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Student Loan Legal Issue - Help or Insight Wanted


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Long time lurker. Second time caller.

Here's my problem:

I'm in grad school. I have 2 private loans. I've been paying them both off, with my cosigners (my aunt and uncle). My cosigners and I agreed that beginning in January I would continue paying the payments on my own every month because I can do so now that I have a new job.

In Janaury, I called in to the Loan Servicer -- "CRAP LAGOONS" -- to make a payment on my loan. I specifically gave them my bank routing number and checking account number as well as my permission to deduct my $410 payment. I waited for a few weeks for the amount to be removed from my checking account. No movement for 2 weeks. So I called Crap Lagoons who said, "There's no payment due, it was already made." I knew this had to be incorrect and told them, "Just debit the $410 anyway, if it's considered an extra payment, fine, but according to my statement this payment needs to be made, please debit my checking account, I know it was not debited."

My cosigners called me just after I got that letter to tell me that their bank account had been debited for $410.00 three times, for a total of $1230 in debits in the course of 2 weeks by Crap Lagoons. They said that Crap Lagoons told them I gave them permission to debit their account. I did not do this. We 'conference called' Crap Lagoons who admitted their mistake and credited my cosigners the $1230 back to their account and arranged for Crap Lagoons to debit my personal checking account and asked them to delete my cosigner's bank details to prevent future confusion.

A week later, I received a letter from UltimateShankBank stating that my payments were now 60 days late and another missed payment would put me in default and that they are reporting this to the credit reporting agencies.

What I've done to try to fix this problem:

I wrote to both UltimateShankBank and Crap Lagoons via CMRRR to explain the problem and also to ask in writing for their privacy policies. It's been about 2 weeks and I haven't seen a response yet. I did not give Crap Lagoons my cosigner's account information and I did not authorize them to debit anyone's account but my own. I also asked for a transcript of the original phone call where I made my payment. Nothing yet.

I asked for their privacy statement because I'm concerned that this bank is using someone elses's financial information without their permission or consent. Even IF it's a cosigner, if the person on the phone with you is NOT the person who owns the checking account, Crap Lagoons should not allow other people to debit payments from accounts that are not theirs. I'm also concerned that they're storing payment information details and they obviously don't have a hold on their security.

Also, I called and asked twice why my payment wasn't debited. Both times I was told that the payment was already made, and as such, nothing was due. I asked for a $410 payment to be made from my account ANYWAY, and this request was not honored. I made every effort to stay current, so why are they reporting me 60 days late?

What can I do now? I've got a money order and I'm CMRRR'ing this next payment of $871 (2 months of payments plus late fees) to their payment address. I don't think they're supposed to report me 60 days late. They seem really not willing to fix what they did wrong, and now I have a 60-day late thing on my credit report at a time that I am preparing to buy a used car.

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Let me start by saying I have never dealth with Student Loans, so this advice would be general in nature......

While the events you describe will try one's patience, they are not uncommon nor out of the ordinary based on my personal experience. Loan Servicers are only as good as their people and software. Once they have entered information incorrectly, it can be a struggle to get things working again.

When I have come across this I go back to the old method of doing business, which is mailing a check via snail mail, which creates a paper trail. I noticed you are sending your payment CMRR, good idea for a couple of payments, so you can see how they process and their timing.

Once 30 days has past if you don't recieve a response from the Bank, I would file a complaint with the Office of Comptroller of Currency. This usually gets the banks attention, no bank wants the goverment asking questions. Generally, they will react once this agency makes an inquirey.

I am not sure how to handle the loan servicer, I am not sure if there is any agency they answer to....

Best of Luck

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Going to law school been in school for over 8 years now, had to get a B.A. first.

I have a lot of experience with student loans.

Private student loans are nothing more than a private loan and should be treated as such.

Federal student loans never go away and can not be settle even in BK.

There are some means to eliminate student loans as in disability or working for a government agency for a time period.

I would consider this. If you can get a loan and your credit is good enough, find a more reputable bank to get a loan to pay off the one you have now.

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If the entry is incorrect on your CR and it results in being denied, sue them under the FCRA. You might want to run this by a consumer atty or maybe drop by the college you attend and see if one of the law professors will help you. I think a nice letter from a lawyer stating intent to sue will get action.

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I would definitely ask one of your professors to assist you with that letter. I'm sure that will spring some action.

If not, SMALL CLAIMS might be a good idea to resolve this. From what I'm hearing you have a claim for damages if your credit is being impacted negatively by UltimateShank Bank due to a mistake or error on their part. Whip out a calculator and do some math. How much are you going to lose if this does not get resolved?

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