Just learned your student loans are with Credit Adjustments Inc? You’re in the right place.
I work with Credit Adjustments weekly, helping student loan borrowers stop garnishments, get collection fees waived, and get out of default.
- What is Credit Adjustments Inc.
- Credit Adjustments got your student loans after you defaulted
- It’s hard to get rid of student loans in collections
- How to get the collection fees waived
- Credit Adjustments likely won’t sue you for student loans
- Credit Adjustments can take your tax refund
- How to stop Credit Adjustments from taking your tax refund
- How to get your refund back after it’s been taken
- CAI can report your debt to the credit bureaus
I’ll tell you how to do that in a moment. But first, a quick explanation.
#1 What is Credit Adjustments Inc.
Credit Adjustments Inc. is not a lender or a loan servicer. They are a receivables management and debt collection agency helmed by their chief executive officer, Michael Osborne.
One of the biggest creditors they provide collection services for is the US Department of Education.
The Department of Education has hired Credit Adjustments to collect defaulted student loan debt using the government’s tax refund offset and garnishment powers.
Unlike the government, Credit Adjustment’s power has clear limits.
They’re a debt collector. And as is true with other debt collectors, that means they have to abide by the debt collection practices outlined in the Fair Debt Collection Practices Act.
If they don’t, complaints can be filed with the Consumer Financial Protection Bureau and they can be sued for violating the FDCPA and other consumer protection laws.
#2 How Did Credit Adjustments Inc Get Your Student Loans?
Credit Adjustments Inc got your federal student loans when you went int default.
You default on federal loans when you fail to make a payment for more than 270 days and you weren’t in a deferment or forbearance.
They don’t own your loan.
They didn’t buy it for pennies on the dollar.
They simply were sent your loan to handle your account when you failed to make your monthly payments.
#3 How Can You Get Rid of Student Loans in Collections?
Other than paying your defaulted loan in full or negotiating a settlement, there’s no effective way to get rid of student loans in collections.
While in default, you’re not eligible for Public Service Loan Forgiveness or Income-Based Repayment plan forgiveness.
You are, however, eligible for cancellation programs like if you’re totally and permanently disabled.
#4 Student Loans and Cancelling Collection Fees
While a borrower may not be able to get rid of their student loan debt that’s in collections, they can get the collection fees waived.
Typically, the Department of Education will waive the collection fees at the end of your rehabilitation repayment term.
Here’s an article where I take a deep-dive into how to get your federal student loan collection fees waived.
#5 Can Credit Adjustments Inc Sue You or Garnish Your Wages?
Can they sue you? Yes. Will they? I don’t know about other debts, but for a federal loan?
You likely need not worry about being sued for a student loan debt.
Having your tax refund taken? Yes.
Having a garnishment on your wages? Yep.
Credit Adjustments can do so without getting a court order by using the government’s administrative student loan wage garnishment powers.
#6 Can Credit Adjustments Take Your Federal Refund Without Notice?
But there’s a huge catch.
The notice rules for defaulted student loans are really lax.
Basically, so long as a letter was sent to the last address on file for you, which may not be your current address, then the service requirements have been met.
And if your refund has been taken before, they don’t have to send you notice each year that they take it.
#7 How Can You Stop Student Loans From Taking Your Taxes?
The easiest way to stop your student loans from taking your taxes is to get out of default.
There are two ways to do that:
- Loan consolidation and
- Loan rehabilitation
Loan consolidation will get you out of default in about 2 to 3 months. Meanwhile, loan rehabilitation will take at least 9 months.
So if you need to get your tax refund back quickly, consolidation may be right for you. But remember, your collection fees won’t be waived if you consolidate.
#8 Does Credit Adjustments Return a Tax Refund?
Student loan borrowers who had their refund taken can ask that it be returned.
But just because you can ask doesn’t mean your request will be granted.
Getting your refund back after it’s been taken is hard to do: you have to have to meet the Dept. of Education’s economic hardship definition.
#9 Can CAI Report Your Debt to the Collections Bureaus?
Credit Adjustments can place negative information on your credit report causing your credit score to plummet.
In my experience, asking CAI to remove the late payments from your report is a waste of time. The better move, in my opinion, is to work with a credit repair professional to work with each credit bureau to get the negative information removed (if it’s inaccurate) from your credit history.