10 years ago my husband attended 1 semester at ITT tech institute and took out what he believed was 2 student loans from Sallie Mae for 10K. He dropped out of school, and deferred the loans for the max of 5 years while he tried to find himself. Lo and behold, he actually took out 3 loans, but did not realize it until the 3rd loan for $1200 was WAY into default in 2005. A collection agency was trying to collect on the debt, and my husband kept insisting that the laons had been deferred for 5 years but that now he was paying on them. After some research, he learned that yes, this third loan was technically legit (although the origination of the loan seems to have been a slimey ITT tech financing office thing, but I digress).
At any rate, we attempted to make a payment plan for the loan of $100 a month for 12 months. We mailed in 2 payments, yet never recieved a receipt and and the collection agency sold the loan claiming he did not pay. This left a bad taste in our mouth. Since 2005 we have not been able to get anyone to commit to payment terms in writing, so we have not made any payments to anyone. We explain to them that we have every intention to pay, and clearly they can look at my husbands credit report and see that he pays all his bills including his 2 S loans in good standing, so I just don't understand why they refuse to cooperate and give us proof that they except the terms we agreed on the phone. I mean, why on earth would we decide out of no where not to pay this one little loan?!?!?
So the debt was sold yet again to an agency that appears to be a law firm. They are offering a 60% settlement. We have enough to pay the full $1500 (after interest and fees) in full and it looks like they are going to mail us an agreement so we can mail in a payment. My main question here is, if we except the 60%, will we get a 1099 on the $600 bucks? Also, can we request that they report paid as aggreed even though it is a settlement? We will pay the full $1500 if thats what is necessary to improve his credit score, but the debt collector is pushing the settlement hard. It almost seems silly to insist on paying more if they will take less... I am more interested in getting this cleaned up so we can buy a house next year. Somehow, even with the default student loan my husband's score has been high 600's for years, but I am afraid a reactivation of the account (even paying it off) will cause him to take a dip because it will report like new again.
Blah, in the end we just want to do the right thing while doing whats right for our future... any advice would be much appreciated!!!
