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By Lori Robison
Staff Reporter
Credit can be fun and easy to
live with, but overcoming a moun
tain of debt is definitely not a hike
through the park.
“You can’t run from (debt),”
Vicki Kuntz, risk manager for the
National Bank of Commerce, said.
In her experiences lecturing
about credit at area colleges and
high schools, Kuntz expressed sur
prise at many students’ attitudes
that high debt and bad credit will
not return to haunt them after
graduation.
When these graduates begin
looking for houses a few years
after school, she said, they find
themselves face-to-face with a bad
credit history.
Kuntz said NBC no longer
solicits credit card customers by
mail because too many customers
were running up a high level of
debt and having trouble paying it
off later.
“We weren’t helping them,”
she said, adding that credit
approval ratings for cards dropped
70 percent after the mailings
stopped and tougher restrictions
for card approvals were imple
mented.
Tom Struebing, office manager
for Credit Advisors, Inc. in
Lincoln, blamed the availability of
easy credit, increased credit limits
and low, temporary introductory
rates as major reasons for the sig
nificant rise in his business’s cus
tomers in over their heads with
credit card debt. Credit card com
panies are giving cards to practi
cally anyone who wants one, he
said.
Laras are becoming more
available to more people now than
ever before,” he said.
But the potential pitfalls for
college students do not end with
the never-ending deluge of credit
card offers arriving in the mail.
There is also the necessary trade
off of loans for education many
must make to attend classes and
buy books.
According to Amanda
Koelling, student loan clerk for
NBC, the average four-year loan
debt for students borrowing feder
al loans is between $17,000 to
$18,000, though Nebraska enjoys
a lower default rating of 11 percent
compared to the approximately 19
percent loan default rating for the
nation, she said.
Koelling said most banks pro
vide federal loans to almost any
college in the state, with the
exception of a few colleges
(including UNL) operating under
the William D. Ford Direct Loan
Program. And, she said, the proce
dure is not as strict as for approval
for other loans or even credit
cards.
The federal government, she
said, not the bank, is ultimately
responsible for collecting the debt
and reimburses the bank automati
cally in case the student defaults
on the loan. If the school has cer
tified that the student is eligible
for federal loan money, she said,
then we will usually approve it.
Kuntz said that for those who
do find their debt more than they
can handle, keeping in touch with
their creditor is a major step
toward resolving the debt;
After the first collection letter
is send to a debtor, Kuntz encour
aged calling and talking with the
bank or creditor. Most creditors
are willing to work with their cus
tomers, she said, especially if that
customer is willing to make an
effort to resolve the situation.
Many creditors wm accept a
payment lower than the minimum
stated on the bill, she said, others
may lower financial charges or
consolidate the debt, resulting in
lower monthly payments. Kuntz
stressed that only by maintaining
contact with the creditors and
showing a willingness to pay off
the debt will creditors try work
within the customer’s economic
situations.
And with consolidation, she
said, whether through the creditor
or through a credit consolidation
company, a debtor may maintain a
good credit history.
Koelling agreed, suggesting
consolidation of loans as a possi
ble remedy for loan debt ills. The
loan repayment period will be
extended, she said, and the month
ly payments will go down,
although the student will end up
paying more in the long run from
higher interest rates on their con
solidated loans.
MrueDing saia agencies like
his work directly with the collec
tion agency or creditor to set up
payments the debtor can live with.
Credit consolidators can
reduce the interest rates being
charged on credit cards, he said,
they can also stop late charges
from accumulating on the princi
ple owed.
The consolidator’s main con
cern, he said, is to keep the cus
tomer from going bankrupt,
destroying their credit history for
years to come.
A budget is usually worked out
with the customer, including utili
ties and rent, and then a minimum
monthly payment set based on that
budget and the amount of debt
owed (usually 1.5 to 2 percent of
the debt)., he said
Although credit card compa
nies automatically close a person’s
account when paying through a
debt consolidator, customers can
reapply if they want to.
“But most don’t,” he said.
Even though consolidation is
an option many in debt take advan
tage of every year, there are some
debtors who, for whatever reason,
have not returned the money they
owe. When that happens, the job of
collecting on the debt usually falls
to a collection agency.
Jackie, a Lincoln resident who
asked that her last name not be
used, knows what it means to have
her name in an active file with a
collection agency. After attending
Union College from 1983 to 1986, |
she was left with a relatively mod
est $9,000 loan debt Jhat, with
interest, resulted in a total debt of
$13,000.
However, a series of moves
kept her out of touch with her
creditor (who later send the
defaulted loan to a collection ,
agency). Finally, in 1993, the
agency found her address and
work number and began demand
ing payments. Jackie said the col
lection agency called her at work,
despite her employer’s request for
the agency to cease the calls, and
at her home, jamming her answer- ,
nig mainline icguiany wnu mes
sages demanding payments.
Jackie said the agency has gar
nished her paycheck for payments
for the last two years, and she
steadfastly refuses requests by the
agency that she consolidate her
loans because of the higher inter
est rates that would result.
Two months ago, after being
sent a statement reflected an 1
increase in principle of $2,000,
Jackie has decided to declare
bankruptcy rather than deal with
an agency she said she had no faith
in.
“It’s my own fault,” she said.
“That’s where I made the big mis
take in'my life—to borrow
money.” j
Len Beckenbach, owner and
manager of Collection Concepts
in Lincoln, said most debtors his
company contacts pay their debt
off through monthly payments or
seek the help of a debt consolida- ‘
tor.
/\no ior mose wno aon i or ior ,
those who move without notifying
creditors, he said, collection agen
cies have at their disposal a variety
of methods to track debtors down.
Using a technique called “skip
tracing” collection agency experts
can trace the debtor by utilizing ,
Internet sites run and updated by i
such organizations as the
American Collector’s Association,
based in Minneapolis. With the !
help of the information highway
and a few quick clicks on the right
icons, agency detectives can track
debtors anywhere in the nation
through official records from
phone and utility companies.
Collection agencies may also
use more conventional methods
such as speaking with neighbors,
former employees and relatives in
the search for a debtor.
But this search is limited in its
scope and in the extent agency
representatives may go to collect
debt.
According to a consumer bul
Please see DEBT on 10
