When you default on federal student loan debt, you may find yourself overwhelmed with dealing with the repercussions that this debt has brought on. This includes payment demand letters and phone calls from collection agencies such as Credit Adjustments Inc, and not to mention the damage that it is doing to your credit.
How do you deal with the phone calls and letters? How do you repair the damage that has been done?
This guide will tell you who Credit Adjustments Inc is, why they are calling you, and how to deal with them and other collection agencies. We will also discuss what your rights are as a consumer, and how to handle your student loan debt and prevent this situation in the future.
Who Is Credit Adjustments Inc? What Do They Do?
Credit Adjustments Inc is a third-party collection agency contracted by the Department of Education to collect on defaulted student loans. The company was founded in 1964 and is headquartered in Defiance, OH. They have additional offices in Toledo, OH, Manchester, New Hampshire, and Ontario, California.
According to their website, “they specialize in debt recovery within the higher education arena and, as a result, have a thorough understanding of student borrowers and have exceptionally high recovery rates – among the highest in the industry.”
Aside from collecting on defaulted student loan debt, they also perform collections within the healthcare industry and offer account resolution for defaulted debts.
Credit Adjustments Inc, Reviews, Complaints, And Lawsuits
Credit Adjustments Inc has been accredited with the BBB since 2019. According to the BBB, Credit Adjustments Inc has a total of 62 complaints filed in the last 3 years, and 26 complaints were closed within the last 12 months. The main complaints filed against them were regarding billing and collection issues.
Credit Adjustments Inc has had several lawsuits filed against them for violating consumer rights. This includes illegally harassing borrowers, contacting consumers using automated telephone dialing systems and artificial or prerecorded voice, fraudulent and deceptive collection practices, and attempting to collect on debts unlawfully.
How Do I Contact Credit Adjustments Inc?
Their contact information is:
Credit Adjustments, Inc
Department of Education Accounts
PO Box 5640
Manchester, NH 03108
Telephone: 800-347-9623
Email: [email protected]
Website: Visit here
Why Are They Calling Me?
More than likely they are calling you to collect on a defaulted student loan debt. They received your information because they are contracted by the Department of Education to recover student loan debt.
Your loan servicer may have attempted to collect on this debt on several occasions and when your account became 270 consecutive days overdue.
As a result, the loan servicer sent your loan to the Department of Education’s Default Resolution Group/ Debt Management systems to pursue the collection process. Your loan was then placed in default status and sent to Credit Adjustments Inc for further collection attempts.
How Do I Deal With Them?
The best way to deal with them is to know your rights under the FDCPA. This agency has had several complaints regarding the violation of the FDCPA. By understanding your rights and enforcing your rights, you are better prepared to deal with them.
The must inform you that you can do the following:
- Request verification of the debt after receiving the “validation notice’
- They must provide a written validation notice within 5 days from initial contact with you. This notice must include the amount of debt, the original creditor, and what to do if you believe you don’t owe the debt or that it does not belong to you.
- They also need to inform you that you can request for them to no longer contact you by submitting a request in writing.
Here is a list of things that Credit Adjustments Inc or any other collection agency are not allowed to do:
- threaten you with violence or harm
- use obscene or profane language
- repeatedly use the phone to annoy you
- misrepresent the amount you owe
- lie about being attorneys or government representatives
- falsely claim you’ll be arrested, or claim legal action will be taken against you if it’s not true
- try to collect interest, fees, or other charges on top of the amount you owe, unless the original contract or your state law allows it
- deposit a post-dated check early
- take or threaten to take your property unless it can be done legally
How Do I Get My Loans Out Of Collections?
If you defaulted on your student loans and it has been sent to a collection agency, you have many ways to get it out of collections. You can do the following to get your loans out of default and out of collections:
- Consolidate your loans
- Rehabilitate your loans
- Payment in full
If you have an active wage garnishment, you can do the following to get the garnishment lifted or judgment vacated:
- Payment in full
- Negotiating settlement
- Voluntary payment arrangements
- Loan rehabilitation
How to get your loans out of default or collections.
Consolidation
A loan consolidation consolidates your defaulted federal student loan into a Direct Consolidation Loan. Now If you currently have a wage garnishment in effect, then you will need to get the wage garnishment lifted or the judgment vacated before you can consolidate your loans.
This can be done by doing the following:
- agree to repay the new Direct Consolidation Loan under an income-driven repayment plan, or
- make three consecutive, voluntary, on-time, full monthly payments on the defaulted loan before you consolidate it.
Rehabilitation
The loan rehabilitation option is one time the only option for your loans. If you default a second time after rehabilitating your loans you must find another option to get out of default. You are required to make 9 consecutive on-time monthly payments within 10 months.
After the 5th monthly payment, your garnishment will stop. Once your loan is rehabilitated, you will be eligible for benefits that were available on the loan before you defaulted, such as federal student aid.
The default will be removed from your credit history, however, any late payments will remain.
Payment in full
This is the least practical option when attempting to get your loans out of default, collections, or active wage garnishment. You would be required to pay the loan balance in full.
Negotiate a Settlement
The only time that you can negotiate a settlement amount on your student loan debt is when it is in default status. However, the Department of Education usually doesn’t settle for less than 85% of your student loan debt. Collection agencies may be able to agree to a non-standard negotiated amount, for up to 40% of the debt in some cases.
The collection agency would have to be willing to eat the difference between the settled amount and the amount equal to 85% of the loan. To negotiate a settlement amount, you need to make sure that you have that amount within 30-90 days of the agreement.
Voluntary repayment plan
A voluntary repayment plan should only be used if you are trying to save money to negotiate a settlement of your debt, or you have no other option to get out of wage garnishment.
This option will only stop a garnishment, however, it does not get your student loan debts out of default. Yet this is the first option that you are offered when the collection agency initially contacts you.
You can also appeal the garnishment within 30 days of it taking place. The downside is that the collection agency will still deduct up to 15% of your take-home pay, while your appeal is being reviewed, which is known to take 2-3 months.
Understanding these options that you have available is important if you want to get your loans out of default and if you want to stop a wage garnishment.
Conclusion
Finally, If you have reservations about dealing with collection agencies, whether it’s because you don’t want to or you don’t know how to, the best thing to do is avoid going into default.
We have professional student loan financial advisors that are experienced in handling these debts and developing strategies to take care of these debts.
