Help, I've debted and I can't get up.
August 5, 2010 9:58 AM   Subscribe

I owe my ex-school lots of money, and don't know what to do. Help!

I attended school in the fall semester of '09. After deciding it wasn't the right thing for me, I stopped going. I never actually dropped out, because I had mused the idea of going back. I got several grants and scholarships, but there was still around 10k dollars left over for me to pay. I tried every loan I could imagine, and tried every adult I knew as a cosigner. None of them got approved.
Fast forward to now, and a debt collector has contacted me, saying if I don't agree to pay the debt and find some way to do it, they're going to take me to court. I don't at all have ten thousand dollars laying around. I'm in between jobs, my father is on disability and my mother is unemployed.
What are my options? Can I declare bankruptcy? I'm in my early 20s- this seems drastic. And if I do need to declare it, how do I go about doing it? And what are the side effects?
What about court? What happens then? Is there any chance of this debt being erased? And do I have to pay court costs? How much will that be?
Sidenote, if anyone knows of any possibly-free debt lawyers/advocates in the chicago area, please give me suggestions.
Could I contact my school. Do you think they could do anything, even though they've already sent a debt to the collector?
So, those are the only options I can think of. If you have any other suggestions/ questions, feel free to ask.

TL;DR: I owe school 10,000. No way to pay. Debt collector won't leave me alone.

throwaway email: debterrific@gmail.com
posted by shesaysgo to Work & Money (22 answers total) 1 user marked this as a favorite
 
I'd be amazed if they weren't willing to set up a payment plan. Have you asked the debt collector about that?
posted by amro at 10:00 AM on August 5, 2010


I haven't yet. I wanted to explore all of my options before I agreed to pay them money, since I don't have any right now. I was just recently hired, but The job won't start for a couple weeks. I could still try to get on a payment plan, but would they let me defer payments for a month or so?
posted by shesaysgo at 10:02 AM on August 5, 2010


Before you start thinking about bankruptcy, TALK to the people calling you and explain your situation. They will want to work with you.
posted by k8t at 10:05 AM on August 5, 2010


You bailed and now you're paying a higher price. You most certainly have a way to pay, just not at the present time. You'll have to work out a payment plan. Since you put off dealing with the responsibility you may not have the option of asking the school directly. But it's worth a shot, call them and ask. Bankruptcy is a foolish plan. This is not that much money and not worth putting the significant black mark against your credit ratings. You're not going to be young, poor and irresponsible forever. Buck up and pay the debt owed.
posted by wkearney99 at 10:06 AM on August 5, 2010 [1 favorite]


I got several grants and scholarships, but there was still around 10k dollars left over for me to pay. I tried every loan I could imagine, and tried every adult I knew as a cosigner. None of them got approved.

I'm not sure if I understand - how did you end up paying?

If you took out student loans - and this is what the debt collection is about - then they could take money from your wages and from your tax refunds.

If you continue to ignore the collectors, you will be screwed. Trust me.
You need to talk to them and work something out - they are able to work out an affordable payment plan with you. You need to do this as soon as possible.

Something similiar happened to me with a credit card debt of only $1500. A police man came to my work and served me court papers. I went to court and verified I owed the debt. I still didn't pay them and my wages from work were garnished and my checking account was cleared out. This caused even more problems, obviously. Apparently they had sent a court notice to my old address stating that they were going to do the above mentioned things if I did not contact them and start paying up.

Fast forward 7 years - because I was unable to pay and eventually unwilling to pay my debts - I was denied apartments, bank accounts, loans, car rentals, etc.
It's been rough. Because of the statue of limitations, most of it has fallen off my credit report and it should be clear by next year - but the last 7 years was very difficult to live through with horrible credit.
posted by KogeLiz at 10:06 AM on August 5, 2010


It would be helpful to know who the original creditor was - was this all on a credit card, a student loan, ?
posted by KogeLiz at 10:09 AM on August 5, 2010


You went to school, you owe the money. Simple enough. But no one is expecting you to pull $10k out of your pocket. THey will be nasty and they will threaten you, but you have to stand firm and get a payment plan set up.

You need to tell them that you plan to honor the debt but you have limited resources. Tell them that you just started your job, and you can only pay them $X per month until you get on your feet, and after 3/6 months you can raise it to $x per month. And then pay it off.
If you keep ignoring them you will trash your credit.

why didn't you contact your school originally? I believe that since the debt has already gone to collections, that there's no way to work anything out, but you could call and try.

I paid off my school loan. So did a lot of other people here. The fact that you didn't graduate doesn't let you out of the obligation.
posted by micawber at 10:12 AM on August 5, 2010


You haven't given enough information, are these student loans through a federal program? Private loans? Credit cards? Other?

Student loans are non-dischargeable in bankruptcy outside of extreme circumstances (like death or total incapacitation), that avenue won't help you there. If these are other private loans, bankruptcy could be an option, but 10k sounds workable without going there.

Assuming these are regualr student loans, you may be able to qualify for an income based repayment plan if your loans are through Federal Direct (or if you can consolidate with them), otherwise your school office may be able to work out a reduced payment plan. I would contact them first before trying to find a lawyer who may not be able to do much for you anyway. At worst, you can let whoever sue you and likely garnish your wages to the tune of 15% or so off the top of your paychecks. That will take several months to a year or more and isn't really such a terrible outcome in the long run, you wont go to jail.

Start here for some basic background info on IBR and student debt generally:
http://www.projectonstudentdebt.org/
http://ibrinfo.org/

Also go here to find the current holders and servicers of your loans, contact them about a payment plan if your school office can't help you:
http://www.nslds.ed.gov/nslds_SA/

If these are otherwise private loans outside the student loan structure, you'll need to contact the creditors somehow and work out a payment plan of some sort to avoid court, garishment, etc.
posted by T.D. Strange at 10:14 AM on August 5, 2010


The fact that you didn't graduate doesn't let you out of the obligation.


Sounds a little judgey for askme, no?

It wasn't so long ago that student loans were dischargable. Absolute obligation has only been the bought-and-paid for law of the land since 2005.
posted by T.D. Strange at 10:16 AM on August 5, 2010 [3 favorites]


First, before you agree to pay them anything, ask for documents to verify the debt to make sure that the amount is accurate.

If the debt is yours and the amount is accurate, try to enter into a payment plan. Most debt collectors are happy to set up a payment plan of some sort. It saves them both time and money from going to court.

Plus, it's in your interest as well because you avoid having additional court costs tacked onto the amount. For instance, if the debtor obtained a judgment against you and ended up garnishing your wages, there are often fees associated with the garnishment or a levy on your bank account which you would then have to pay.
posted by statsgirl at 10:34 AM on August 5, 2010


I think T.D. Strange may overstate how difficult it is to get student loans discharged in bankruptcy... but not by much. This form of debt is designed to be hard to get rid of, and yours is a borderline case at best. "I changed my mind" is not going to convince any judge that you're facing undue hardship, as the option does still exist that you could go back to school. The assumption that going back to school will get you a better job is arguably starting to be something like a fiction, but it's the assumption that the court system is going to make when it evaluates your case.

Call your debt collector and talk about a payment plan. If you can't work something out, contact a local legal aid clinic.
posted by valkyryn at 10:44 AM on August 5, 2010


Well, since you've defaulted on your student loan debt, that means that your credit score probably already took a hit. I don't believe bankruptcy discharges student loan debt.
posted by anniecat at 10:45 AM on August 5, 2010


1)You've all mistaken what I've said. These are not loans, I said I was never approved for a loan. This is money I directly owe to my school. It's my tuition.

2)"I'm not sure if I understand - how did you end up paying?"
I didn't, and herein lies the problem.

3) I'm not ignoring the debt collectors, we've spoken several times and I'm in full cooperation with them. So the comments of "If you continue to ignore the collectors, you will be screwed." and "If you keep ignoring them you will trash your credit." aren't really applicable, nor helpful.

4)"I paid off my school loan. So did a lot of other people here. The fact that you didn't graduate doesn't let you out of the obligation." Comments like these: also not applicable, also not helpful. If you're looking for some place to sound self-righteous and judgmental, go somewhere else. Telling someone to do something that they're already doing is just a waste of space, time, and energy. I'm going to take care of the debt, obviously, so stop telling me to do such.

5)"why didn't you contact your school originally?"Not helpful, not applicable. This isn't a place for sitting around and saying "why didn't you do this, or that?" because it's not going to help my situation now. I can't go back in time. And it's not applicable because I did contact my school originally, and they simply gave me a list of loans they accept, and told me to leave the office. So assuming, yet again wrongly, that I've not done something when I did, isn't getting us anywhere.
posted by shesaysgo at 10:48 AM on August 5, 2010 [2 favorites]


I haven't yet. I wanted to explore all of my options before I agreed to pay them money, since I don't have any right now. I was just recently hired, but The job won't start for a couple weeks. I could still try to get on a payment plan, but would they let me defer payments for a month or so?

You need to ask them about your repayment options. That's the bottom line.

I'm not ignoring the debt collectors, we've spoken several times and I'm in full cooperation with them. So the comments of "If you continue to ignore the collectors, you will be screwed." and "If you keep ignoring them you will trash your credit." aren't really applicable, nor helpful.

If this has gone to a debt collector then it's probably already been reported to the credit agencies.
posted by amro at 10:59 AM on August 5, 2010 [2 favorites]


Also, speaking for myself - I have never heard of a school personally lending out money.

I'm not sure why people aren't getting this. The school didn't lend the OP money. They charged tuition which s/he did not pay. It's an outstanding bill, not a loan.
posted by amro at 11:00 AM on August 5, 2010


[few comments removed - knock it off with the manners lessons and go to metatalk or email please.]
posted by jessamyn (staff) at 11:48 AM on August 5, 2010


What can you pay? Agree to a plan, and stick to it. Realistically, it's fair to use your iTunes/ fast food/ beer budget to pay debts, but not your food/prescriptions budget. Even if it's 5/week, you should commit to a payment plan.

Before you agree to a plan, though, ask them to reduce the amount. Explain that you have almost no money, and ask them to reduce the amount owed to 5,000. You have everything to gain by negotiating the amount. They bought the debt, and at a discount, so they may be willing to deal. The debt is unlikely to be eradicated.

I think school tuition is bankruptcy-ineligible. And, seriously, bankruptcy has long-lasting repercussions that are way worse than paying off 10K.
posted by theora55 at 12:15 PM on August 5, 2010


I'm not sure why people aren't getting this. The school didn't lend the OP money. They charged tuition which s/he did not pay. It's an outstanding bill, not a loan.

Sorry, but I was confused why the OP would owe money despite not attending classes. I thought schools wanted you to pay your tuition by a certain date before classes start and if you didn't, then you would be dropped from all of your classes.

If the case is that they are charging you for nonpayment, then you ought to consult a lawyer at legal aid clinic or something. This is sort of crazy. You didn't pay your tuition, they shouldn't have let you register for classes. I seriously don't see how they can go after this money, but IANAL.

If you're in Chicago, and since you have access to the internet, you should google Legal Aid Clinics and call them up. I know Northwestern Law School and UChicago Law School have them, and I imagine John Marshall and DePaul have them too. School isn't in session now, but I'm pretty sure they have a nonprofit legal aid outfit in the city. Google it and I'm sure you'll hit upon something.
posted by anniecat at 12:17 PM on August 5, 2010


I want to second anniecat. Typically, if you do not pay your tuition, you are unable to register for classes, or dropped from classes that you already registered for and then you wouldn't owe tuition (or would need to scramble during the first week of classes to get tuition paid if you did intend to take the classes.

It would probably help us to know in what capacity you attended. Did you go for a week? Did you complete the semester? How did the school let you take classes if you hadn't paid? Is this money a scolarship that the school gave you that came with conditionals such as requiring repayment if you didn't complete the program?

You should contact the debt collector and get some documentation of the debt, then contact the school and see why the tuition was still charged to you if you didn't actually take the classes (or elsewise figure out how you were allowed to take classes if you still owe tuition). If there's something wacky there, you should try to get free legal aid. If you cant get free legal aid or if the debt is legit, set up a payment plan with the debt collectors. Don't bother paying for legal services to try to get rid of a 10k debt, because you'll likely just end up in more debt from legal fees.
posted by WeekendJen at 1:25 PM on August 5, 2010 [1 favorite]


One wonders if perhaps the OP attended a for-profit institution.
posted by galadriel at 4:20 PM on August 5, 2010


Prior to working at my current institution, I also thought that schools would drop students if they didn't pay beyond the first week. That's how all the schools I'd known had operated. Until recently, though, the private college at which I work would track down students through the end of the semester. At some point they'd lose email access, which honestly would impact the professors more than the students I think. But yeah, it's totally possible for a student to have attended a college most of the way through the year and still owe money.
posted by bizzyb at 6:36 PM on August 5, 2010


This happened to me after my first year of college (at a private, non. Essentially, I got a letter from a bill collector after it was already in collections and they froze my transcripts until I paid it off.

Speak to the collection agency about getting on a payment plan. You're not absolutely screwed. You can pay it off.
posted by loriginedumonde at 11:58 AM on August 6, 2010


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