Student Loan Defaulted- Collection Agency Trying to Collect Along with Loaner

leatha1978@email.com · #1 09-24-2009, 03:32 PM

My question involves collection proceedings in the State of: Alaska.
My sister took out a student loan through the state of Alaska in 2002 for three semesters. Ending in the spring of 2003. She moved from where she lived and did not get her mail forwarded. She should have started paying the loan back 6 months after quitting school. She did not. She "forgot" about the loan until a collection agency contacted her in 2006. This agency told her that they took over the loan from the state of Alaska. Her $13,500 debt was now $20,000. She was unprepared to pay this.
She makes less than $15,000 a year and could not afford the $400 a month they wanted to repay the loan. She started paying $75 a month at that point and has increased the payment to $125 now for the past year. Recently we discovered that the state of Alaska has put a lien on property that we both share for $18,000. I would like to know if we have any leg to stand on, so to speak, to get this debt under control. Her payments make no dent in the collection agency's debt and we can't figure out how the state and the collection agency can both have the debt.

jk · #2 09-24-2009, 03:40 PM

not all collection agencies own the debt. In fact, the bulk of collection agencies collecting relatively new debt do not own the debt they are collecting. They are hired by the creditor to collect the debt.

So, to answer your question, you need to discover who actually owns the debt.

leatha1978@email.com · #3 09-24-2009, 05:01 PM

Quoting jk

not all collection agencies own the debt. In fact, the bulk of collection agencies collecting relatively new debt do not own the debt they are collecting. They are hired by the creditor to collect the debt.

So, to answer your question, you need to discover who actually owns the debt.

How do I do that? The University/loan dept will not discuss the loan due to the collection agency "having it". The collection agency refuses to discuss anything outside the full payout or a large monthly payment.

jk · #4 09-24-2009, 05:05 PM

ask them...both.

leatha1978@email.com · #5 09-24-2009, 05:08 PM

Once I know, either way, is there a way to negotiate a repayment plan that is more affordable or is this just one of those lost causes because of all the time lost?

jk · #6 09-24-2009, 05:13 PM

that is entirely up to them. I have not heard of much experience with schools as creditors so I do not know what position, if any, is typical.