Decades Old Student Loan in Default
Late last year I was contacted by a collection agency named "Financial Management Services." The CA is contending I defaulted on a student loan in 1985. I would like to outline some particulars and get some advice and opinions.
I don't have the paperwork in front of me but the total owing is about $7k. About $2k of that is principal, $1k in collection costs and the remainder is interest.
I definitely attended the school the CA is talking about. I left the school in 1979 and had attended on the GI bill. I have absolutely no recollection of borrowing any money to attend the school. I am not saying I didn't borrow it, only that I don't remember borrowing it. I can't imagine why I would have borrowed the money since, like I said, I had the GI bill which was much better in those days than it is now.
I have requested, in writing, a copy of the original promissory note with my signature. I sent this certified mail, return receipt requested. This was late January of this year. I did get the receipt back indicating that the CA had received my letter. To date, despite my written request and several verbal (via phone) requests, I have yet to receive the promissory note.
About every other week the CA will call, threatening to garnish my wages. I remind them that I have requested the promissory note. They admit to being able to tell I have done that and that ends the phone call. A couple of weeks or so later, the process repeats itself.
In the mid 1980's, I filed bankruptcy. I know that now student loans are generally not dischargeable through bankruptcy but I understand that at some point they were. Without the promissory note I have no way of knowing what the rules were when I allegedly signed the note.
I want to resolve this. I am thinking of asking the CA to proceed with the garnishment at which point I will ask for a hearing and see if I can get the promissory note through that process.
When I have a phone call from the CA and remind them of the request for the promissory note, they indicate that they will request it from the Department of Education AGAIN. They indicate that despite having previously requested the PN, they have heard nothing from ED either in the form of getting the PN from them or some indication from them that they are unable to locate it. What happens if they are unable to locate the promissory note? This thing would have had to have been signed prior to 1979, near as I can guess.
Here is my thinking. If I owe the money and they can prove it, I want to pay it. I have the money and will not have to make payment arrangements. If the loan was discharged under my BK, I don't owe the money. Lots of thing here hinge on what the promissory note says, assuming there is one and that it contains my valid signature.
My wife kind of seems to want me to just settle this thing since it amounts to such little money and I am thinking about that too. I mean, it might go away for awhile if ED can't come up with the PN but what if 10 years from now the PN suddenly appears? Then I will just owe that much more interest. If I could get a settlement proposal in writing from ED so this never comes back to haunt me again, I might be willing to consider it assuming we can agree on the numbers. I am thinking all of the principal, 1/2 of the interest and no collection costs might be worthy of consideration.
So what do the experts think? Should I just hold out until they either produce the note or garnish my wages, the request the hearing? Should I suggest a settlement offer?