You asked some really great questions. Because you asked so many and there is so much information that you need, I created a 3 part series at Credit Repair College to answer your questions in detail and provide the solutions you are looking for. You can see the part 1 of the series here:

How Do I Clean Up My Credit?

the links to parts 2 & 3 are at the bottom of each post. I hope this helps. Let me know if you have any additional questions.

Vincent

Thank you for the kind words. The letter that you received that you are referring to is a letter required by law that the lenders and collection agencies have to send to you BEFORE they can begin other collection efforts and BEFORE they can post it to your credit report. In other words, they have to inform you in writing and give you a chance to dispute the validity of the debt up front, otherwise, you could get hammered with a collection on your credit report and be harassed by collectors because your name is something common like Bill Smith. The law is designed to ensure that if you aren’t the Bill Smith that owes the debt, you don’t have to endure the harassment or negative credit.

So, with the lapse of the 30 days, they began collection efforts and probably reported a collection on your credit report. It is their reporting of the collection on the credit report, along with the original loan that you will want to dispute and use the debt validation method on. You can also use the 6-2-3 method on the original lender.

So, to answer your question, yes, there is still hope to dispute the debt that the collectors have filed and get it removed using the methods I described. The next step is to get the loan rehabilitated.

With that you accomplish multiple things:

1. Presently, you probably have two different derogatory accounts for the same debt. One by the original lender (probably Sallie Mae) and the other by the collector. So, your credit score is probably getting hammered because you have two negative items reporting. So, the dispute and debt validation methods should get rid of the derogatory account the collection agency is reporting.
2. When you rehab the loan, the derogatory account that the original lender is showing will be erased and replaced with a new perfectly paid loan.

Thanks,
Bill

Wow, is all I can say. I’ve asked this same question on another forum and only received one response (get a part time job and pay it, that’s the only solution). You provided a lot of details and help which kind of helps me to sleep at night now since I don’t have to worry about a suit. Thanks a bunch for your informative post and I can tell that your clients and future clients is in great hands!

Kudos to you friend.

Bill

The good news is there is hope. There are options that it sounds like that you are not aware of. To answer your questions:

Q: “what do you think the chances of them suing me for $1,000 of unpaid student loan debt is?”
A: I think the chances are so infinitesimally remote that I wouldn’t worry about it on that small of a debt. The amount is simply too small and would cost too much in attorney’s fees for a $1,000 student loan

Q: “What should I do, continue to avoid them since I cannot pay at this time?”
A: Absolutely not! You need to hit them right between the running lights and end the harassment now. Here’s how, first you need to dispute the debt with all 3 credit bureaus (yes, even though you admit that you owe it and are desirous of paying it back, we are going to attack this on multiple fronts). If you have the address of the collection agency, you need to send them a certified letter advising them that going forward, you only want to be contacted in writing via mail and that they are to immediately cease and desist all phone contact (which, once notified in writing, they are required by law to do). If you don’t have their address, answer their call next time and get it. In many cases, the collectors will try to be crafty and NOT provide you with the address because they know what you are going to do. I have had them hang up on me numerous times. If they refuse to provide it, you can find it one of two ways, either by searching the Internet OR by looking at your credit report. It will show the collection agency and their address. You can get the exact letter to send them with all instructions through your Credit Repair College Membership

Then, you want to hit them with a Debt Validation letter. With this letter you can require them to provide written proof that they own the debt, their contracts with the original lender, copies of the original signed loan application and loan documents that YOU signed, their license to do business in the state you live in and a host of other things. 99% of the time, they don’t have the documents, can’t get the documents and will go away. Watch the Debt Validation video here: Clean Up My Credit Debt Validation Video

Seriously, would you want to have to collect all that documentation and send it to someone who owes you money?

I wouldn’t!

So, now that we have stopped the harassment, we still have to deal with the fact that the student loan is an unforgivable loan that will never go away since it is federally insured. In other words, Uncle Sam isn’t going to let you off the hook and just write it off. He is going to hound you until the day you die or pay the loan off. The good news is, there is a great solution that most people don’t know about and most collectors never inform you of because they are paid on a commission basis. It is called a student loan rehabilitation agreement. Handled properly, this is an excellent opportunity to repay the loan AND improve your credit.

Why is this?

Because if you follow the repayment schedule, after 12 months of on time payments, they are required to remove the derogatory credit from your credit report. In other words, all those payments that you didn’t make that are negatively reporting on your credit report and absolutely destroying your credit score….. GONE! See Ya! Adios! Peace Out! Don’t let the door hit you on the way out.

Here’s the actual statute:

Section 674.39 Loan Rehabilitation
REHABILITATION OF LOANS

(A) IN GENERAL- If the borrower of a loan made under this part who has defaulted on the loan makes 12 on time, consecutive, monthly payments of amounts owed on the loan, as determined by the institution, or by the Secretary in the case of a loan held by the Secretary, the loan shall be considered rehabilitated, and the institution that made that loan (or the Secretary, in the case of a loan held by the Secretary) shall request that any credit bureau organization or credit reporting agency to which the default was reported remove the default from the borrower’s credit history.

You’re lovin’ me now, aren’t you?

Want to hear the best part?

They are required by law to allow you to rehabilitate the loan. There is no approval process. All you have to do is have the right documentation and request it. You can get what you need through your Credit Repair College Membership

So, in summary, you:

1. Can stop worrying about a lawsuit
2. Can end the harassing collection calls
3. Can require them to jump through a myriad of hoops to provide you documentation
4. Can rehab your loan and get the derogatory credit removed and add new positive good credit

Problems Solved

Let me know if that helps you.

Here’s my situation. I have a student loan from over 3 years ago that was never repaid back. I am just now hearing about it, this time from a debt collector. It is for $1,000. I am unable to pay it at this time, but they keep calling and sending letters, just within the last month (guess they found me :/ Anyhow, what do you think the chances of them suing me for $1,000 of unpaid student loan debt is? What should I do, continue to avoid them since I cannot pay at this time? Please advise on your help.