criminal claims will be pursued.
Sincerely,Your Name
Any advice about the affidavit?
(Photo: Getty)
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NCO Financial is the WORST debt collector ever. 3 years ago I disputed a debt for a gas bill that was not mine. The 3 major credit bureaus investigated the matter, deemed the account to be erroneous, and removed it from all 3 of my reports. Then last month, I receive a bill from NCO Financial saying that I’m liable for this $600 bill from the same gas company I never did business with. NCO is in the business of digging up Zombie Debt and trying to get you to pay on it. I would suggest contacting Consumer Credit Counseling Services (non-profit) and speaking to a credit counselor about your options.
If they’re still calling and hanging up just to harass you, there’s a device called “Person-To-Person® console” that costs about $100 and will filter whatever you want out so it just never makes it to your phone, never rings, nothing. FANTASTIC for this.
Okay… here’s my student loan story from a long time ago. I went into default after losing my job a few years ago. The student loan people would call me. I’d ask for a statement of amounts owing. They would say things like they could only give me that information if I agreed to pay the entire amount due within 72 hours. They would call me names. I would yell at them.
Finally, they suggested I get on a loan redemption program. I agreed to look at the paperwork. I started paying the amount due under the redemption program, but refused to sign the paperwork, because it would have added 25% to my principle. They weren’t happy, but they didn’t do anything, because they were getting money regularly.
At that time, no one I talked to knew anything about the law of student loan collections. I’m pretty sure that some of the collectors I talked to broke the law.
Ultimately, I paid off the entire amount due (less the 25% principle enlargement) with my share of the real estate bubble. It all worked out in the end. Your mileage may vary.
I am so glad I am not only debt free coming out of school (whenever they send the damn diploma) but that I got a mix of scholarships, fin aid, and a decent college job so that I’m coming out of school with a sizable chunk of change in the bank, and a guaranteed job that pays the bills (barely) until I can find a real job. I think the ten grand I saved up in school is gonna be used for a house down payment!
When it says she has to pay 335 for 9 months, I assume this is to get her out of default on that loan? I don’t really understand how student loans (or loans in general) work when they get to this stage.
Take personal responsibility by paying your bills on time. Then nobody will call and “bother” you because YOU owe them money. Oops. That was easy.
@kwsventures: I can tell you are a huge douchebag because just reading your comment made my cunt start smelling like roses.
@alphafemale: LOL, good one. I guess some people don’t understand the meaning of unavoidable financial difficulties. kwsventures probably works for a DC.
@Allen Harkleroad: Thanks, I wasn’t sure if using the c-word was going too far, but really any other word wouldn’t have been the same.
Judging from previous comments, I have to give kwsventures credit for at least being consistent with his douchebaggery.
Don’t sign anything!!!
Fuck NCO. They are a corporate parasite cut the same grotesque cloth as Halliburton and the Federal Reserve.
The Education’s Dept. Direct Loans now hires outside collection agencies to collect overdue balances on their federal loans. So once the overdue balance is collected the loan switches back the the Direct Loan offices. So I suggest finding out if this is the case with NCO and if it is, you should contact the Direct Loan offices directly.
Student loans are a horse of a different color when it comes to debt collection.
First off, they are governed by the Higher Education Act
[www.ed.gov] not the FDCPA.
Secondly, they can AND WILL garnish your wages and tax refunds without having to obtain a judgement first like other creditors do.
Third, you have the right to “rehab” your loans which will help you so that after 9 consecutive, on time payments it will remove the loan from default.
Consolidation may also be an option to lower the monthly payment and interest rate.
Sarah should have requested a deferment/forebearance for the time(s) she was unable to repay her normal loan amounts.
More info regarding student loans, default and rehab can be found here
[creditboards.com]
Why you should only get student loans if you will be making more than enough to pay it back right out of college. 100k in loans isn’t a problem if you’re making 200k. 40k of loans is a problem if you’re making 40k
I had the misfortune of having a hospital bill go to NCO while I was in college and very broke. I was lucky that my boyfriend was able to give me the remainder of the amount I owed to pay the debt, but trying to get documentation from them of WHEN I repaid the debt in full was impossible. I spent 2 weeks and many hours calling them, being bounced from person to person because they couldn’t find my record. When they finally sent me some documentation it was an undated letter that just said “this debt has been paid in full.”
It was no help in getting the status of the loan fixed on one of my credit reports. They had the date of repayment about 2 years later than it actually happened. I ended up giving up. :/
Having worked collections for awhile a few times let me say a few things.
1) I have NEVER ever heard of using an affidavit. This is NOT legal. It might be breaking the FDCPA
2) Technically yes as long as there is a debt you can still be contacted, even if on a plan…UNLESS you simply sign a letter and clearly write that it is to be a “cease and desist letter”
3) this will end all communications except for a confirmation.
4) if a company goes under it will sell the debt to someone else.
Never ever sign a document in bad faith. Period.
It’s terrible that a medical condition can de-rail someone’s life like this. Here she is, education complete and ready to be a productive member of society, and our shit for brains ass backwards health care crisis in this country forces her to have to choose between paying for medical care/drugs, having a roof over her head/eating or paying back loans. While I believe that everyone should honor their debts, the last thing I would do is live in a cardboard box or forgo my meds just so these bozos we keep seeing on the news can pad their $300m golden parachutes. America is a great country, but you simply can’t afford to get sick here. It’s terrible.
consolidate your loan with another lender and be rid of them.
Sarah, you need to call Direct Loans ASAP and have them send you paperwork to refinance your loan and take it out of default. I used to be a bill collector for student loans and this will work for you! You don’t even need to deal with that stupid NCO anymore. I used to hate dealing with them on a “professional” level. Your interest rate will go down and once your loan is finished then you can have your access to deferments back and can take advantage of those benefits. It usually only takes about 45 to 60 days for the process to complete and then things will be much easier. Go to http://www.dl.ed.gov and check it out.
Firstly, do not sign anything.
Secondly, be careful with that cease and desist. The way it is written in the article is a cease and desist of ALL communication regarding the debt. The problem with this is that it doesn’t just stop them from calling you, it stops them completely and essentially forces them to sue you.
Even though she is currently “on record” as saying she can’t afford the requested amount, an affidavit would be a more recent “on record” saying you can. Absolutely no upside to her for signing it, and lots and lots of ammo for them in court, where they could say “see? In January {or whenever} she said she could not pay, but in November she said she could.” Also, an affidavit is a sworn statement, not just any old statement.
A lot of deadbeats making excuses for not paying debts. How would you like it if someone owed you money and they stiffed you? Doesn’t feel good.
Hey, I work in collections and any company whether it’s the original lender or a third party company they HAVE TO STOP CALLING YOUR WORK. Either you or any employee can advise the company that you cannot get calls at work. No there does’nt have to be anything in writing. Period!
I just had to respond to this one. I’ve been in this situation with NCO Financial on a student loan. NEVER deal with a collection agency on a federal student loan. They’re worse than new cars salesmen and will tell every lie in the book to get you in a corner. You’ve got much better several options. First, inform NCO Financial to stop all communications under the FDCPA via certified letter, return receipt requested. Keep that return receipt. They’re a third party, not the original lender, and this will work. If they continue to contact you, get a witness to the call, then file suit in small claims court and pick up some money for that big violation to help you with your debt payments.
Next, figure out your plan forward. You’ve got several options.
1. Federal student loans are extremely difficult to discharge in a bankruptcy, but one major exception is for medical reasons. Talk to a bankruptcy lawyer and find out if you might qualify. Your initial discussion with any lawyer about your options for a bankruptcy should be FREE. Make sure you understand the differences between a Chapter 7 and a Chapter 13 before going down this path.
2. If bankruptcy is not a good option, go back to the original lender of your student loan and try to negotiate directly with them. They usually are much more likely to deal honestly with you. With a federal student loan, you can get a deferral for medical reasons (on some or all of the loans), and interest may not even accrue, allowing you more control on what you’re paying monthly. If you don’t know who this lender is, contact your school’s financial aid department or pull a credit report (or 3) and get the contact information from there.
3. Check out the William D. Ford Federal Direct Loan Program. This is the lending arm of the federal Department of Education, not some schmuck bank. They can qualify even students loans that are in default for a consolidation. The downside is, they’ll roll all those default fees and interest into the principal, but it will clear all your issues up at one go. [www.ed.gov]
Finally, remember that federal student loans have all sorts of safety nets, specifically because they are so hard to discharge. If you ever have problems making a payment for any reason, always immediately contact your student loan lender. You can get a deferral for almost any reason at the drop of a hat.
It took months to get my mess straightened out, but it can be done! Good luck!
Over 10 years ago, when I was 22, I was diagnosed with leukemia. I had to cash out all my savings and move back in with my parents. My mom and dad both wiped out much of their savings and 401k to pay for just a portion of my medical bills. I also had a new Honda Accord that I voluntarily surrended (same as repo, only you drive it to them and hand over the keys) and let over $8k in credit card debt charge off. When facing the very real possibility of death, creditors aren’t even on the radar.
Thankfully, I kicked leukemia’s ass! =)
I had to deal with countless collection calls, many from individuals that spoke as their IQ was below the threshold for mental retardation! I tried to explain that I had been very sick and that my medical bills were, in fact, more important than what I owed anyone else, including them! Human emotion, especially sympathy, isn’t a concept that these people understand!
So….I learned how to get rid of them one by one, some were a bit tougher than others, but eventually I won. I did it by being ruthless and saying things to some of them that still shock me when I recall some of them. I used the most hateful, evil, vulgar words and thoughts that I could possibly imagine! I fought fire with VENOM…but didn’t raise my voice (usually), I just said abhorrent things to those cretins and they eventually decided that no amount of money I owed was worth them having to listen to what I had to say. One jerk even called me Satan….but I got rid of them.
BTW, this tactic as a last-ditch effort after multiple cease and desist letters, faxes and verbal notifications to all of them! I dont’ think I could ever do it again, but it was a desperate reaction to preserve what little sanity I had left!
@ElijahGolem: Aww c’mon! That’s just a tease! I want examples of the terrible things you said, I bet it was very impressive.
I’m a big fan of giving as good as you get, and taking the gloves off when needed.
Nowhere in the United States constitution does it say health insurance is a right. You should of had your own health insurance policy. For a 22 year old, the insurance would not have been very expensive. You planned poorly.
You are such an ass. Your parents planed poorly as you are the poster child FOR abortion. Mr Spock had more compasion then you you jerk off!!!
I have no experience with student loans, but I have a lot of experience with unsecured debt, like credit card debt. And I can tell you that a cease and desist letter makes a lawsuit more likely. I would just send them a certified letter saying that your employer forbids you from receiving these phone calls at work. I’m a little confused about you making payments to NCO for 27 months. This is student loan debt?
i am a student loan debt collector. While it can be frustrating dealing with collection agencies, you have to admit you are in the wrong by not reading your contract. you had 5 yrs of forbearance and over 6 yrs worth of deferments, by blowing it off you have no one to blame but YOURSELF. you can make all the payments you want but how much are these payments? im sure they are not qualifying pmts. a qualifying pmt is what is required to successfully finish a rehab program, also you have to be enrolled in the program for your pmts to even be considered a rehab payment. by just sending in 25 bucks here and there you do nothing. I would figure something out before they garnish your wages or ssd up to 25% plus penalty’s, how long have these loans been outstanding? oh and btw i can call you, i can leave msgs with your grandma and grand pappy just as long as i dont divulge any info but i sure can imply things. hell i can call your boss and leave msgs with him, i wouldn’t recommend a cease communications letter, once received they go straight to WAGE GARNISHMENT/FEDERAL OFFSET. moral of the story READ YOUR CONTRACT, KEEP IN TOUCH WITH THE LENDER, there are programs that are offered to help you, but because you couldn’t be bothered with your own bills, you now have to deal with people like me. GOOD LUCK TO YOU! you will need it. oh and the letter they sent you is a rehab letter. the lender will not speak with you they have deemed you noncollectable, so what they will do is not speak with you then they will send your loan out to another third party agency and they will also charge more fees and penaltys. Also i hope you dont own a business or hold a professional license i wouldnt plan on keeping either of those if this loan isnt taken care of soon. i would google student loans consequences of default also go to the dept of eds. website you can find out exactly how screwed you are.
Do not sign the affidavit, and do continue making the previously agreed upon payments; however if they have a local office, pay your monthly amount due entirely in pennies. Yes it means a quick stop to the bank prior, however if they refuse it will completely nullify your debt.