I owe about $50,000 to a private lender, and after I graduted put them into foreberance to get my financial affairs in order. Recently I checked my credit report and was schocked to see that my loan had been charged off, as I had never recieved any messages from them about deliquent payments. I assumed I was still in forebearance. When I contaced the lender they would not talk to me, and directed me to their internal recovery group. I asked about setting up a payment plan and they were evasive, they want a settlement. When I got a family member who is an attorney they promised to call him back but never did, and the woman he spoke too has a voicemail box that is always full.
What should I do here? I can make payments on my loan, but I am really freaking out about the effect this has had on my credit score.
Unfortunately, private loans work much the same way as other installment debt. Once you default, you are at the mercy of whoever holds the debt and have to negeotiate with them to set up a payment plan or settlement. Unless the promissory note for your loan says differently, the loan is due and payable in full when it defaults. Normally they are willing to work with you, but they are not require to offer you any specific set of options like CAs for federals loans are.
The damage to your credit report is likely already done - they have reported the original tradeline charged off. If the debt is given to a CA to collect, that may report as well. I would hop over to the Rebuilding Your Credit forums and learn about your options and get some stratgies for neogtiating.
Thank you for the advice.
What will happen if I reach a settlement with them? Will the loan still be reported as charged off? I'm willing to pay them for the loan, I just need to figure out the best way to handle this since I might end up needing to apply for law school loans in the future. Right now the bank has given the loan to its internal collection agency-is there a way I could call them and ask them to take the loan back from collections? Again, I *could* make payments and they only reason I was deliquent was not being contacted.
The bank may be willing to take the loan back and set up a payment plan, they may want you to only do a payment plan through their internal collections group, or they may only want payment in full to settle the debt - or anything in-between those options. It's really up to the bank, and every situation will be different. Call them and talk about options, see what they offer you and then go from there.
If talking to their internal collection department is not working, consider filing a complaint with the BBB. It *might* motivate the bank to start a dialog with you.
Be careful how much detail you are putting in the BBB complaint. Some (most?) of their complaints become public.
Have you gone over your forbearance letter to see what the terms were? Did it say you had 6 months to get your finances in order and start paying? Did it say you need to reapply every 3 months? There "charge off" might be a mistake or something that was overlooked in the details.
I would think - and I could be wrong - that doing an electronic payment or mailing a check in - would start the process of paying them back. They would probably accept the check. In the past, I have had experiences with places that refused to take payment (like the hospital) so I had my bank send them a check every two weeks. Danged if they didn't cash every single one of those checks! Still were b**tholes, still wouldn't talk to me, still sent me to collections. And each time it went to collections, I produced the history of the every two week payments to the CA and the CA always returned the account right back to the hospital.
I am sorry that you are experiencing such a brick wall with communicating with the bank. I hope you can find a way around, over, or under the brick wall and get them to cash your checks/payment. And don't let them bully you into an agreement you can not afford. If possible, do payments every payday.