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

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

Why Shouldn’t I Ignore My Student Loans?

Ignoring your student loans has serious consequences that can last a lifetime. Not paying can lead to delinquency and default. For federal loans, default kicks in after nine months of non-payment. When you default, your total loan balance becomes due, your credit score is ruined, the total amount you owe increases dramatically, and the government can garnish your wages and seize your tax refunds. Talk to your lender if you’re in danger of default. You can also find useful information at studentloanborrowerassistance.org.

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

Do I Have Options for Paying My Loan?

If you’re having trouble making payments, don’t panic. Whether it’s due to unemployment, health problems, or going back to school, there are legitimate ways to postpone your federal loan payments, such as deferments and forbearance. Beware: interest accrues on both subsidized and unsubsidized loans during forbearances. First see if Income-Based Repayment could help instead: your required payment could be as little as $0 when your income is very low.

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

Why Should I Stay in Touch with My Lender?

Whenever you move or change your phone number, make sure to tell your lender right away. If your lender needs to contact you and your information isn’t current, it can end up costing you a bundle. Open and read every piece of mail you receive about your student loans. If you’re getting unwanted calls from your lender or a collection agency, don’t stick your head in the sand! Talk to them about the issue: lenders are supposed to work with borrowers to resolve problems. Ignoring bills or serious problems can lead to default.

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

What is the Right Repayment Option?

When your federal loans come due, your loan payments will automatically be based on a standard 10-year repayment plan. If the standard payment is going to be hard for you to cover, there are other options that can help you manage your debt, including alternative repayment plans and deferments. Extending your repayment period beyond 10 years can lower your monthly payments, but you’ll end up paying more – often a lot more – in interest over the life of the loan. The most important new option is the Income-Based Repayment program. It can cap your monthly payments at a reasonable percentage of income, and forgive any debt remaining after 25 years of payments. Forgiveness may be available after just 10 years of payments for borrowers in the public and nonprofit sectors (see below).

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

Thank you FOR YOUR CONTRIBUTION!
Please continue to share
your truths.

Stay informed