Few years ago I attended this college in NH, USA. I owed them about $5,000 for courses and housing. Since I couldn't afford to pay for the next semester, I stopped going to that school.

About 4 months ago, I got a call from a collection agency asking me to start making payments that I owe to the school to them. I agreed and promised them that I will call them back when I have the money.

Few days ago, I got all the money and wanted to call the school directly to completely pay the money but there is a problem. The school closed and was completely shut down about few months ago. Their website is down too. When you call them, their phone beeps and disconnects.

My only option is to call the collection agency that called me few months ago and make the payment through them.

Is this a good idea?

Do I still need to pay this money even when the school is shutdown?

I am so confused at this moment and don't want to waste this money if it is not required.

  • 2
    Debts don't usually go away just because a creditor has stopped doing business. Either the collection agency is collecting on behalf of the school, in which case you still owe them but might be able to wriggle out of it somehow if they just stop trying to collect, or (more likely) they sold your debt for pennies on the dollar to the collector, who now owns your debt, and therefore you owe them. You might be able to negotiate a lower settlement amount with the collector - since they pay less than the sum of principal owed they can take a smaller amount and still turn a profit.
    – CactusCake
    Commented Aug 2, 2017 at 18:10
  • Ok. Didn't they can sell your debt. Thanks for the info. Commented Aug 2, 2017 at 18:15
  • Is your credit score tanked already because of this, or have they not been reporting it yet?
    – Hart CO
    Commented Aug 2, 2017 at 19:59
  • I haven't checked my credit score and don't know if it has been affected. This might sound crazy but I really don't care about my credit score. I just want to pay that off and be free from it. Commented Aug 2, 2017 at 21:18
  • Just wanted to add that you do want to check your credit score and see if it has been affected. This can prevent you from getting a credit card, car loan, or home loan in the future if the score is bad enough.
    – CSRenA
    Commented Aug 4, 2017 at 16:11

1 Answer 1


If it was me, I'd wait until/if you get contacted again by the collection agency. Once you do, I'd offer to settle for less. Perhaps 1000-1250 to start, and I would not go any higher than 2K. Get it in writing that this settles your debt in full, and do not give them direct access to your checking account.

You can pay them by certified check or with a prepaid credit card or something. If you do the latter, throw that prepaid card away, and never use it again.

You may also try to get them to agree that you do not owe the full 5K, and again get that in writing. Otherwise, you will be 1099'd for the difference between it and the amount you settle and therefore it will be treated as income.

I'd stick 2k in a bank account for a while, perhaps two years, and you are free to use the remaining 3K to meet other goals. After two years, I would check my credit and see if it is still in the report. You might also choose to dispute the collection and see what happens there. If it is successful it will come off your report.

Prior to a big credit decision (aka buying a home), I would check on the status of this collection. Only at that time would I contact that collection agency and again try to settle. If I contacted them, I would start the negotiations around 500 or so.

  • 1
    Thanks. The problem is the money increases monthly or yearly. I can't really remember which one. They haven't called since then but isn't this going to make the money I owe increase while waiting? Commented Aug 2, 2017 at 18:17
  • It typically doesn't, or if it does, you can negotiate it down.
    – Pete B.
    Commented Aug 2, 2017 at 19:20
  • Ok. I will for a while and see what happens Commented Aug 2, 2017 at 19:39
  • 3
    Be careful when communicating with the collection agency. If you acknowledge (especially on a recorded call or in writing) that you owe the debt, they may insist or sue you for the full amount. Maybe have someone contact them on your behalf and try to negotiate a settlement for less? You also want to ask for proof (in writing) that you owe the debt and they own said debt. It could be a scam, how are you to know?
    – Rocky
    Commented Aug 2, 2017 at 23:01
  • Yes, I think that makes sense. I will let someone make that for me and ofcouse, I expect a proof from them before making any payment. Commented Aug 3, 2017 at 11:00

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