Jump to content

Help with a question about charging interest on a collection


JPOWELL2000
 Share

Recommended Posts

Hi, I have been working on DH and my own credit for about the last year. Mine is coming along great, and alot of it has to do with all the great advice, suggestions, tips and tricks from this boards, and of course the Good Credit is Sexybook, Love it!

So, my situation for my DH is this: He opened a student loan through Student Financial Services for Truck Driving school 7-1999 in the amount of 4,215.00. Number of payments 180, amount per month $67.88. Interest rate of 18%. Account was transfered at some point to Wells Fargo. My husband defaulted on the loan while we were seperated, sometime 2-2003, I guess was when it was 120 days past due. We get back together, we do alot of credit repair. Plaza Associates, aka Law offices of Mitchell N. Kay, and aka MKM Acquistions takes over the account. While doing said credit repair, we have any number of these 'agents' contacting us for payment, by phone and mail. 8-18-2004 they send a letter demanding the balance due of $5,118.90. I call them, and ask, "why is the amount so much higher?' They tell me there is a 18% daily interest on the amount due. I try to work with them on payments, they want the full amount, then offering on 9-22-2004 to make a 60% settlement of $3,108.21, payable right then. Well, obviously, we couldn't do it. They continued to harass us on almost a daily basis, refusing to work with us, (as everyone else did) and compounding daily interest. I finally sent a cease and desist letter to each of thier 'partner' companies, and they did. Now, everything on his credit is either paid or gone, this is the last item. So, I send a letter to Wells Fargo, and tell them our situation, and offer to make good on this loan. However, I do not get contact from Wells Fargo, but Plaza Associates stating they received our letter and our amount is now up to $5991.49 and they are willing to offer us a settlement of 50%, all up front, still no payment options. We have disputed it several times, and it remains. This 'Plaza a$$. also periodically pulls my husbands credit, it shows as an inquiry on all of his CB reports. So, here is the run down,

Experian - Date opened/reported since 7-1999/11/2002 Date of status/last reported - 2-2003/2-2003 credit limit or high balance - $4,215.00 Recent balance/Recent payment - $3,561.00 Status - Open/past due 120 days $314 as of 2-2003

Transunion - balance $0 Date verified - 3-2003 high balance - $4,215 120 days past due date open 7-1999 date closed 3-2003

Equifax - date opened 7-1999 high credit - $4,215 transfer/sold/paid Items as of date reported - 11-2005date of last activity - 11-2002 over 120 days past due - acount transfered or sold

So, my questions are these:

Can they continue to charge interest?

Can they continue to put inquiries on his CR?

Does anyone have any clue how to go about getting this taken care of?

We would like to buy a house, but this is kinda in the way, so we can't just wait for it to fall off. I would like to work out payments, but these guys are real stinkers.

Any suggestions, legal advice, anything would be great! You guys are always so knowledgable and helpful. I wish to make this thing go away one way or another, so I am in it for the long haul.

Thanks again!!! Jessica

Link to comment
Share on other sites

So, my questions are these:

Can they continue to charge interest?

Can they continue to put inquiries on his CR?

Does anyone have any clue how to go about getting this taken care of?

We would like to buy a house, but this is kinda in the way, so we can't just wait for it to fall off. I would like to work out payments, but these guys are real stinkers.

Any suggestions, legal advice, anything would be great! You guys are always so knowledgable and helpful. I wish to make this thing go away one way or another, so I am in it for the long haul.

Thanks again!!! Jessica

I didnt see anywhere where these accounts have been disputed. Have you done that? Have you followed the DV procedure to make sure that the CAs involved have a legal right to collect this debt?

Once you get that process started, then you can go from there based on the results. Also-remember, a paid collection item is just as bad as an unpaid collection, so your going to want to work for deletion. I have heard that for mortgages though-they are more interested in paid accounts-but if you can go for deletion I would think that would be where to start.

It sounds like you are well on your way!

:)

Link to comment
Share on other sites

yes, we have disputed it over and over again. I know that a paid collection is just a bad.

Can they continue to charge 18% interest on a debt that has already gone to collections?

Can they put inquiries on his credit reports even though it has already went to collections? It is listed under his regular inquiries :

Plaza Associates (address, etc.)

Requested on 10/29/2004

Inquiry type: Individual

This has been in collections since 2003.

We are interested in buying a house, but I have a feeling they are going to want this gone, or paid.

I just don't want to pay 18% interest if there is a reason not to, and I don't want to pay it if they are breaking any laws and I can work that angle.

Thanks again.

Link to comment
Share on other sites

ok-have you sent DV letters and started that process? Disputes with the CRAs are probably not going to get you anywhere. The CAs must provide validation that they can legally collect. If they cannot-then no, they cannot continue collection efforts and must remove the accounts from your reports. HOWEVER-they can (and do) still hit inqs on accounts. I fight them all the time from JDBs on stuff over 15 years old that gets resold to new CAs. I just send out the standard DV letter and state that if they cannot validate demand that they remove the inqs. Sometimes it works, sometimes it doesnt. Most of the time the inqs just fall to the bottom and dont impact the score that much (but they dont continue adding new ones after getting the DV letter).

Which reminds me that I have another one from last month to send out.... Grrr...

Remember that it took time to mess up so it will take time to clear up.

:)

Link to comment
Share on other sites

Sorry- I didnt answer your question. Yes, they can and will charge obscene amounts of interest. If you get down to where you need to settle for delete then they will start discounting all that to get you to pay. Thats how they build up an amount so that they have something to bargain with... if that makes sense...

Link to comment
Share on other sites

ok, new stratagy. They just called. spoke with me about the account. I am not on the account, I am not listed as an authorized anybody on the account. They spoke with me about how much is owed, and settlement offered. Is this allowed? Is there another course of action I can take by using this against them to get a result more favorable to us?

Thanks again! Jess

Link to comment
Share on other sites

If you are a spouse then they can speak to you about the account (I think this will probably be argued-but that is my understanding) so no leverage there.

I would still get the DV letters out today if you can. There are sample letters all over the site to help get you started. Make sure you understand the DV process first though so you know what to ask for and what to expect from them.

Here is the link to learning about the DV process:

http://www.creditinfocenter.com/rebuild/debt_validation.shtml

:)

Link to comment
Share on other sites

Are you sure this isnt a federally insured loan?? Most defaulted loans add 18% in collection fees plus the daily accruing interest. The repayment terms sounds like a government loan. You owns this debt now?? In cases of both governemnt and privates loans, they are NOT bought or sold to JDB's or CA's. They are simply farmed out to CA's.

Wells Fargo handles both govt and private loans. Both are very collectable. Private loans will file suit right before the SOL arrives.

Also making payments on a default will not remove the negative tradelines, nor do they pay for delete.

Link to comment
Share on other sites

No, not a federally insured loan. The orginal company went out of business some time ago and 'transfered or sold' the loan to Wells Fargo. After Plaza Associates were so mean and nasty, I tried appealing to Wells Fargo, but my letters sent to Wells Fargo ended up with Plaza Associates. It says 'transfered or sold' on Wells Fargo as well.

I have sent another DV certified mail to Plaza Associates, but it didn't do any good the first time, they just quit harrasing us, that is until I contacted them via the letter to Wells Fargo.

I find it hard to believe that they are allowed to continue charging interest even though the amounts reported to the CB have been the amount originally owed when we stopped paying.

Anyway, thanks, anymore suggestions are appreciated!

Link to comment
Share on other sites

Sounds like a standard private educational student loan. Wells Fargo was probably the guarantor as Student Financial Services sounds like it was the loan originator/servicer. Yes, like all student loans, interest will continue to accrue even once the loan has defaulted.

Wells Fargo has assigned it to a CA and probably wont intervene since they have a contract with the CA for their collection efforts. I would suggest resolving it, as Wells Fargo will authorize this to go on to become a judgement account.

Link to comment
Share on other sites

yes, I have tried to resolve it, and recently when they called, they stated they would settle for 50% of $5991.49, which all is needing to be paid right then, and of course this amount grows by 18% everyday! I can't pay it, and if I started to save to pay it, how am I ever going to get enough at that rate?

anyway, thanks, I guess we are just out of luck on this one.

Link to comment
Share on other sites

yes, I have tried to resolve it, and recently when they called, they stated they would settle for 50% of $5991.49, which all is needing to be paid right then, and of course this amount grows by 18% everyday! I can't pay it, and if I started to save to pay it, how am I ever going to get enough at that rate?

anyway, thanks, I guess we are just out of luck on this one.

No it doesnt grow by 18% everday. The interest rate is 18% per year, propably compounded daily. That would amount to about $1100 (approx) based on a current balance of $6k or about $3.00 per day.

Can you borrow the money?? Otherwize you need to get into repayment or you will find a judgement filed against your DH. They are not above garnishing wages or seizing bank accounts.

Link to comment
Share on other sites

Firstly, I know the idea of settling for 50% may sound good, but it really won't help your credit score. At best, it will keep the mortgage company from denying based on a lien possibility. You see, when you settle for less than full balance, the creditor still has to charge-off the unpaid balance. A settled for less account is still an unpaid charge-off in that capacity. Additionally, you may end up getting a 1099 in the mail come tax-time where you will have to pay income taxes on the unpaid amount that they are "forgiving."

Since the "school" is out of business there is a very good chance that the records on the account are incomplete in some fashion. I would claim that you do not recognize the account as part of your dispute and ask for all the documentation they have on it including the signed instrument that created the alleged debt. Also be sure in the dispute to DENY ACCOUNT AS STATED. If they cannot produce the contract, in other words the debt is "paper" only, then you have more avenues to pursue to eliminate this.

Link to comment
Share on other sites

Since the "school" is out of business there is a very good chance that the records on the account are incomplete in some fashion. I would claim that you do not recognize the account as part of your dispute and ask for all the documentation they have on it including the signed instrument that created the alleged debt. Also be sure in the dispute to DENY ACCOUNT AS STATED. If they cannot produce the contract, in other words the debt is "paper" only, then you have more avenues to pursue to eliminate this.

The school is not a party in this transaction and do not hold any of the financial docs. The fact that they are out of business is irrelevant. Wells Fargo would not have paid the default without the docs so they will verify.

Link to comment
Share on other sites

The school is not a party in this transaction and do not hold any of the financial docs. The fact that they are out of business is irrelevant. Wells Fargo would not have paid the default without the docs so they will verify.

Reread the first post:

Student Financial Services for Truck Driving school ... Account was transfered at some point to Wells Fargo.

That seems pretty clear that Wells Fargo is not the original lender. It was your suggestion, LynnInMN, that WF was the original servicer. I'll defer a complete answer to the original poster since it wasn't a default out of the gate.

JPOWELL2000, Were all payments made to WF for the life of the account or were the first original payments made to "Student Financial Services for Truck Driving school" or some other name?

It's important to clear this up for accurate answers. For example, I financed a $2400 class in bartending from Professional Bartending School years back. They did their own financing arrangements and later sold the account to Household. My first 3 payments went to PBS, the rest went to HFC. So it is possible that WF did not originate the account.

Link to comment
Share on other sites

The school is not a party in this transaction and do not hold any of the financial docs. The fact that they are out of business is irrelevant. Wells Fargo would not have paid the default without the docs so they will verify.

Reread the first post:

Student Financial Services for Truck Driving school ... Account was transfered at some point to Wells Fargo.

That seems pretty clear that Wells Fargo is not the original lender. I'll defer a complete answer to the original poster.

JPOWELL2000, Were all payments made to WF or were the original payments made to "Student Financial Services for Truck Driving school"?

Student Financial Services would have been the loan originator or servicer. Wells Fargo is the guarantor. This is how student loans, public or private work. Student Financial Services is would not have been affiliated with the school. When a student loan defaults, the servicer files a claim against the guarantor, who is forced to pay the claim.

Link to comment
Share on other sites

Thanks for your response Methuss. No, MTA was actually the school. Student Financial Services was a lender that they used. I don't think that it is an actual 'student loan'. From what I know SFS is out of business now, (probably from people defaulting on their loans:( ! ) Our loan with SFS began on 6-24-99 and we made all the payments. Effective June 1, 2002 the loan was transferred to WFF. He stopped making payments around the end of that year, pushing it to 120 days in 2003.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.. For more information, please see our Privacy Policy and Terms of Use.