Allied Interstate ripoff Minneapolis Minnesota

I hope this isn't so outdated of a report that nobody will see it.  I've run into some trouble defaulting on my loans and have been contacted by Allied.  I'm considering my options and trying to figure out what to do ASAP and have been troubled by some comments in this chain.  I'm worried now that:
1- I don't need to pay anything off and it's pointless to do so
2- Anything I pay to Allied wouldn't even be affecting/applied to my original debtor

My situation is potentially different though as it involves my STUDENT LOANS.  I will outline my situation and hope for some help, clarification, direction and understanding from anyone out there.

The long story short of my situation is that I had a handful of Federal loans (half subsidized, half unsubsidized) that were consolidated to total about $12,000, and a private loan for about $15,000 through Sallie Mae. Well, they've been put into default and are now in the hands of Allied Interstate. 

There's one potential blessing in that I've received a letter that says I can settle the private loan for around $11,000 paid in full by the end of the month. This is a pretty good deal considering it's less than I borrowed. Someone suggested I contact Sallie Mae directly and try to negotiate a deal with them for even less as that $11,000 includes a cut for Allied and Sallie Mae might very well strike a deal directly that would be cheaper for me and in turn mean more for them, but I don't know if they would even do something like that.

My bigger concern is the federal loans being defaulted. Sparing you all the details, this whole thing was a total surprise to me cause I signed up for an economic hardship deferral program which was supposed to put all my payments on hold for my federal loans and even have the government still picking up the interest tab for the time being. Them being defaulted on is a concern because Allied called me and I mentioned this program and they claim "there is no such program". I know I've lost out on forbearance and deferment privileges by being in default, but this deferment I'm talking about is not the one I could pay $50 for 6 months at a time, but an automatic one because I don't make enough money. I've also stumbled on something about IBR (income based repayment program) which I don't think I'll now qualify for either. 

Let me also note here that Sallie Mae still has record of my private loan on file, but the federal loans have been shown to be paid in full and out of their system, so they can no longer do ANYTHING with those. They were passed to USA funds, but their system now directs me to contact Allied as well and there's nobody I can talk to regarding it.

I only work part time and make less than $10,000 a year as far as factoring in for repayment abilities go. The idea for cutting a deal and paying off the loan would require me to have a family member pay it and me just pay them back to get all this off my credit and if I'm gonna be paying interest and whatnot I might as well give it to them. Also, it would eliminate any unavoidable extraneous fees that would be tacked into my loans through the Collection Agency.  They threatened to go through wage garnishment if I don't work with them to set up a payment plan.

I received a letter a few weeks ago that wage garnishment was going to start if I didn't contest it and be paid to Pioneer Credit Recovery (from Arcade, NY) on behalf of USA Funds for my federal loans. The calls I'm receiving from Allied are regarding these same loans, so it's kind of interesting/confusing that Pioneer is garnishing my wages and Allied is calling me saying that they will put that through. Anyhow, it said they could take up to 15% or the maximum allowed. Well, I make about $225 a week gross and about $150 after taxes and deductions. The wage garnishment they have been allowed to take out only comes to $1.72 a paycheck! That's got to mean something with respect to my financial position as a bargaining tool to cut a deal because of how little I'm legally considered to be able to pay.. 

Please offer me any advice you can as I don't want to make a wrong move. I feel like I have an opportunity to make something positive come from this negative situation and am believing for that to happen. 

After my post last night, I went to several other consumer sites, finally ending up with a copy of my credit report-how did I get my current job? It is full of errors! I'm not sure I would have hired me.

I would never have known how to take back my financial life if it had not been for the problem I had with Allied, which brought me here.

I have learned so much from your replies, and from reading some of the other reports.

I feel a bit of a fool. I had a run of bad luck that I now see began after a nasty divorce, worsened when I took the Alabama job in 2002, and got really scary when in October 2005, I ended up virtually homeless-not living in my car, but living in Georgia, imposing on the generosity of a friend who is letting me stay until I get back on my feet. I have been in a panic for months.

But now, based on what I saw on my credit report/background check, no wonder my former employers treated me the way that they did, and again, I have to wonder, really, how I got my current job. (BTW, my current employers are great, I work for a fantastic company, and hope to be with them for a long time.)

Once, I thought if I paid my bills, or contacted my creditors if a problem arose, I would be ok. (Actually, I tried not to have creditors; when I was turned down a couple of times in the last eight years for small loans, I just thought I wasn't making enough money, or that I didn't have enough credit history. I never bothered to request the report after the turn downs.) I never even thought to check my credit report or background at all.

What a terrible mistake. I wish I had not had to learn this the hard way, though.

Any way, I think I'll keep coming here, the support and advice is great.

Thank-you all for your posts. I have never felt so alone until coming here; your replies have helped in a lot more ways than I can express.

Matt,

Paying ANY 3rd party debt collector/debt buyer serves no purpose to the debtor. There is no benefit at all to the debtor, so why do it?

Paying on an old charged off / sold debt WILL hurt the debtors credit score more than just letting it go.

Paying on an old debt will validate it and make it legally collectable, where it may not have been.

Paying on an old debt restarts both the SOL for enforcement of collection AND restarts the 7 year negative reporting period.

Very few collectors/debt buyers will actually sue, and of those who do, very few will actually win, and of the very few that actually win only a few will actually get paid!

So, exactly why should a debtor pay a collector?

Maybe I missed something.

Go back to your cubicle.

Matt,

Paying ANY 3rd party debt collector/debt buyer serves no purpose to the debtor. There is no benefit at all to the debtor, so why do it?

Paying on an old charged off / sold debt WILL hurt the debtors credit score more than just letting it go.

Paying on an old debt will validate it and make it legally collectable, where it may not have been.

Paying on an old debt restarts both the SOL for enforcement of collection AND restarts the 7 year negative reporting period.

Very few collectors/debt buyers will actually sue, and of those who do, very few will actually win, and of the very few that actually win only a few will actually get paid!

So, exactly why should a debtor pay a collector?

Maybe I missed something.

Go back to your cubicle.

Matt,

Paying ANY 3rd party debt collector/debt buyer serves no purpose to the debtor. There is no benefit at all to the debtor, so why do it?

Paying on an old charged off / sold debt WILL hurt the debtors credit score more than just letting it go.

Paying on an old debt will validate it and make it legally collectable, where it may not have been.

Paying on an old debt restarts both the SOL for enforcement of collection AND restarts the 7 year negative reporting period.

Very few collectors/debt buyers will actually sue, and of those who do, very few will actually win, and of the very few that actually win only a few will actually get paid!

So, exactly why should a debtor pay a collector?

Maybe I missed something.

Go back to your cubicle.

Matt,

Paying ANY 3rd party debt collector/debt buyer serves no purpose to the debtor. There is no benefit at all to the debtor, so why do it?

Paying on an old charged off / sold debt WILL hurt the debtors credit score more than just letting it go.

Paying on an old debt will validate it and make it legally collectable, where it may not have been.

Paying on an old debt restarts both the SOL for enforcement of collection AND restarts the 7 year negative reporting period.

Very few collectors/debt buyers will actually sue, and of those who do, very few will actually win, and of the very few that actually win only a few will actually get paid!

So, exactly why should a debtor pay a collector?

Maybe I missed something.

Go back to your cubicle.

Send Allied a Cease Communication letter as stated above. Include in the letter that you will deal with the original creditor only. Don't sign your name, print it. At the bottom of the letter under your name include the following: This is an attempt to make a debt collector obey the law. Any information obtained will be used for that purpose. Make sure to include in your letter that any adverse information submitted to any of the credit reporting agencies will result in legal action. Send it certified with returned receipt. Allied bought the debt so you no longer owe the original creditor. They sold it to them for pennies on the dollar.

Allied has been sued by the AG in Minnesota and it was costly to them. They are well known for their FTC violations. In fact they make Bud Hibbs's worst list. Go to budhibbs.com, and read about them. He also has a sample letter I got the above info from. He knows his stuff. Good Luck with this company. I had to deal with them on an account that wasn't even mine. Let's just say I'm a couple of grand richer. Keep us posted.

First of all, the OP did not have a contract with Allied..it was the the original creditor. Had she paid Allied, not a dime would have gone to the original creditor in most cases. Additionally, collection agencies/junk debt buyers are not notorious for keeping their word. This same debt would have been paid and then sold to another JDB and the cycle begins again and again and again.

Bianca, I think your move was a much smarter one.

I am in the process of joining a debt management plan through a local non-profit consumer counseling service. I will be repaying the original creditor-not Allied-and not the amount (nearly double, according to the original creditor-homelessness makes concentrating hard, so I couldn't recall the amount).

Thank-you Steve, the advice you gave stopped the calls; and thank-you Matt-but you should have read the entire post-I TRIED to get information from Allied, and I TRIED to set up a re-payment plan, which, if you will reference my original post, you will see was unsuccessful.

What is interesting is that a different collection agency contacted me regarding a cell phone bill I am disputing-as soon as I answered the phone, an operator professionally ID'd himself, I got all his info, and faxed, then snailed the return rcpt letters I sent regarding the dispute-haven't heard from anyone since. Then another agency contacted me about another bill, one I owed, and was great about helping me set up a payment plan.

Allied is bad news, and I think a comment read on other posts about them is quite accurate-they don't want the money (which according to my original creditor, they are not owed), they want to terrorize fellow Americans.

Steve why should she send a cease letter to the collection agency? She knows that she owes the bill why not call and set up a payment arrangement with them and pay teh bill she knows that she owes? What you are suggesting is not going to help her in any way except by eliminating a few calls. If she sets up a payment plan with the collection agency I'm pretty sure that they won't keep calling if they know that the money is secure.

Steve why should she send a cease letter to the collection agency? She knows that she owes the bill why not call and set up a payment arrangement with them and pay teh bill she knows that she owes? What you are suggesting is not going to help her in any way except by eliminating a few calls. If she sets up a payment plan with the collection agency I'm pretty sure that they won't keep calling if they know that the money is secure.

Steve why should she send a cease letter to the collection agency? She knows that she owes the bill why not call and set up a payment arrangement with them and pay teh bill she knows that she owes? What you are suggesting is not going to help her in any way except by eliminating a few calls. If she sets up a payment plan with the collection agency I'm pretty sure that they won't keep calling if they know that the money is secure.

Steve why should she send a cease letter to the collection agency? She knows that she owes the bill why not call and set up a payment arrangement with them and pay teh bill she knows that she owes? What you are suggesting is not going to help her in any way except by eliminating a few calls. If she sets up a payment plan with the collection agency I'm pretty sure that they won't keep calling if they know that the money is secure.

Bianca,

The best thing to do is just change your phone# to an unlisted one, and do not put it on anything you apply for as it will end up on your credit report.

Also, do not even talk to them. AND, never give them any personal info or employment info.

You can send a CEASE COMMUNICATION request as per your rights under Federal Law. [FDCPA]. You can read this law at the FTC.gov website.

Collection Agencies are absolutely powerless. They cannot do anything to you. They break the law on a routine basis. You need to file a complaint online at FTC.gov each time they call you after you tell them to stop, and each time they insult or threaten you.

Collectors are punks. Most collectors take the job as a way of getting even wit the world. They feel powerful being able to terrorize and harass someone over the phone that they would never confront face to face. It is common for collectors to be on drugs, and to have minimal eduaction and people skills. These jobs are very easy to get, and have high turnover.

Chances are good that the original creditor charged off AND sold that old debt to a junk debt buyer.

Cut off ALL contact with them.