What I discovered was that they would mostly likely relent over time and suggest a payment plan. And the details I found about payment plans offer to debtors in similar circumstances were the same as what I worked out with Nice Collection Agency, a one time downpayment of 10% of the outstanding balance, plus monthly payments.
That's all well and fine when it worked out with Nice Collection Agency, to whom I owed a measly $3000, but this debt is far larger - $28,050!!! How was I going to come up with $2,800?
I resolved I would get past some current obstacles and then worry about saving up for the day the offer came and perhaps visit a Consumer Credit Counseling agency. But, alas, today Evil Collection Agency called me and offered a payment plan with NO DOWN PAYMENT.
The payment plan they offered was $260 a month - the best they could do because they can't extend payments for more than 9 years. No interest - just the full amount I owe payable in a little less than 9 years.
This is why I am very happy about this arrangement:
- Stops the phone calls, the letters, the general fear that I would be sued, thrown into Debtor's Prison, have my wages garnished, tax refunds seized, etc.
- Finally owning up to what has been by far my biggest financial mistake to date.
- Paying the actual amount I owe instead of having it affect me down the line with attorney's fees, late charges, so on and so forth.
- Payment in nine years with no interest is actually a MUCH better deal than the original term of the loan - 25 years at high interest rate (not that I suggest defaulting to anyone!).
- No judgement on my credit report (though the CA will most likely be there unfortunately).
Here's why I'm not so happy about the agreement:
- Holy crap, I don't actually have $260 and the check NEEDED to post this month or they would "take further action." From what I've been reading about debt collection, this is most likely a crock of s**t but it was enough for me to agree. Need to devote the next seven days to finding an extra $180 laying around - more on this later.
- Holy crap, I'm going to be paying almost $800 a month of debt - a full third of my salary!
I'm trying to focus on the positives - the private loans will both be gone in less than 9 years. I wanted the education and I'm glad I got it, but damn....that's all I have to say about that right now.
My advice to students pursuing higher education - don't take out private loans!