Charged off Student loan

Charged off Student loan

sabre_sale@hotmail.com	6/27/2005 2:48:51 PM
am having a continuing problem with a set of loans from a local credit union. I live in Colorado. The loans started off as Subsidized Stafford Student Loans for the 1994-1996 school years. The credit union apparently made some sort of violations when filing for the interest with the Department of Education. Around December 2000 the credit union was removed from the Federal Family Education Loan Program(FFELP) and the Guarantor of the student loans ended the insurance on them. I have been repeatedly told that at that point the loans were no longer Federal student loans. They became private bank loans. I have been refused assistance from the Department of Education Ombudsman and I am unable to consolidate the loans with the rest of my student loans. In 1998 I withdrew from Full-Time school and the grace period expired; the loans should have been in repayment at that time. I later continued half-time attendance and graduated in May 2001. I should have immediately entered into repayment after graduation. After graduation I should have had two deferments for Half-Time attendance. I was not in financial condition to pay on the loans until late 2004. I was considerably delinquent with the loans and did not make a payment until April 2004. At this time I met with the credit union's loan officer and agreed to make a single $70 monthly payment to service all the loans. This was all I could afford to pay and I was told that this payment would be enough to avoid being sent to collection. In this first meeting with the loan officer I noticed that the interest on these loans was considerably higher than the interest on my other Stafford loans. I asked about the interest rates at this time and was told that the since the loans were "no longer student loans" that the interest rate was fixed rather than the variable rate specified in the Promissory Notes. The variable rate that should have been charged at that time was 4.22% and I was being charged 8.25% on two of the loans and 8.92% on the other two. The 8.92% actually exceeded the specified cap on the variable rate. In early May of 2004 I made a second $70 payment and deposited funds into checking for the June payment. At the end of May the credit union closed my checking account and applied all funds from there to the loan balances. I was never contacted by the credit union that this would happen or that it did happen. I first became aware it happened when my Discover Card e-payment had bounced in early June 2004. I went in to the credit union to discuss the matter with the loan officer. I again voiced my concerns about the interest rates in the June meeting. I was told that the $70 payment was not covering the monthly finance charges("negative amortizing") and this was the reason my funds were seized. I am positive that if the specified variable rate was used that the $70 payment would have covered the finance charges and paid on the principal too. At this time the loan officer agreed that the funds seized would be considered to be my June payment and I would not pay again until July. I made the July 2004 payment in person at the credit union early that month. I received a statement on July 14, 2004 showing the loans were charged off on June 8,2004. This account statement was the first I ever recieved showing the total accrued finance charges. I realized these finance charges were considerably higher than they should have been based on the variable interest rates and interest not being charged while in school. I was never given any statement showing collection costs or late fees were being charged to the account. I again met with the loan officer on July 15, 2004. In this meeting I asked to be supplied with copies of the Promissory Notes. I also asked for a history of the account showing month-by-month finance charges. The loan officer would not supply me with a copy of the Promissory Note and stated that the Credit Union did not possess any copies. I was also told at this point that it was impossible to obtain a monthly history of the finance charges since the credit union's computer record system had been changed over the previous month. The Loan officer did supply me with a photo copy of all the documents that they had in the loan file. I was told at this meeting that the charge off was "internal" and as long as I continued to make the $70 payment that it would not be reported to the Credit Bureaus. I have written documentation of this verbal agreement. At this point I began researching and documenting the variable interest rates of Stafford Loans. I contacted the Department of Education at and was informed the loans were not student loans and the Department of Education was no longer involved with the matter. I was told the credit union was removed from the Federal Family Education Loan Program for reporting violations in 2000. On July 20, 2004 I wrote the credit union by certified mail requesting copies of the Promissory Notes; a complete record of all periods of deferment, forbearance, and repayment; the current status of the accounts; and a complete history of the finance charges on the loan. I called to confirm that the letter had been recieved and was told that the Loan Officer I had met with previously was no longer working there. I waited seven weeks for a response before writing again to the credit union. This time I stated that I believed the interest rates used for the loans were incorrect and that the totals for the finance charges were calculated incorrectly. I again requested the same information as in the previous letter. I did not receive any response to these letters until November 9, 2004. I finally received a letter from the credit union. This letter included copies of the Promissory Notes, but did not include a history of the accounts. The letter stated that further research would be done on the finance charges, but no account history would be available. I waited two more months for the additional information to be sent to me. I contacted the National Credit Union Association for assistance on January 10, 2005. The credit union manager responded to this complaint on February 10, 2005 with a letter contending that the fixed interest rates were correct. Documents actually showing the variable nature of the interest rates were included with the letter. No itemized statement was included with this response. After an additional letter to the NCUA, I received a decision on April 25, 2005 that there were discrepancies with the way interest charges were calculated. Their decision was that the credit union must supply an itemized statement and adjust the finance charges that were applied to the accounts. The decision stated that the response from the credit union should be made "shortly" but it was left open ended. After waiting one month, I went to the credit union to check on the status of their response. I was told that they needed more time to calculate the interest charge adjustment since their accountant had open heart surgery. At this time they brought up the subject of settling the charge off. The Manager also stated that I was "not legally obligated" to pay the loans. This last week I received copies of my credit reports. I made a verbal agreement with the credit union that making a $70 payment monthly woul



Rich Carreiro	6/28/2005 6:28:06 PM
sabre_sale@hotmail.com writes: Was it legal for the credit union to remove all the funds from my savings and checking accounts without a judgment or any court involvement? Probably was, but read your account agreement to be sure. Many account agreements say the accountholder grants the bank/CU the right of "set-off", meaning they can unilaterally use your deposit accounts to pay off any loans you have with them. I know a number of people who will not keep deposit accounts and loans at the same bank for that reason. -- Rich Carreiro rlcarr@animato.arlington.ma.us

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