[ctraviss]

I live in Ontario Canada. I have been making regular monthly payments to a debt collection agency for about 2 years on a student loan, previously held by a bank, that went into arrears. The collection agency periodically calls me and asks if my situation has changed or if I can increase the payments or settle the account. My situation has not changed and I have informed them of this. Recently they sent a letter stating that if arrangements for resolution of this debt are not made then the loan will be reported to my credit bureau and further collection measures will be taken.
So, can they 'take further collection measures' even though I have been making regular monthly payments?
What are 'further collection measures'?
If I can't settle the account, what can I do to avoid this?
Any help is appreciated. Also wondering what gov't agency I could talk to about this or do I need to speak to a lawyer, if so, what type of lawyer?
I'm so confused.
Thanks
ctraviss

[Iknowalotofstuff]

You need to understand how collection agencies work. The optimum goal is to collect or settle the entire debt with one letter or phone call. The least favourable goal is to accept an arrangement that allows the debt to be paid over an extended period. The first option has little overhead while the latter has a lot. Every letter and call is designed to get the account dealt with as soon as possible.

Here is the collection tactic that is most common. Make a demand. Suggest an unpleasant consequence. Attack self esteem. I want the money yesterday. If you don't pay we will sue, ruin your credit or take your assets. What kind of a person are you that does not pay their debts. Fear of consequences and guilt often results in another bad financial decision that benefits the collection agency.

First you have to determine if you have the ability to ever pay the debt. Do you have surplus income after meeting the necessities of life that will retire the debt in a reasonable time say 4 years. If so, pay. If you cannot, investigate a consumer proposal under the Bankruptcy and Insolvency Act. If you have been out of school for 7 years, this proposal will allow you to pay either all or part of the loan at no interest at payments you can afford over a period up to 60 months.

If it takes you 6 years to pay your student loans on your own, it will be on your credit file for 6 years after that. 12 years all together. If you make a proposal say over 4 years, it will be on your file for 3 years after completion. What the better deal 12 years or 7 years.

Talking to a bankruptcy trustee at the very least makes you a more informed consumer and at best gives you a solution better than your present situation. A consumer proposal is not bankruptcy.

If you have more specific questions, post them and I will try to answer them.