I have recently been contacted by a Canadian Collection agency informing me that an American student loan has been defaulted and now the full amount is due within one week. The loans went to collection in the states last April and I paid the owing amount and I was informed that all loans were up to date. Payments have continued monthly and 'all is well'. Apparently within the group of loans one did not reach this particular agency and has been defaulted for almost one year. This is after the catch up cheque was cashed, and no further correspondence was received. These were student loans and albeit from the same company, different dispersement dates, four different company changes over four years, and difficulty contacting the Guarantor (voice mails) has left me confused. My credit card, mortgage, Canadian student loans, etc., have never gone without being paid. I have expressed a desire to the collection agency to get everything up to date, but have been treated poorly and even hung up on. My question is 1) should I not have received written notification of this loan (if in fact it is defaulted, and 2) what should my next steps be legally or financially? The company has requested either $12,000 US in 48 hours, or three monthly payments of $4,000 US. Both these proposals are extreme. I am going to ask to speak with the manager and propose a 1 to 2 year payment plan. Is this reasonable?

We are unfamiliar with collection practices and law in the U.S. so cannot comment on the events to date. Your intent to negotiate a payment plan sounds reasonable. Just make sure you receive confirmation in writing that you have an agreement before sending any money in - it's not unusual for a collection agency to verbally agree to something and then get harassing again.

Ann Clarke
phone: (403) 296-2972
aclarke@moneyhelp.ca