$160K in loans went to collection. Please help!

[0ncogene]

I borrowed around $160K in loans from my medical school university, who is now contracted with Heartland ECSI. I was not aware that they were sending me bills after my grace period, which ended about 7 months ago.

I have not paid my loans for 7 months. It is in default and has been sent to collection. Additionally, they added a $50K in fees making my total to be around $210K.

This is my fault and I am just trying to find a way to rehab my loans and undo as much of the damage as I can. Please help!

1. What is the best way to approach this?
2. Is there anyway I can get the $50K in fees waived with ECSI?
3. I also have another $180K in federal loans already consolidated and up to date with payments. When is the best time for me to add the $160K university loan to my consolidated federal loans?

Thank you for you time.

---

Members don't see this ad.

 

[Doctor Christmas]

I borrowed around $160K in loans from my medical school university, who is now contracted with Heartland ECSI. I was not aware that they were sending me bills after my grace period, which ended about 7 months ago.

I have not paid my loans for 7 months. It is in default and has been sent to collection. Additionally, they added a $50K in fees making my total to be around $210K.

This is my fault and I am just trying to find a way to rehab my loans and undo as much of the damage as I can. Please help!

1. What is the best way to approach this?
2. Is there anyway I can get the $50K in fees waived with ECSI?
3. I also have another $180K in federal loans already consolidated and up to date with payments. When is the best time for me to add the $160K university loan to my consolidated federal loans?

Thank you for you time.

What about income based repayment? Can u try that maybe? How did you not get the payments though - wrong address or you ignored them?

 

[deleted480308]

If you can try to request they waive some fees tell them you’ll consolidate and they can get their cash now

Then consolidate and use an income based repayment plan during residency.....then either just pay it all as an attending or try working somewhere with Loan payments

 

[0ncogene]

What about income based repayment? Can u try that maybe? How did you not get the payments though - wrong address or you ignored them?

Im trying to consolidate it to my other Fed Loans right now.

There are a few reasons why I never got anything from them. First, it was the wrong address on the account. Secondly, I got two accounts on ECSI, one handling my undergraduate loans and my med school loans was on another one. I was making timely payments on the undergraduate loans but had no idea my med school loans was delinquent and now in collection until now.

 

[0ncogene]

If you can try to request they waive some fees tell them you’ll consolidate and they can get their cash now

Then consolidate and use an income based repayment plan during residency.....then either just pay it all as an attending or try working somewhere with Loan payments

I am trying to get the $50k fees waived, but I don't know how successful this will be. I will have to wait until Monday to talk to my school. Does anyone have any experience with this before and had any luck with trying to get such a large amount of fees waived?

 

[Doctor Christmas]

I am trying to get the $50k fees waived, but I don't know how successful this will be. I will have to wait until Monday to talk to my school. Does anyone have any experience with this before and had any luck with trying to get such a large amount of fees waived?

The fees are outrageous. I have heard of this before but it is unconsciounable (sp?). This should be illegal. Regardless you might need to get a lawyer involved. If you can get that waived/removed, you should try to do income based repayment. Also if you did not update the address you might be able to make a case or something re: not getting the bills, etc.

 

[doc05]

(1) your school has nothing to do with it anymore
(2) you can definitely negotiate a lower number.
(3) the 50k fee is a scam
(4) you probably don't have time to deal with all this, so be prepared to spend thousands on attorney's fees

 

[mvenus929]

I'm not sure you can consolidate school loans (which are essentially private) into federal loans.

 

[hallowmann]

(1) your school has nothing to do with it anymore
(2) you can definitely negotiate a lower number.
(3) the 50k fee is a scam
(4) you probably don't have time to deal with all this, so be prepared to spend thousands on attorney's fees

Yeah, I agree with above.

The only upside to this is (2), because now that its in collections, you absolutely can negotiate a lower number. Its possible the collections agency paid much less for your loan than even your principle. I'd try to negotiate down as much as possible, even if its below the principle. I would absolutely not accept a loan amount that includes any of the fees. Those are absolutely a scam.

 

[RangerBob]

Unfortunately you cannot consolidate private loans into a federal loan, so that will not be an option. You could consolidate into a private consolidation loan, which often have lower interest rates, but defaulting on your loan is will have hurt your credit and you may not qualify for a good rate, or possibly a loan at all.

It doesn't hurt to talk with your financial aid officer at your school, as they may have contacts that could help you out. While it's a whole separate league financially, I once had a ER bill sent to collections. The medical center wasn't able to bill my health insurance correctly, so they told me not to pay the bill yet. It inadvertently went to collections. I spoke with our med school dean and he spoke with hospital billing and they reversed the collection. I am not sure this could work in your situation, as more time has passed in your case and you owe much more (so the collections agency is going to want to put effort into getting that money), but it's worth looking into.

Otherwise I agree with the above that you should negotiate with the collections agency. Depending on how the school loan was structured (ie., can it be discharged in bankruptcy), you may have some leverage. Typically student loans aren't eligible, but a school loan is different than a federal loan and most private bank loans from. An attorney could really help you out a lot in your current situation.

 

[Dral]

This type of thing is so frustrating. Sorry.

Some of my loans (the biggest chunk) had some special deal where I was around 4%. They were unexpectedly sold off to Heartland and now they're up at 6.8 with the rest of my loans. That pissed me off to say the least.

I don't have any good advice to add, but at least misery loves company and such.

 

[wholeheartedly]

In this case I would get a lawyer to help you deal with this. It'll cost some money, ut a drop in the bucket compared to what you stand to lose at this point. If you have other loans that you can show consistent on time payment, including one with Heartland,I think youve got some arguing power, especially if you had two separate accts with heartland and going to different billing addresses. But definitely get a lawyer to help you negotiate things.

 

[0ncogene]

Unfortunately you cannot consolidate private loans into a federal loan, so that will not be an option. You could consolidate into a private consolidation loan, which often have lower interest rates, but defaulting on your loan is will have hurt your credit and you may not qualify for a good rate, or possibly a loan at all.

It doesn't hurt to talk with your financial aid officer at your school, as they may have contacts that could help you out. While it's a whole separate league financially, I once had a ER bill sent to collections. The medical center wasn't able to bill my health insurance correctly, so they told me not to pay the bill yet. It inadvertently went to collections. I spoke with our med school dean and he spoke with hospital billing and they reversed the collection. I am not sure this could work in your situation, as more time has passed in your case and you owe much more (so the collections agency is going to want to put effort into getting that money), but it's worth looking into.

Otherwise I agree with the above that you should negotiate with the collections agency. Depending on how the school loan was structured (ie., can it be discharged in bankruptcy), you may have some leverage. Typically student loans aren't eligible, but a school loan is different than a federal loan and most private bank loans from. An attorney could really help you out a lot in your current situation.

Thank you everyone here for responding. Let me clarify a few things.

It is a Loan for Disadvantage Students (LDS). The collection agency said that I can consolidate it with my other Federal loans and we are in the process of doing that right now.

They will not waive the $50,000 fee (~ 28% of the amount owed). I spoke to my school who said there's nothing they can do about it.

- How can I negotiate a lower number, where do I even begin? (I do have a couple weeks before the consolidation process is done)
- Lets just say I want to hire a Lawyer, what kind of things can they help me with?

 

[deleted480308]

Thank you everyone here for responding. Let me clarify a few things.

It is a Loan for Disadvantage Students (LDS). The collection agency said that I can consolidate it with my other Federal loans and we are in the process of doing that right now.

They will not waive the $50,000 fee (~ 28% of the amount owed). I spoke to my school who said there's nothing they can do about it.

- How can I negotiate a lower number, where do I even begin? (I do have a couple weeks before the consolidation process is done)
- Lets just say I want to hire a Lawyer, what kind of things can they help me with?

Is it still a student loan or is it now private unsecured debt?

If it’s still a student loan then it cannot be discharged and you have no leverage unless they violated the terms of the loan. If it’s now an unsecured debt you might be able to get them to accept a settlement by agreeing to pay instead of declaring bankruptcy (which is a bit of a bluff because you make too much money for bankruptcy to be an easy)

 

[ThoracicGuy]

Is it still a student loan or is it now private unsecured debt?

If it’s still a student loan then it cannot be discharged and you have no leverage unless they violated the terms of the loan. If it’s now an unsecured debt you might be able to get them to accept a settlement by agreeing to pay instead of declaring bankruptcy (which is a bit of a bluff because you make too much money for bankruptcy to be an easy)

Using Professor Google, it looks like that loan is a Federal Loan.

Also you can request deferments. Can you request that and have it backdated?

That fee also is outrageous. Here's the actual penalty clauses:

PENALTY CHARGES Borrowers must be charged a late fee for installment payments on LDSs that are more than 60 days past due. For loans disbursed on or after October 22, 1985 or for which promissory notes 41 have been signed on or after October 22, 1985, the late fee cannot exceed six percent of the installment payment.

This provision is intended to assist schools in collecting LDS funds by providing delinquent borrowers with an incentive to remit their payments on a timely basis to avoid any additional costly charges. Accordingly, each school is encouraged to implement the provision at an amount and frequency that will be of greatest benefit for improving its ability to collect from its borrowers.

For loans extended prior to October 22, 1985, schools may impose a late charge for failure by the borrower to pay all or any part of an installment when it is due, or for failure to file timely evidence of deferment or cancellation of part or all of a loan. The late charge may be up to $1 for the first month or part of a month following the due date, and $2 for each subsequent month or part of a month.

[Section 722(I) of the Public Health Service Act; 42 CFR Part 57.210]

https://bhw.hrsa.gov/sites/default/files/bhw/lds.pdf

 

[RangerBob]

Using Professor Google, it looks like that loan is a Federal Loan.

Also you can request deferments. Can you request that and have it backdated?

That fee also is outrageous. Here's the actual penalty clauses:



https://bhw.hrsa.gov/sites/default/files/bhw/lds.pdf

That is interesting, as your quote cites 6% of the installment payment. That would be drastically less than what the OP was charged.

I have no experience with HRSA and LDS loans (or if they're the same thing or completely different)--it sounded like a private loan to me. If it's being consolidated with federal loans then it's clearly a federal loan.

I would talk with the director of financial aid at your school. When I ran into trouble with my loan servicer incorrectly consolidating my loan and was assigned a higher interest rate than simple math dictated, I turned to my financial aid director (actually the FA director for the med school associated with my residency program) as no customer service representative or their supervisor was able to understand what was going on. I tried for weeks and the servicer would not fix things, which is why I turned to her. She fortunately had a contact at the loan servicing company who promptly looked into my problem and then fixed it. It cost me nothing but time (which is in short supply in residency). Everything was adjusted retroactively.

Start there. Maybe they have a contact. Maybe there's something they can do to eliminate or decrease that penalty. It can never hurt to reach out and ask.

 

[NotAProgDirector]

Chances are that the collection agency added on whatever fees they wanted. They will tell you that you have to pay them. They are lying, and hoping you don't notice.

 

[gutonc]

Thank you everyone here for responding. Let me clarify a few things.

It is a Loan for Disadvantage Students (LDS). The collection agency said that I can consolidate it with my other Federal loans and we are in the process of doing that right now.

They will not waive the $50,000 fee (~ 28% of the amount owed). I spoke to my school who said there's nothing they can do about it.

- How can I negotiate a lower number, where do I even begin? (I do have a couple weeks before the consolidation process is done)
- Lets just say I want to hire a Lawyer, what kind of things can they help me with?

Well, for starters, they can get rid of that usurious fee for you. That's worth the 3-4 hours of work it will likely take, at $350/h right there.

 

[ThoracicGuy]

Thank you everyone here for responding. Let me clarify a few things.

It is a Loan for Disadvantage Students (LDS). The collection agency said that I can consolidate it with my other Federal loans and we are in the process of doing that right now.

They will not waive the $50,000 fee (~ 28% of the amount owed). I spoke to my school who said there's nothing they can do about it.

- How can I negotiate a lower number, where do I even begin? (I do have a couple weeks before the consolidation process is done)
- Lets just say I want to hire a Lawyer, what kind of things can they help me with?

Also, I wouldn't consolidate it WITH the $50k fee or that might get locked in. Get that taken care of first.

 

[wholeheartedly]

Chances are that the collection agency added on whatever fees they wanted. They will tell you that you have to pay them. They are lying, and hoping you don't notice.

exactly this and what @gutonc said.

Do NOT trust the collection agency, ever. collection agencies rule by lies and fear.

A lawyer can help you sort out what's real and b.s. in this situation. $50,000 is not something to sneeze at even in the scope of large student loans and a good lawyer will more than pay for themselves on something like this.

 

[HomeSkool]

I'm not sure you can consolidate school loans (which are essentially private) into federal loans.

You can consolidate federal loans into private, but not vice versa.

 

[0ncogene]

Update: I ended up paying around ~$17,000 in the end for my mistake. This makes the total owed to the collection agency $177,000. I consolidated the whole thing and got it out of collection. It's better than paying the whole $50,000 but $17,000 is no small number.

I got a lawyer involved. I called HRSA, my school, and got in touch with a few other people who specialize in student loans. But my loan was different (LDS) and there was not a lot that could've be done for LDS loans that go into collection. I got the fine reduced by continued negotiation with to the collection agency manager. I also explained my situation and told him that I received the LDS loan, because I came from a financially disadvantaged background. Unfortunately, that was the lowest he was willing to go. I am in ortho so I don't know if PSLF is a good idea. Maybe I should just pour everything into my loans and pay it off in 5-7 years once I am an attending.

Thank you everyone for your thoughts on this topic. You guys definitely helped me save some money.

 

[BoardingDoc]

I am in ortho so I don't know if PSLF is a good idea. Maybe I should just pour everything into my loans and pay it off in 5-7 years once I am an attending.

Just keep living like a resident for 2 years after residency and you'll easily have your entire loan balance paid off with your ortho salary.