For Consumers

There are more than 1 billion credit cards in our country today, with Americans carrying roughly $8400 of debt on average. This could take 30 years for the average individual to pay off. Dealing with debt and credit issues can be an emotional, and often uncomfortable process. But, it doesn’t need to be.

As an industry, third party debt collection is committed to treating each consumer with dignity and respect, along with offering solutions that benefit both the consumer and the creditor.

As a consumer, you have rights that protect you under state debt collection laws, as well as under the federal Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA). By understanding the facts, you will be empowered to help yourself cope with your collection concerns and solve your debt problems.

Collect the Truth wants to be a resource to you. We’re answering some of the most common consumer questions, and hopefully shedding a little more light on what you might not know about third party collection and consumer rights.

To learn more, you may also visit www.consumerfinance.gov for more information from the federal Consumer Financial Protection Bureau (CFPB), which offers education, resources, and assistance regarding financial products and services.

FAQ

Student Loans

Why Should I Understand My Loan?

It’s important to keep track of the lender, balance, and repayment status for each of your student loans. These details determine your options for loan repayment and forgiveness. You can start by asking your lender. If that doesn’t work, try visiting www.nslds.ed.gov. Once you log in there you can find out your total loan amounts, lender(s), and the repayment status of your federal loans. If some of your loans are not listed, they are probably private (non-federal) loans. For those, try to find the paperwork that you signed; contact your school if you cannot locate any records.

Source:  The Project on Student Debt; An Initiative of the Institute for College Access & Success

Can My Loan be Forgiven?

There are various programs that will forgive all or some of your federal student loans if you work in certain fields. Public Service Loan Forgiveness is a new federal program that forgives any student debt remaining after 10 years of qualifying payments for people in government, nonprofit, and other public service jobs.  Find out more at www.IBRinfo.org. There are other loan forgiveness options available for teachers, nurses, AmeriCorps and PeaceCorps volunteers, and other professions.

Source:  The Project on Student Debt; An Initiative of the Institute for College Access & Success

To Consolidate or Not Consolidate?

A consolidation loan combines multiple loans into one for a single monthly payment and one fixed interest rate.  If consolidation is right for you, shop around for the best deal, but banks and private lenders are not making consolidation loans as often as they used to. There may be other options, but Direct Consolidation Loans from the Department of Education are definitely available.

Source:  The Project on Student Debt; An Initiative of the Institute for College Access & Success

Which Loans Should I Pay Off First?

If you’re considering paying off one or more of your loans ahead of schedule, or trying to reduce the principal, start with the one that has the highest interest rate. If you have private loans in addition to federal loans, start with your private loans, since they almost always have higher interest rates and lack the flexible repayment options and other protections of federal loans.

Source:  The Project on Student Debt; An Initiative of the Institute for College Access & Success

Should I Work on Lowering My Principal?

When you make a loan payment, it covers any late fees first, then interest, and finally the principal. If you can afford to pay more than your required monthly payment, you can lower your principal, which will reduce the amount of interest you have to pay. Include a written request to your lender to make sure that the extra amount is applied to your principal, otherwise they will just apply it to future payments. Keep copies for your records and check back to be sure the overpayment was applied correctly.

Source:  The Project on Student Debt; An Initiative of the Institute for College Access & Success

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