How to deal with collections!

November 15, 2006 6:31 PM

BadWithMoneyFilter: I owe my college roughly $4,000. This is due to being under part time student, and not being eligible for loans. What to do as it is now in Collections!

I went through a bad time, changed jobs twice, and am in a much better place now emotionally, and am slowly paying back my debts. I missed the first two months repayment on my college loans (other origanzation) but quickly repayed up to what I owed, and have been making 125% of my monthly payment every month. I have been slowly paying back my creditcard debt (which isn't horrible, roughly $1500). I should have it paid off in 6 more months. I have saved up a small pile of money, and have all my other bills current.

For whatever reason, I hate opening mail. I open all my emails, and have had no problem paying all my bills I have emailed to me, but for some reason, I have an extreme fear of opening letters. So 6 months after the money was due, the school finally sent me a letter saying "your $$ is now due to collections agency xyz". "We have also added 20% to your bill for this service".

I talked to the business office, and promised my life and first two children to try to clear this up. Every penny I have to my name right now is roughly $1000, (leaving a very small coushin that I need to be sane). I have roughly $700 in available credit. I offered them $1000, and that I would make a deal with them to get the rest payed off on a monthly basis, but they said "THE REASON YOU ARE IN COLLECTIONS IS YOU DIDNT ANSWER OUT LETTERS".

So I have two questions.
a. Is the 20% really possible??? Are there laws that govern this? I never agreed to pay 20% (this is not a loan, it was money due for classes. Nothing was ever signed other than add/drop forms for classes).
b. I have begged. Offered children and limbs. All over the phone/email. Is a in-person pleeding going to help? A friend who works in admissions says the head of billing who I am dealing with is a real b*tch.

This is super-stressing me out (trouble sleeping, feeling a bit trapped and depressed).

I got a letter from the agency today, and immediately called them to inform them I am working with my college, and contest the charge.

Help?

posted by anonymous to work & money (5 comments total)

The school probably sold your debt to the collections agency. That means they gave up on you, wiped their hands of the matter, and settled for a small percentage of the money. They can't really do anything now. You have to work with the collections agency.
posted by smackfu at 6:56 PM on November 15, 2006

Set up a payment plan with the collections agency. Pay regularly for a certain period of time. After that period of time, attempt to settle for pennies on the dollar. This approach can work, since the collections agency already acquired your debt for a mere percentage of what you owed the university/college.

The trick is to settle fairly quickly -- within a year -- before they start demanding payment in full. And DO NOT MISS PAYMENTS. This is absolutely critical.

I have some experience with a similar situation (long story involving college tuition and a parental divorce) if you want to email me to find out how it panned out. michellerw at gmail
posted by wildeepdotorg at 7:35 PM on November 15, 2006

I have been in that exact same situation, burying my head in the sand, not opening mail, in debt (and worse). Get support. I had to have my mom walk me through negotiating with the collections firm in my case.

Don't just pour your heart out here, make sure somebody who know you knows this dark little secret, and will hold you accountable for taking care of it, and help you to do so. You have to, have to, have to learn to face these things before they get like this. The reason you're afraid of opening mail is that it's never something you can handle. You need to know that you don't have to handle it alone. You may get bad credit at this point, but you'll be OK. You are going to be FINE. You will feel better about this once it's all laid out in front of you and your mail is opened and dealt with at least weekly.

Now, as for the business office. Go in person. They have tissues. They have a very hard job, don't loathe them too much. You do owe them all that money, and they are supposed to collect it. Somebody there should be capable of interviewing you and getting to the bottomm of your situation. Don't be flip. Don't offer "limbs and children," explain how much you make and what your rent is and give them your phone number.

This is the right thing to do. If you can keep your debt in their charge, and not a collections agency, and can pay it in full, you'll be glad you did for the next 7 years, which is how long it will take for a default on a debt like that to stop fucking your credit. I defaulted on my first credit card, the final amount owed was $800, and I missed 3 loan payments in my bad spell, and I still can't get cleared for a cell phone. You need to protect your credit.
posted by Ambrosia Voyeur at 7:45 PM on November 15, 2006

I relate to this feeling of desperation so well.

I spent years in a flux of dead-end jobs and deep denial that found about $6000 of student loans in collections. Then I spent about 8 years alternately appeasing and avoiding the collections agency which did a lot of damage to my mental health.

Finally, with a stable job and a real desire to get on the right track, I talked to a personal banking agent at a bank near my workplace. To my surprise, they actually agreed to grant me a line of credit -- which at the age of 29 was the first credit I was able to get -- so that I could pay off the collections agency.

It's been about two years and I'll be paying off the debt for a few more yet, but this was the absolute best decision I could've made for myself. It enabled me to get "legit", and not only did it repair my damaged credit and build good credit; not only did that collections debt get marked "paid' on my credit report; not only did it enable me to get a credit card for the first time in my life; but it actually let me feel good about myself and feel free for the first time in my adult life, without the black cloud of debt and avoidance that I'd had over me since I was 21.

My advice: find a way to pay that debt to the collections agency. Then repair and build credit by paying off the bank, most likely at a lower interest rate. I guarantee that you will feel 2000% better about yourself by facing the problem head-on. Don't let a $1500 debt steal your peace of mind any longer.
posted by loiseau at 8:17 PM on November 15, 2006

There is probably some sort of agreement that you implicitly agree to when you register for classes that covers things like this. I don't think you have any standing in terms of "laws that govern this." At least, I'm pretty sure that's how it works for my school.

I would ask the business office if you can handle it through them instead of the collections agency but it may not be a possibility at this point.

A large number of schools are highly revenue driven. That means your tuition dollars actually matter and the school isn't primarily funded by wealthy donors and endowments. They probably don't care about your unique situation and are more concerned about getting the money. That's not to say they don't care about you, but that their hands are tied in this situation. That's why I think that pleading and in-person discussions may not do you a ton of good. You're better off just working with the collections agency and moving on. You may be able to bargain them down perhaps?

There comes a point where you have to be accept responsibility for this. And start opening up your mail! Or at least get some help for that. I have a problem with it too but it's way scarier to NOT open the mail, as you've learned.
posted by ml98tu at 8:30 PM on November 15, 2006