proper pay procedure for student loan settlement

[maddog2112]

Lcs financial has offered to settle a student loan on behalf of arrowwood indemnity for the principal balance of the loan. What is the proper way to pay this settlement offer. The letter sent to me says, I can wire the money to LCS or send a cashiers check? I just want to make sure I have proper tracking and documentation of the payment. Any experience on this out there?

[tobee43]

i would never settle with any company unless they provided a written contract outlining the terms of the settlement.

payment should be acceptable via your personal check unless they can specify why exactly that is not acceptable and have a darn good reason. this is a THIRD party....therefore it is imperative you have everything in writing stating whom they represent, the amount etc.

best of luck!

[backtoschool]

Student loans are rarely "settled". Sometimes you can get some of the principal knocked off, but collection agencies have a legal right to add 25-30% of the loan's principal balance to the loan as a "collection fee" so make sure you are really getting a settlement for only the principal balance.

Like tobee43 says, gets something in writing and even then, I would be skeptical.

[maddog2112]

Damn, It`s a shame we all have to be so skeptical!! This is what the letter says. As you have been advised, arrowood indemnity co. has a claim against you for the total amount of 906.90 as of the date of this letter. The total amount due includes unpaid principal in the amount of 648.73, interest of 258.17 and miscellaneous fees or advancesof 0.0. Lcs financial services corp. on behalf of arrowood indemnity has agreed to accept no less than 500.00 as satisfaction of the lien and debt, relative to the above referenced loan number. please note: this settlement offer will expire after the date stated herein. They did not say I couldn`t send a personal check. I was just afraid to do so for security reasons. Does this sound Kosher? I`m going to call the collections manager again today with any questions or response. I`ve been working on this for about a month trying to get this settlement. Is there something else I should ask for?

[tobee43]

Damn, It`s a shame we all have to be so skeptical!! This is what the letter says. As you have been advised, arrowood indemnity co. has a claim against you for the total amount of 906.90 as of the date of this letter. The total amount due includes unpaid principal in the amount of 648.73, interest of 258.17 and miscellaneous fees or advancesof 0.0. Lcs financial services corp. on behalf of arrowood indemnity has agreed to accept no less than 500.00 as satisfaction of the lien and debt, relative to the above referenced loan number. please note: this settlement offer will expire after the date stated herein. They did not say I couldn`t send a personal check. I was just afraid to do so for security reasons. Does this sound Kosher? I`m going to call the collections manager again today with any questions or response. I`ve been working on this for about a month trying to get this settlement. Is there something else I should ask for?

is it too late to settle with the actual lender??? i would....or at least try. even IF it's in collections. we did that with our second... and we owned a large amount already in default i went into the bank and offered them 1/4 in cash to settle...to my surprise and although it was already a lien..they accepted, the lien was removed and live went on...(this was years and years and years ago)....but nowadays i'm certain any money is better than none.

it's worth a try really...i would not trust a third party collector at all...they have a way of leaving out many important factors when it comes to reporting your payment...and the actual lender never removes it from your credit report.

i'm certain b2s and i don't mean to be skeptical...just cautious! proceed...slowly, carefully and mindfully...that's all...

[maddog2112]

Ok a little more history. This student loan was originally with citibank, and as I found out after the fact, non dischargeable thru my ch7. Arrow indemnity paid off citibank, as they were the insurer of the loan. A few years later, it is in the hands of LCS. according to LCS and the letter, they are accepting the payment on behalf of Arrowood. I`m pretty sure it`s too late to go thru citibank. Am I missing anything?

[tobee43]

no...it's never too late to at least attempt it. most likely they may say no since they probably (citibank) wrote off the amount as a bad debt and this other company purchased the debt. however, i still think it's worth a visit...not a phone call.

i would just go into my local branch and say...i have had some hard times..i owe u...and here's what i can pay...can you help me? if not..unless you get every word in writing from that third party collector i would not settle...put it in black and white and also have them add PAID IN FULL and will be reported as such to the credit agencies.

[maddog2112]

Tobee43, unless the collection agency is blowing smoke(which I wouldn`t doubt), Lcs said that citibank has already been paid by arrowood, who insured the loan. Now they are collecting for arrowood. According to many on this site, they usually don`t settle for less than principal, so I thought this sounded like it was on the up and up. Anymore advise appreciated.

[tobee43]

Tobee43, unless the collection agency is blowing smoke(which I wouldn`t doubt), Lcs said that citibank has already been paid by arrowood, who insured the loan. Now they are collecting for arrowood. According to many on this site, they usually don`t settle for less than principal, so I thought this sounded like it was on the up and up. Anymore advise appreciated.

well it that's the case there is a serious problem. if the debt was already paid then it's paid....

yes, i would see what others say...i wouldn't touch it with a ten foot pole.

[maddog2112]

Thanks Tobee43, hopefully someone else can chime in.

[backtoschool]

Here is how student loans work. They are guaranteed by a guarantor, who is paid by the Federal government. In this case it sounds like Citibank, the original holder of the loan, was paid by the guaranty agency. Whether or not the original loan holder was paid by the guaranty agency has nothing to do with the loan being paid in full. The loan goes to a collector who has the authority to add 25%-30% in collection fees to the loan and to collect on behalf of the guaranty agency and the federal government to get the money back that was paid to the original lender. This is why student loans seldom settle for less than owed and often settle for much more than was originally owed.

I would not pay this creditor until you contact the guaranty agency and see what is owed.

[tobee43]

also maddog....you should post this on the student loan forum

http://www.bkforum.com/forumdisplay.php?26-Student-loans

i think you will get more effective responses there...best of luck to you!

[Freefinder]

Well, it may have any good procedure to consider, the bottom line there is that procedure wont work if you dont have the money..

[maddog2112]

Thanks all. Sorry about posting in the wrong place. The settlement offer is time limited and I guess Im a little anxious to get this behind me.

[tcreegan]

Hi maddog,

The settlement offer is time limited This is your first clue they are not on the level; trying to get you to make a decision before you have time to research the offer to make sure it is legit.

Run away, fast as you can....

Tom in Colo