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Account Classification Error
I received a scholarship to a community college. After a death in my family right before the semester started I dropped from four classes to one. The school never told me that reducing my courses took away my scholarship funding. A YEAR later I noticed the account in collections on my credit report and contacted the school. They confirmed that they sent out one letter that was returned to them and no further efforts were made to contact me even though they had my phone number and email.

I know I owe the balance. I am not disagreeing with that. However, they are reporting the balance as an UNSECURED LOAN with a MONTHLY PAYMENT AGREEMENT, resulting in 16 "missed payments" on my credit report. I never signed or agreed to any loan/payment terms or conditions.

Can they legally classify my account this way without signed documentation? If they cannot, can you please refer to me to the law/documentation stating the regulations they must follow so I can provide it to them and get the error corrected.

Thank you!

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Its in the fine print

if you were to go over the original documents for the scholarship you'll probably find that they stated in the fine print that if you did not use the scholartship as intended that it would revert to a loan. That is standard practice.  Your not the first one to take money for a scholarship then drop classes.  You'll probably also find that because it is not a standard loan that they don't have the same requirements as a regular creditor as far as notification or trying to send you a bill.   

My best advise to you to deal with this now is to Write to the Collection agency addressed to the "Collections Manager". (The only one that can make this type of agreement)  Offer a whats know as a "Pay to delete"  Google it for more info and a template. Start by saving up enough money to pay the balance in full.  In the letter you offer to pay the balance due if they will remove the derogitory remark from your credit report.  Do not send payment until you have a writen agreement from the Collections Manager to remove the account.  Once its paid the account should be removed with in 30 days.

Good luck

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