I'm helping a friend with some (old) student loan from 15years ago. It has went to a third party collection "Total Recovery Toronto Ontario". She has admitted to them she does owe the money which is around $8000.00 - and has made some payments to them in the past (last payment to them was June 2007)... since then she has tried to come to a settlement with them. She offered them $5500.00 in Nov 2007 to settle this - she just wanted this done and over with,(was borrowing from a family member) they declined and said no the settlement would be $7100.00 and since then they have requested financial statements and require her "new" spouses financial papers... and won't be considering an offer till this info is received to them.

Is this true? Her financial papers and spouses? To a 3rd party collections? They have also told her that they can sue her and take her income tax and go into her bank accounts and have her wages garnished... is this all so true?

**A little back ground on the loan... was taken out 15 years ago for school through a bank, the school ended up claiming bankruptcy and never received her schooling... She isn't saying that she doesn't owe the money but why won't the collection company accept the offer of settlement? **

She just wants this done and over with... and they only thing on her credit rating is this company... the bank isn't even showing up on it.

First, did the school get the money or did she? If the money was paid directly to the school, and then went bankrupt, she may actually be off the hook.

Second, the creditor doesn't have to settle at all. They are probably looking to see how much she can really afford. Also, the amount actually borrowed would have a bearing.

I would not gived them any information on anyone else. While they may want it to see how much she can afford, its her debt alone.

As far as I know right now... (have put a call into her regarding where funds went)
What I'm to understand is she paid the school went to classes and ended up leaving school due to having a baby, and when off - the school closed up.

Could they deduct money do to that? Off original loan agreement? If went to court?

So I'm to understand that Total Recovery can refuse settlement... what happens if she just refuses now to pay on it?

Can they sue her? Garnish wages? Take her income taxes?. remember this is 3rd party collection company the original company has no file for them any long... assuming they charged it off many years ago
I have confirmed this with the National Student Loan office that there is no record of her loan in system with her ssn#.

Now the story is changing. She left school and the school closed AFTERWARDS. That's a different situation. Also she got the money then paid the school, that changes things too. Under those circumstances its likely she is liable for repaying the loan.

If she refuses to pay, they sue her obtain a judgement, then garnish her wages and/or attach other assets. Once they obtain a judgement they have no incentive to settle since they can have there court attach assets.

Unfortunately she has acknowledged the debt by offering a settlement and making payments. So it would be hard to deny it.