Hello everyone-

I obtained a private student loan ~ 8 yrs ago, went to National Collegiate Trust/AES [I am supuer confused, is AES and NCT the same thing?]  from the original Lender and then to “A” C.A. I was doing monthly payments to this C.A., then suddenly they dissapeared, then a new C.A. “Law Offices of Patenaude & Felix” in California bought this loan.  Now, they are suing me.

I talked to them yesterday and they told me that I have different options for them to put the lawsuit aside, one is to get myself on a payment plan and one is to do a settlement.  I have 30 days to do this since I received this lawsuit papers 4 days ago.  The amount is for ~$12-000-13000

I am very confused on what to do here.

Should I contact National Collegiate Trust/AES and see if they can work with me now that I have a job and work on a payment plan/settlement?  Should I work a payment plan with the new C.A. or do a settlement?

How much should I offer them?  Is there a document I can read on settlement stuff?

I dont want this sue to go on, so I want to do something in the next week.  As I said, I am pretty clueless on which option to take here. What would you guys recommend?

Thanks in advance,

Mikey

Mikey,
  Sorry to hear of your situation.  My name is James and I am Heather’s Communications Director (and husband).  Before I offer you some general information that may assist you in your decision-making process, I need to quickly clarify that because of the rules governing attorneys, unfortunately Heather cannot provide personalized legal advice to you without first associating with local counsel in your state.  She (and I, by extension) is only able to give you general legal information.  That said, the following information may help shed the light on your situation.

The first thing to do is gather up all the information on this and any other student loans that you may have (so that you are looking at the complete picture).  As you may know, student loans (especially private loans) tend to change hands over the course of their “lives” and it’s important to know who “owns” your loans (as you’ve already discovered). 

You can look up your federal loans (if you have any of those) on the National Student Loan Data System at http://www.nslds.ed.gov/nslds_SA/, where you will need a PIN issued by the Department of Education.  You can get a PIN for NSLDS at http://www.pin.ed.gov/PINWebApp/pinindex.jsp.  You should find your private student loans listed on your credit report at https://www.annualcreditreport.com/cra/index.jsp.

For federal loans, loan cancellation can help a few borrowers, and you ought to double check whether any of these circumstances may apply to you: http://www.studentloanborrowerassistance.org/loan-cancellation/  Consider the pros and cons of rehabilitation or consolidation to get out of default.  The best resource we know of for you to learn the steps is: http://www.studentloanborrowerassistance.org/default-and-delinquency/repayment-get-out-of-default/.
 
A few more things to think about relative to your private loans.  Private collectors do not have as many collection tools as the government.  There is a time limit for collection.  The limits are different in different states, but tend to be around six years after default.  An attorney in your state could research the statute of limitations there.  Often private lenders will hire collection agencies.  Borrowers have certain rights to fight back against any harassment or abuse by collection agencies.  Collection fees for private loans should be listed in the loan agreement.  There may also be other laws in your state that limit the amount of collection fees that private creditors can charge.  The main thing the private lender can do is sue you in court (as they have done here).

Some private lenders may eventually negotiate a payment plan or debt settlement (as you’ve indicated).  IF you have a lump sum of money, there may be some possibility of settlement of private loans: http://www.studentloanborrowerassistance.org/default-and-delinquency/compromise-settlement/, I know that isn’t an option for most of us. 

You may want to look into finding an attorney who specializes in consumer law in your area.  Heather is a member of the National Association of Consumer Advocates, and that’s the place to look (http://www.naca.net/find-attorney).

Our hope is that over time, borrowers will have more options, but for now these may be your best bets.

Best of luck and please let us know if you have other questions.

With kind regards,

James

If you are having trouble with the Student Loan Borrower Assistance link above, it is re-posted here: http://www.studentloanborrowerassistance.org/collections/private-loans/default-and-delinquency/.

More information on private loan settlements: http://www.studentloanborrowerassistance.org/loan-cancellation/settlement/private-loan/.