This is a unique situation that I haven't seen mentioned on the board. I would appreciate anyone's advice on what to do. If you need more info about my situation please post and I'll do my best. The bottom line question is: should I cash in my savings bonds and try to get a lower payoff amount for my student loans (say, $30k instead of $50k) or pay the whole thing off over time once I start working and earning income (keeping in mind the effect on my credit score and overall liquidity). If I can pay some fraction of the loans and not have a bad mark on my credit, I would jump at that. I'm just finishing my senior year of college and will graduate in May. I have a $47k/year job that starts in July. Over the last few years, my dad and I were co-signers on student loans from a bank totaling $45k at 5% fixed. I don't have any other debt (CC or otherwise) and my car is paid off. In late 2002, my dad had a big legal judgment entered against him so he filed for bankruptcy (chapter 13) to try to protect his assets. As a result, the bank sold the promissory notes to a debt collector (they said that's their standard procedure when a co-signer declares bankruptcy). So now I'm dealing with the debt collector (DC). The DC has not started bothering me because my dad is still under bankruptcy protection, however it's not really clear who has the responsibility to pay back these loans. However, I think my dad got kicked out of bankruptcy protection because the court realized he was just trying to protect his assets and wasnâ??t really bankrupt. But the DC doesnâ??t know that yet. I don't know if the loans would have been consolidated under my dad's repayment plan or if they still fall to me. Today the DC told me that this fiasco is negatively affecting my credit score, which is fairly high (~750) however when I checked my Experian report, it showed no mention of this debt or anything negative, just my usual charge accounts and my rating was still +750. I would really like to keep my credit score as high as possible. I currently have $50k in savings bonds (I and EE). Some of them can be cashed in now, some will have to wait until August 2004 for the 1-year holding period to lapse. However, the i-bonds that are eligible for cashing now were issued in 2001 when the fixed portion of the interest rate was higher, and I'm hesitant to part with those. The DC said that if I were able to come up with some money they would settle for less than the full payoff amount (currently $50k). She didn't give me a specific, but said that 75% is the average although sometimes they take less. She said that if I started making payments every month, even if it were only $100, that might make them less likely to take a smaller payoff 6 months from now. Obviously I didn't tell the DC about my savings bonds or about my job offer. I think that if they find out I make $47k/year they will not be so likely to take a reduced payoff. So maybe I should rustle up some money before I start working and pay them off. Does anyone have experience negotiating with debt collectors - are there any tactics for getting them to accept a lower payoff (other than pleading poverty)? What factors affect their willingness to haggle? From reading the forums, it sounds like I need to get a "settlement in full" to ensure that no negative marks are entered on my credit report, correct? Options: 1) Cash in high-interest rate savings bonds and settle for a reduced payoff amount ($35k instead of $50)? But will this drag my credit score down for a long time? Is it worth sacrificing my I-bonds with the higher fixed rate? 2) Start making small monthly payments now and when August comes, try for a reduced payoff amount using the lower-interest-rate savings bonds (this may backfire if they find out how much I make at my job, this may also hurt my credit score). 3) Start making small payments now and make bigger payments in July once my job starts until the loan is paid off in full. This would probably be the best option for my credit score, but also the most expensive and long-term (I would much prefer to settle all this now rather than leave it hanging over my head for the next 5 years). 4) See if my mom can get a HEL (her mortgage is 100% paid off), use that to pay the DC in a reduced payoff, and then pay her back with the savings bonds in August or with my income. 5) Is there some option I'm not thinking of??? Question: 1) Is there any sort of civil or criminal liability I could incur if I mislead the DC about my job status or personal assets (savings bonds)? Or if I just omit certain pertinent pieces of information? I donâ??t want them to come after me for fraudâ?¦ I really appreciate any insight into this messy situation! Perhaps I have overlooked some facts or pieces of information, maybe there are some options I haven't considered? Thanks for your help! (to preempt any questions about â??why were you buying savings bonds if you had all this debtâ? â?? my dad thought that things were going to work out differently than they did, and I believed himâ?¦hindsight is 20/20)
