How to deal with a debt collector and repayment schedule?

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How to deal with a debt collector and repayment schedule?

I have had to take a drastic cut in pay at my new place of unemployment and fell behind in my student loan payments. Now I have a collection agency contacting me. Even though I sent a good faith check and tried to set up reasonable payment arrangements; approximately. 2 weeks after they cashed my check, they called me to threaten me with garnishment. As I did not want that to happen, I accepted their payment arrangements of approximately 50% of my pay that is deducted automatically from my checking account. Now, with this amount going out I am getting further behind on my other obligations. Is there anything I can do to set up more reasonable payments?

Asked on September 14, 2010 under Bankruptcy Law, Colorado

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

You may need to consider bankruptcy, and should probably meet with a bankruptcy attorney. The problem is, except to the extent debts are modified in bankruptcy, creditors are not obligated to take less than payment in full when due; also, when there is a contract or payment agreement, the creditor does not  have to let the debtor change or modify it--as a contract, the creditor can look to enforce it. Therefore, there probably is no way to change the payment schedule without th intervention of a bankruptcy court.

The kicker is, student loan debts are VERY hard to discharge in bankruptcy; a showing of extreme hardship is necessary. Therefore, bankruptcy may still not help you, depending on your situation, but it is definitely worth the consulation with an attorney. Good luck.


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