Question: I received a dunning letter from a collection agency and responded via certified mail, requesting validation in the form of “a copy of the original signed promissory note”. I received a response of a letter that said “see attached” and the attached document is a printout of a federal loan consolidation application (without signature).
That loan is current as far as payments go, but through the same original creditor in question. My question is, although this is NOT validation for the loan in question, how should I proceed, if at all? My logic tells me to give them enough rope to hang themselves with and if it were to go to court; would be cancelled by technicality as they validated the wrong debt.
Answer: I am not an attorney and suggest you seek legal advice but I will offer the following. In the event you are sued you can definitely use their failure to properly validate the debt as an affirmative defense. The plaintiff has the burden of proof; therefore, if the collection agency only has possession of the information they provided you it is a possibility the case can be dismissed.
But keep in mind, the court may give legal counsel an opportunity to provide the correct information before simply dismissing a case. And, even if a case is dismissed based upon a “technicality” such as validation for the wrong debt, the case will more than likely be re-filed with the correct information.
Another option, if a case is filed, would be for you to bring a motion for summary judgment or a motion to dismiss. These two motions are basically procedural steps that test the validity of a case to determine whether it should get thrown out. But again, even if you get the case thrown out the collection agency can re-file.
I think you should be concentrating on the issue of payment or settlement and I say this for the following reasons:
- Student loans rarely go away. Not even bankruptcy can get rid of a student loan under normal circumstances.
- It is possible to avoid repayment and collection agencies for quite a long time; however, one day, you will have to confront the loan.
- If you request correct validation and it is provided, are you prepared to make payments?
These are just a few issues to consider when deciding on how to proceed. There may be other alternatives you might want to research such as loan cancellation or discharge by the Ombudsman under certain conditions or criteria.
There may also be an opportunity for you to rehabilitate the defaulted loan. Rehabilitation involves making a series of on-time payments. Once those payments have been made the default status of the loan is removed and you regain the benefits of the loan program which includes deferment or forbearance.
Another great benefit of loan rehabilitation is the credit bureaus are notified and the loan is brought current on your credit reports which will help your credit scores. The best of luck to you.