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Collection agency charging 50% in fees?

Thanks to the information provided by the helpful people from Yahoo answers I decided to ditch the credit repair company and do the work myself to repair my credit. First the good news, my score has increased by a whopping 200 points. Now the bad news, I have an old university debt that I am trying to dispute because I did not withdraw for medical reasons and they are trying to get me to pay it. The original debt was 879.00, and now it is on my credit as a bad debt for 1349.00. This is over 50% in a charge, fee or what have you. I called the school today and first the lady agreed with me, and said she would call the agency to see what is going on, and she calls me back and says they use an "inverse" method when calculating the fees. I am waiting on the Louisiana state attorney general office to call me back with the actual amount they can charge I was told 35%? Any suggestion in the meantime?

Public Comments

  1. They will charge their fee's that will continue to grow as time passes on. How old is this debt? It isn't abnormal to see huge differences in the amount you originally owed and what they are charging you now.
  2. One word for you: BLUFF!!!!!!!! Call them up and tell them that you are deeply considering claiming bankruptcy as you are not sure what else you can do. (Note: if you were to ACTUALLY claim bankruptcy, they wouldn't ever receive a penny!) Tell them that unless they are willing to comprimise with you and come up with a reasonable figure for you to pay, that you will have no other choice but to do exactly that. MOST companies will comprimise and come up with a reasonable figure for you to pay off and they will remove it from your bureau. Chances are they will not refuse to comprimise as receiving some money from you is better than getting nothing at all!
  3. Send them a demand for validation letter. They need to be able to prove they have the right to collect the debt and the amount. If they do validate I would send them a letter agreeing to pay x if they delete from your credit report. Most collection agencies buy debt for pennies on the dollars.
  4. If you look at the contract that you signed for the loan, I believe it says "reasonable" collection costs. 50% is not "reasonable". Neither is 35%. I would stop talking to the collection agency and negotiate directly with the school. If you have the money, offer to pay the $879 as payment in full. Make sure that you get any payment arrangement in writing.
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