I Have Never Made a Payment on My Student Loans and I Just Got a Settlement Offer – Jason


Dear Steve,

I went to ITT Tech back in 2004 but never completed the course as I became disabled before completing the course. I have never made a payment on the loans and have good credit even with the defaulted loans listed on my credit. I have now been receiving letters from a company called Central Credit LLC and they are making me an offer to completely pay off my loans for 10% of what is owed. I am also “judgment proof” if that makes any difference on what I’m asking.

Is this company trustworthy and legit?

And my second question is if it is legit should I take this offer to get rid of the loans from my credit score? As bankruptcy is in my opinion not worth it when I have a good credit score or am I looking at this the wrong way?



Dear Jason

I suspect the company name is actually Central Credit Services, a collection company. I also suspect your original student loans were private student loans.

The scenario that makes the most sense is they were private loans that the lender sold off the defaulted debt to a bad debt buyer. The debt is either now owned or being attempted to be collected by the collection company.

It sounds as if they are offering you a settlement to pay 10% of the outstanding balance to satisfy the debt.

But since it has been so long since you defaulted and made a payment, it’s not clear if the loans are outside of the statute of limitations in your state. If so, while they could always sue you, you can raise that issue as a defense. One place to check the statute of limitations in your state, is here. It you decide to lean on the fact the debt is outside the statute of limitations then I would encourage you to speak to an attorney who is licensed in your state to confirm. There are all sorts of funky things that can start and stop the clock.

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Speaking of starting the clock again, don’t acknowledge the debt or make a promise to pay. That can restart the clock on the statute of limitations.

If you decide you do want to take them up on the settlement offer, I would first ask them to validate the debt to make sure they can even legally collect the debt. Can they prove you actually owe them the debt? Many can on old debts that have shifted around.

If the loans are that old, they should no longer be reported on your credit report. They would have fallen off seven years after you went delinquent. So it sounds like in 2011 they fell off. You should check your credit score for free and see if they are still being reported and what might be dragging your score down.

I would be more inclined to think your score is being held back because of a lack of good credit being reported rather than an old loan from 2004 that should have fallen off.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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