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DISCLAIMER: This article is based on a complaint. The defendant has not responded to the complaint to present its side of the case. The claims mentioned are accusations and should be considered as such until and unless proven otherwise.
A collector is facing a Fair Debt Collection Practices Act lawsuit for allegedly accepting the first in a series of payments to settle a student loan debt, only to later tell the plaintiff that the payment of $4,800 was not able to be credited to the account, and that the full amount of the settlement was still due.
A copy of the complaint, filed in the District Court for the Southern District of Indiana, is available using case number 23-cv-00885 or by clicking here.
The plaintiff and a representative of the defendant “after spending a considerable time negotiating back and forth” worked out a settlement of $15,000 to repay the plaintiff’s student loan debt, according to the complaint. The payments were to be made over the course of a number of months. The plaintiff made the first payment of $4,800 and then borrowed against her 401k to pay off the remainder of the balance. When she called to make the final payment, the defendant informed the plaintiff that the account had been returned to the creditor and that the settlement agreement could not be honored nor could the $4,800 payment be returned. The plaintiff allegedly demanded that the defendant get back the account so it fulfill its obligation and honor the agreement that was made.
The defendant was able to get the account back, but told the plaintiff that it could not credit the account for the original payment that was made, and that she would have to repay the $15,000, according to the complaint.
The complaint accuses the defendant of violating Sections 1692e and 1692f of the FDCPA as well as state law in Indiana.