The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Information on this website may not be current. This website may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites. Readers of this website should contact their attorney, accountant or credit counselor to obtain advice with respect to their particular situation. No reader, user, or browser of this site should act or not act on the basis of information on this site. Always seek personal legal, financial or credit advice for your relevant jurisdiction. Only your individual attorney or advisor can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, contributors, contributing firms, or their respective employers.
Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them. Compensation is not a factor in the substantive evaluation of any product.
With student loan balances continuing to climb, student loan default has increasingly become a problem for consumers, and in addition to the problems default causes on its own, it brings along another unpleasant experience: debt collection.
The rise in student loan debt has resulted in more lawsuits against borrowers for failing to pay, often leading to judgments against the borrowers. Judgments typically lead to wage garnishment and credit damage (in addition to what’s already been suffered by not repaying the loans), making it even more difficult for the borrowers to regain the financial stability necessary to catch up with debts that are practically impossible to get rid of.
This issue becomes more problematic when you factor in the possibility that these lawsuits come from entities without the right to collect these debts in the first place. In a recent article, Bloomberg described a system in which debt ownership is repeatedly transferred and lawsuits come about from entities that may not have the right to sue borrowers. Still, if borrowers don’t question the lawsuits and fail to show up in court, judges rule in favor of the creditor and issue default judgments against the borrowers.
Whenever you’re dealing with a debt collector, and especially if you’re being sued over a debt, the first thing you should do is request verification of that debt in writing. It’s one of your consumer rights in regard to debt collection, but it’s something many people overlook, either because they assume it’s legitimate and can’t do anything about it or they don’t know otherwise. The collector should be able to provide you details on the debt and how it got to the point of needing to be pursued legally.
Checking your credit also needs to be at the top of your to-do list when dealing with debt collectors. It’s important you know how the debt is being reported and that is done so accurately, because collection accounts and judgments have a seriously negative impact on your credit scores. You’re entitled to a free annual credit report from each of the three major credit reporting agencies through AnnualCreditReport.com, and you can get two of your credit scores for free on Credit.com, updated every 14 days.
If ever you have questions about how to deal with a debt collector or if you legitimately owe the debt, seek the help of a consumer attorney — you should be able to find someone to review your case for free.
Image: iStock
August 26, 2020
Student Loans
August 4, 2020
Student Loans
July 31, 2020
Student Loans