How can I investigate/remedy possibly misleading loan agreements from several years ago?

August 24, 2008 5:18 PM

Debt/Loan Filter: I was stupid with credit and debt when I was younger. Is there anything I can do now? More details inside.

When I was in college, I did not manage my credit properly and wound up taking out a debt consolidation loan. I started out with about $8000 in debt in 1999 and due to poor choices on my part and, I believe, possibly misleading loan officers, I still have $4000 left to repay now.

I refinanced it a couple of times, which was dumb, but I suspect that the loan companies misled me about how much I was refinancing and tacked on additional charges. I don't even know if I could track down copies of those original loan documents, but is there anything that anyone could think that I could do to investigate or remedy my situation, without increasing my debt more, of course?

posted by slavlin to work & money (11 comments total)

You could pay off your debt. There are many people here who would be very happy to only have $4000 in debt.
posted by saeculorum at 5:52 PM on August 24, 2008 [1 favorite]

What makes you believe that you were misled?
posted by decathecting at 6:05 PM on August 24, 2008

$4000 may seem like a lot now, but it's a small price to pay for a lesson learned, if you learn that lesson and are careful with debt in the future. Suck it up, pay the maximum amount you can per month and you can have it paid off in a year or two.

I've found this loan calculator to be invaluable for illustrating the value of paying as much as possible per month (it shows total interest paid and time to pay off the debt). Adding as little as 10-20% above the minimum payment can save an incredible amount of time and money.
posted by letitrain at 6:05 PM on August 24, 2008

If your interest rate is really high, you could try to transfer your balance to a credit card with a 0% introductory rate. But basically, yeah, the only way it's going to go away is for you to pay it off.
posted by designbot at 6:08 PM on August 24, 2008

It'd likely take much more time and effort trying to get those fees revoked (if that is what you're suggesting) than it would take to repay the $4000. Instead of using that time to fight the old companies, I'd use the time to educate yourself so this doesn't happen again (you getting in debt, you staying in debt, you getting tricked). Personal finance blogs (eg, Get Rich Slowly) are a good place to start.

Also, I'm not sure why you think you were misled. But it is fairly normal for you to still have a lot of the capital left to repay. In any fixed-rate repayment plan, in the early years, you owe so much that you're still accumulating a lot of interest, so the vast majority of your payment goes to interest. In later years, you owe less principal, so you're accumulating less interest on that, so more of your payment goes toward the principal. See these pages for a tiny bit more detail on this. And every time you refinance, yes, they really may charge fees (which they should have told you about), and they may lower the amount they charge you each month in exchange for resetting the clock on when you'll be done with it for good.
posted by salvia at 6:47 PM on August 24, 2008

How can I investigate/remedy possibly misleading loan agreements from several years ago?

It took several years for you to suspect you've been mislead? Sounds like you're still not paying near enough attention to your money. In short, if you don't have the documentation to support it you're probably SOL. If you want to fight this you're going to need a lawyer. They cost money. Not having money is your current problem. If you do fight it you won't win because loan companies are in the business of not forgiving loans and know how to cover their legal asses really well. They have more expensive lawyers than you do.

Call them and ask for copies of your original loan agreement. They should have it somewhere. I suspect if you read the fine print you'll see they're living up to the letter of the agreement.

Instead:

1) Pay it off as fast as you can.

2) In the future keep better documentation and don't throw out any piece of paper from a bank, loan agency or CC company you're doing business with. And keep anything you sign. (At least for several years.)

3) Take responsibility and learn about credit. Quit blaming your loan officers, etc. It was you who got into debt and the consolidation company can't do anything without your permission. If you didn't understand what you were doing you need to ask more questions and learn about credit, loans, etc. Which brings me to...

3) Learn your lesson and don't do it again. You don't mention how you got all of this debt in the first place. Examine why you did and don't do that any more.
posted by Ookseer at 8:09 PM on August 24, 2008

If your interest rate is really high, you could try to transfer your balance to a credit card with a 0% introductory rate.

This is terrible advice.
posted by null terminated at 8:09 PM on August 24, 2008

Even if you were misled, the law assumes you are an adult that reads contracts before you sign them. If extra fees and interest were in the contracts then you have no recourse. You should have your own copies of the contracts to review, if you threw them out you can contact the companies you received the loans from and they should be able to locate them for you (although they may charge a photocopying fee). I think this is something you need to chalk up to a learning experience and pay off that $4000 as soon as possible. There are a lot of really good financial threads bother here and at getrichslowly. Educate yourself and be enriched more than just financially.
posted by saucysault at 8:38 PM on August 24, 2008

If your interest rate is really high, you could try to transfer your balance to a credit card with a 0% introductory rate.

This is terrible advice.

Any particular reason behind this sweeping generalization? There's a lot of preachiness here, but I think you already realize you weren't that responsible in the past and are striving to do better. So congrats on that.

Whatever happened in the past, I think you just need to let that go and concentrate on the future. The key to being financially responsible is being informed. Find out what your current interest rate on the loan is. If it's very high, there is no reason to not try to lower it.

Credit card intro rates are one option, although remember you may pay transaction fees if you use one of those credit card checks. (and if you do go this route, be sure to set up a recurring monthly payment. if you are even one day late, they will not hesitate to jack your interest rate up to 30%)

Another option would be a new loan to pay off this one. If you're not in a credit union, you should join one. Almost everyone is eligible for at least one, and their far more customer-friendly than regular bank. Mine have me a 8.99% debt consolidation loan when my credit was not that great.
posted by drjimmy11 at 9:01 PM on August 24, 2008

The bad news about credit is that there are no quick fixes. Paying off the debt - and the interest that's accumulated with it - is the fastest way to getting OUT of debt. The other options - more consolidation loans / credit card 'intro rate' tricks - only delay your repaying the loan and TRULY putting it behind you. It's a slow hike up a steep mountain - but it feels SO GOOD to finally reach the top... And by the way, I'd give a significant portion of my anatomy to 'only' be $4,000 in debt.

If you're unable to make the monthly payments, now is the time to start eating ramen noodles, move in with mom and dad, etc. etc. Don't make a situation worse by putting it off longer and longer.
posted by chrisinseoul at 10:40 PM on August 24, 2008

Hmm. Shifting debts between 0% interest rate offers is fairly common, at least here in the UK. This MoneySavingExpert article gives a taster. However, and I can't stress this enough, you need to have the discipline to not spend any more. And it's getting harder to get new offers due to the credit crunch, so you can't depend on getting several in a row like you used to. But for a year or so off paying interest, it's great. You can then use the extra money saved in interest to pay off more of the debts. Here is a calculator to work out which debts you should be paying off first, which lets you experiment with different amounts of repayments. If you can squeeze an extra few hundred from somewhere and pile it onto the repayments, they'll be gone before you know it.

I'm afraid I don't have any advice about the possible mis-selling, however. Personally, I would assume there's not much you can do, which is why I posted the above. But do a bit of digging - if the companies involved HAVE been implicated in a mis-selling scandal then you'll be able to reclaim. Again, I think this is fairly unlikely. Better to concentrate on paying off the debts, and then if you can reclaim later, so much the better. Good luck.
posted by danteGideon at 3:52 AM on August 25, 2008