Consumer Protection Law
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You can certainly negotiate with the lenders but there is nothing (no law or statute) that says they have to accept the original amount in full and final payment and they usually don't.
so I'm stuck with the garnishment?
However, just because a garnishment has been issued doesn't mean that you can't negotiate with them.
No, you can try to pay it off, offer them an amount to withdraw the garnishment, etc.
but they don't have to accept it
It isn't like a regular loan though because they know the odds are in their favor as far as collecting.
No, they don't have to accept it.
so I'm stuck with the garnishment
There is an internet rumor that says if you offer the original amount plus interest then the lender has to accept it but that is just a myth.
The most I have ever known them to reduce the amount by is 20% and that was for a couple of people I know who paid off six figure amounts in one lump sum.
so after they get their $14,000 am I still in default?
The total of the loans plus all of the penalties and interest is $14k?
If you could pay that amount then it would no longer be in default.
However, they will keep adding on interest and penalties as long as they can.
I can pay the original $5,000 but not $14,000
You can certainly ask them if they'll accept it but the chances of them agreeing are very, very slim.
so I'll probably end up paying more then the $14,000
Yes, if you pay it out.
They are going to continue charging interest.
even though they are being paid?
Yes, they continue charging interest as long as the debt is outstanding.
If by some freak of luck I catch someone in a good mood and they accept my offer of the original amount plus what they've already collected, would I still be in default?
No, that will remove you from default.
ok, I appreciate your help. any other advice u want to add?
No, not really. The only thing I can add if you don't pay it off is that you may want to ask for an itemized listing to make sure that you haven't been charged twice or been charged interest on interest.
what do you mean by interest on interest?
They can charge you interest on the original amount, let's say the $5000. Every now and then you see where they add interest to the amount and then charge interest on that amount (ex. add $100 for interest to the amount making it $5100 and then charge interest the next time on $5100).
They aren't allowed to do that. I'm not sure if they can charge interest on the penalties or not but you would want to take the position that they can't and then make them show you where they can.
then wouldn't they have been doing that all along to get the total up to 14k?
No, probably not. It is certainly possible but it is rare for this to happen. It's worth checking though.
thank you. every little bit helps.
You're very welcome.
Anything else before I exit to help others?
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