Question:
Dear Steve,
I had a student loan. They say I owe them around 6,000 and said if I wait to pay it then I’m guessing my interest rate will go up and it will be hard for me to get another loan. Is this true?
They claim that if I do a monthly payment 3 times of 200. The rest would be basically taken care of. I wouldn’t have to worry about paying anything. Why? I don’t understand.
Answer:
Yes, your interest rate could go up and you could be charged a massive fee for legal action and/or collection charges.
Everything they can and may do to you is typically clearly defined in the lending agreement you signed. Just look for the section on default.
As far as the 3 x $200 claim I would have to default to WTF?
I can see a scenario where something like that might bring you back to a current status from a default, maybe, but as far as the rest of the balance going away and not having to worry about it, that would be kind of farfetched.
But that being said, stranger things have happened. If they are actually offering you a settlement, then read Debt Settlement Pros and Cons. My No BS Guide to Settling Your Debt.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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What type of loan is it?
Who is the servicer or debt collector?
When did you last pay?
What is the actual penalty amount that was mentioned? The question references a $200 dollar amount, but here you reference a 20k penalty.
Well unfortunately it is typically written into the default part of the loan agreement. It’s stuck in there so the collection company can be compensated and motivated for chasing you. If you are looking for logic, you should not look for that in the debt world.
Who do you actually represent ? You appear to be a shill for the debt collection industry.
I make every effort to represent the truth and provide good information to help people understand their debt situation and how to deal with it. My answer is right on target for what you asked. You wanted to know how they can do that and as I pointed out, it is typically written right in the agreement the consumer signed. Just like arbitration agreements, default rates, etc.
I just answered your question.