If you have defaulted on your federal student loan, then, chances are that you have received a call from Coast Professional.
Coast Professional Inc., or CPI as they are commonly referred to, is a third party collections agency that is located in Geneseo, New York.
It is a top-performing Collection Company that focusses on government and higher education debt which includes federal and non-federal student loans, tuition, fees, accounts receivables, housing charges, and almost any other student debt.
They currently provide collection services to more than 200 government institutions, universities, and colleges in the US, and are a top vendor for the US Department of Education.
The purpose of this blog post is to share with you precisely who Coast Professional company are, what they do, how they collect debts, and also give you some insight into how you can exercise your rights as a consumer without being exploited.
Let us begin.
Who is a debt collector?
A debt collection company is a company that operates as an agent for creditors, and they collect debts for a fee or a percentage of the total amount owed. Some go a step further and buy the debt at a subsidized rate, then, later on, collect the debt and make a profit.
The process of debt collection is not a pleasant one, as you must spend time on the phone calling client after client, begging them to pay up what they owe.
Sometimes, these calls tend to be aggressive in a way that the client on the other end will not appreciate, and may end up in court if they feel that their rights as consumers have been violated, and they have been treated with disrespect.
All of these companies are regulated by the Fair Debt Collection Practices Act (FDCPA), which is federal legislation that was passed by Congress to protect all consumers from aggressive debt collectors.
We shall look at their rules and regulations later on.
How does Coast Professional operate?
Usually, if they have taken over one of your debts, you shall be receiving phone calls and letters from them, requesting you to repay the student loan. In addition, they shall also report negatively on your credit report through the credit bureaus.
They can also inflate the total balance by charging you astronomical interest rates and collection fees for this work.
This can cause your overall debt to balloon overnight. In fact, one of their customers has reported that their student loans moved from $50,000 to almost $80,000 once Coast Professional took over their debt and started contacting them.
Nevertheless, this is part and parcel of the collection process. They hope to pressure you into contacting them and taking action on the debt. It’s a scare tactic.
If they’re unable to collect this debt, they have two options. First, they can resell the account to yet another debt collector. This new debt collector will, of course, begin calling you, sending letters, and they’ll report more negative information on your credit reports.
Or they can sue you. The goal here is to win a judgment because then they’ve really got you by the short and curlies. Judgements can potentially result in wage garnishment, liens placed against you and or your property, and even asset seizure.
For full details, investigate your local legislation, because every state has different laws. By the way, if you have a federal student loan in default Coast Professional can garnish your wages without a judgment. Moreover, a judgment on credit report files will annihilate your credit score.
How many complaints have been made against Coast Professional?
The BBB has reported at least seven complaints that have been closed for Coast professional in the last three years. The closed cases allege problems with billing and collections.
Also, since December 2016, the Consumer Financial Protection Bureau (CFPB) has closed over 57 complaints against CPI. Justia, on the other hand, has at least eight civil litigation cases that involve Coast Professional Inc.
Does it help to pay off the debt?
Most people think that once they are contacted by a debt collector, paying off the debt will automatically cause their credit report and score to improve. It seems to make sense, but that doesn’t happen at all.
The only thing that will happen when you pay the collections is that the status of the item on your credit report will change from due to a paid collection.
This is still a negative entry and will damage your credit score nevertheless. It is guaranteed to lower your credit score.
Listen, the key to getting your credit score up is to remove this negative item from your credit reports, entirely. And for some folks, this may require paying off collections, but only after first performing the necessary due diligence and following tips
The first thing you should do when you receive that ill-fated telephone call from Coast Professional is to request for the debt to be validated, even before you pay or enter into any repayment agreement with them.
This is your legal right and has clearly been outlined by the FDCPA.
In essence, what you are saying to Coast Professional you first prove this is my debt, show me the paperwork, and then we may be able to discuss payment. After all, you did not do any business directly with them; they just showed up one-day demanding money.
It’s most effective to make your debt validation request in writing and send it using certified mail, with return receipt requested. This way, you’ll have evidence you made your validation request, and they received it.
You see, they’re required to respond by providing you with the paperwork, documents, and evidence that proves this is your account. This paperwork should show you all the details about the debt, such as who the original creditor was, the principal balance, the dates of account activity, etc.
If they fail to validate your debt, then in compliance with the FDCPA, you’re no longer legally responsible for payment. And this failure to validate can be for any reason, as simple as them misplacing your paperwork.
Age of the debt
Once Coast Professional has validated your debt, then, you must review all of the paperwork in details. You need to look at the last date of account activity and ensure that you are not legally responsible for paying the debt forever.
The state law regulates the exact amount of time you are legally responsible for repaying a debt. This is called a statute of limitations. It does vary state by state, and if you want to know the full details of your law, then you need to check out your local legislation.
Generally, the required length of time is seven years from the last activity on that account. Once this time window runs out, then following the statute rules, the debt is legally forgiven. In other words, what we are saying is that your responsibility on the debt ends there.
This is also the time in which the debt is removed from your credit report.
Paying the debt
If your account has been validated, and it is within the statute of limitations, the next step you should take is to negotiate for a settlement agreement directly with Coast Professional. It is advisable to do this in writing in two parts;
First: you will need to negotiate to pay less than the total debt balance. Often, you shall be able to pay as little as 15% or up to 45% of the debt balance. The exact amount will depend on the type of debt you have in collections and how old it is.
Second: The second part of the agreement is extremely critical. In exchange for your payment, Coast Professionals must agree to stop reporting the account to the credit bureaus, to ensure that it doesn’t appear on your credit report and mess up your credit score.
How do you remove Coast Professional from your credit report?
As mentioned earlier, paying the debt will not help in improving your credit report. The fact that the collections item is still present on your credit report means that your score will still be low, and as such, your only course of action will be to find a way in which the entry can be deleted from the report.
This will involve raising disputes with the credit bureaus and negotiating with Coast Professional to remove the negative entry from your report.
To do this, you will need to exercise more of your consumer rights, this time, those granted by the Fair Credit Reporting Act (FCRA).
Here are some blog posts I have written before on this topic.
Have you ever heard about a pay-for-delete approach to dealing with debt collectors? If not, this is a popular internet myth that claims you must first demand the debt collector delete the negative item from your credit reports, and then you’ll make payment.
It sounds great. And you’re welcome to try it, but please, don’t hold your breath. For a myriad of reasons, debt collectors won’t ever make this agreement. It’s more likely we’ll see PETA (People for Ethical Treatment of Animals) opening up a butcher shop.
The much more effective, pragmatic, and an agreement they will make is to stop reporting your account information to the three credit bureaus, in exchange for your payment. On occasion, they may reluctantly agree, but this is something they will do.
What are your rights?
The Fair Debt Collection Practices Act (FDCPA) is a legislation that was passed by Congress to regulate the debt collection industry. This act consists of laws and guidelines that all debt collections agencies must follow to ensure that they do not violate the rights of the consumer.
Here are some of their rules on debt collectors:
They prohibit the use of harmful and unfair tactics when trying to collect a debt.
They should not contact anybody who is not the main person that owes the debt.
They shouldn’t threaten you with referral to an attorney, wage garnishment, or harm your credit without an actual intent or act on the threat.
They should not call you at unreasonable times, such as before 8 am, or after 9 pm.
They should not contact you at your place of work if you have specifically asked them not to do so.
They should not place calls to inform on you to your employer or disclose any aspect of your debt to others.
They should not use profane or obscene language during their calls.
They should not send collection letters which appear to be from a government office or a court.
They should not threaten to arrest you if the debt remains unpaid.
Being a student and in debt is extremely common. A majority of Americans are still trying to pay up their student loans.
The government has now put some measures in place to try and collect the more than $1.5 trillion in student loans. This means that you are probably going to receive a call from a debt collector requesting you to start paying off your loan.
I have always advised students to try and start the repayment of their student loans as soon as they receive, them, and while still in school, because the loan will never go away until you pay it.
If you start early, you will make it easier for you to reduce the total amount of debt even before you graduate and get employment.
But, if you have been called already, the best thing to do after validating the debt is to start paying off the loan in small installments. This will go a long way in repairing your credit report and score, which will make easy for you to make financial decisions.