I have quite a few current debt issues, and I am badly in need of all sorts of advice moving forward, but right now I could really use some feedback on one pressing issue: My University Tuition Debt: 1. Last month I discovered that my past-due tuition debt had been forwarded to a collection agency. The debt has not been sold, the agency is collecting on behalf of the University and "is not authorized by the University to settle the debt for less than in-full" 2. The collection agency received the debt on May 21st and immediately added $3,400 in "reasonable collection fees" (33% of approx 10,500 past-due) They subsequently refused my request to negotiate their fee in exchange for immediate payment in full. 3. In my last discussion with the University--where I was told that all transactions relating to the debt must be handled through the CA--I was told that by my act of registration I agreed to pay any collection costs incurred. Bottom Line: By May 2011 I will need to have satisfied this debt to the University or they will not issue my degree. I have been given several suggestions by others, and I really need some informed feedback. Option #1. Send by certified mail payment in full for past due balance directly to the University hoping that they will accept the payment and I can skirt the CA's insane fees. My concern is that this payment will make its way to the CA rather than to the University, and the CA will be emboldened to insist on full 33% fee. Option #2. Make minimum payments to University or CA and hope that the lingering uncollected liability impels CA to negotiate fee in 9-12 mo. My concern here is that a 33% fee for collections seems very unreasonable for a debt that has been in the custody of the CA for less than 50 days. A year from now, a 33% fee might seem more. . .reasonable. Option #3. Sue, or credibly threaten suit for damages under FDCPA for unreasonable fee and settle debt for principle that way. My concern with this option is, I cannot find any guidelines for what constitutes "reasonable". I am concerned I will be found liable for equally outrageous attorneys' fees if this fee is actually determined to be reasonable. I really want to fix all of my past mistakes and I have many other problems that I need help with, but right now, this one is most pressing and I need to make a plan of action. Notes to help any potential advisors: 1. The University is located in Washington, DC. 2. I am a resident of Texas 3. This is not, strictly speaking, a student loan, but it is arguably money that was lent for education and therefore undischargeable in BK 4. No written correspondence has been sent by either the CA or myself.
I lean towards Option #1, but I would try to work directly with the University first to convince someone with authority to pull the account out of collections. I wouldn't just send in payment "hoping" that the CA doesn't come after me at a later point for the additional fee. The school may be telling you they can't do that at the moment, but there's got to be someone who has the authority to pull it back from collections. Then I would make payment in full directly to the University.
Reasonable eh? Who says they have the right to determine what is reasonable? Attorneys going to court do not have the right to determine what is reasonable attorney fees. Reasonable has to be determined by the judge based on the amount of time the attorney spends on the case broken down into quarter hour segments times their normal hourly fee for such work. A collection agency has the right to determine what is or is not reasonable? I don't think so. That is pretty normal for all contracts. Actually much worse than that assuming the school will accept the money and not just send it back to you and tell you to send it to the collection agency which is the most likely thing for them to do. They have a contract with the collection agency which says they agree not to accept money from a student once the account gets turned over to the debt collector. If they break the contract the debt collector could refuse to collect any more of their accounts. That's not likely to happen but I can assure you that they will just send it back to you. Even if they did accept the money the debt collector would still come after you for the 33% and would then add even more fees and other collection costs as time went on and would finally sue you for the new debt. So let's forget about bad idea #1. The answer to bad idea #2 is the same as the answer to bad idea #1. Read bad idea #1 and you will get the idea of why this is no better. You are getting somewhere in the area of the remedy here. I don't know of any section of FDCPA that defines what is or is not reasonable either in the way of collection costs and fees or attorney fees. For that matter FDCPA don't even define what validation is or what it must consist of. The answer starts in demanding validation of the debt. Now let me explain why that is so valuable. I got a letter from a lawyer about a car loan I had defaulted on. I sent them a demand for validation to which they responded with a letter on their stationary telling me that I owed $10K. That's it. Nothing more. FDCPA violation #1. Then they filed a lawsuit on me. FDCPA violation #2. They had me served. Violation #3. I sent them my demand for admissions and they responded. Their response had no debt collection notice. It was mailed directly to me and not filed with the court. Therefore their response becomes violation #4. They sent me demand for admissions, interrogatories and production of documents. Again, no miranda notice. Violation #5. I sent demand for production of documents. They responded with a copy of the contract which stated that they had the right to get 15% of the default balance for attorney fees. They wanted $1400 attorney fees. They also sent a letter from the Plaintiff showing that I was being charged $2300 for various expenses including attorney fees!!! OOPS!!! Double dipping on attorney fees eh? The defaulted balance was about $8K, not 10K. The other $2300 brought it up to the $10K figure. So 15% of $8K comes to about $1200, not $1400. So violation #6, misrepresenting the amount of the debt. Violation #7. Providing false and misleading information to a consumer. Violation #8. violation #9 again, no miranda. Violation #10. illegal continued collection activity. We went to local court yesterday and a new attorney showed up. That was her first violation. Illegal continued collection activity so she gets sued too just as the first attorney will get sued in federal court. And the violations just keep on going and going and going just like the energizer bunny. (LOL) It all started with that all important validation letter. Trap the debt collector into making mistakes and sue them in federal court. Make them pay you, make them return the account to the school so you can pay the school directly. Make them pay you your court costs and all other costs plus attorney fees for acting as your own private attorney general. That's the way to win. The judge told me to file motion for summary judgment against the plaintiff and demand that the lawyers be sanctioned. When he made his final ruling he said, "i'll be waiting for the next exciting episode in this case." (LOL) have they called you? If they are calling you should dispute the debt and demand validation right there on the phone. If they call you should keep a careful record of all phone calls and record them if possible and it always is. I say nail them to the wall then think about paying the school. In the meantime keep your money save in a good savings account. Look on line for allybank.com and open a savings account with them. You will get better interest there than just about anyplace else.
