I have one student loan that's currently in default. It appears 3 times on my credit report, twice under the company that the loan was through, and once under the guarantor who assumed it when it went into default. I have no idea why the originator is reporting it twice. Well, obviously I need to get that loan back under control if I'm planning to buy a house soon, so I'm considering my options. Option 1: The collection agency is encouraging me to apply for a consolodation loan. Once complete, they tell me that the original loan will simply show "Paid as Agreed". I have the paperwork for this signed and ready to mail, but decided to do some last minute research before I commit to this course of action. Option 2: It's my understanding that I can contact the guarantor to rehabilitate the loan. From the information I've found so far, it sounds like after 12 months of on time payments, they will remove ALL of the negative history associated with this loan. Rehabilitation is the better way to go, isn't it? Or am I missing something? My big question, for anyone who's done this, is if I rehabilitate, will it remove the negative history for ALL 3 entries on my credit report, or just the entry from the guarantor? From posts on this board, it seems that dealing with negative student loans is hard to do. Is there any way to get the 2 entries from the original lender removed, or at least remove one of them? It doesn't seem fair to me that ONE bad loan appears to anyone looking at my CR as if it's THREE bad loans.
CAs are misinformed, uninformed, and, on those rare occasions when they do know anything of value, only share it with you when it's in their interests to do so. The rest of the time, they lie. In this case, it looks like the CAs are giving you false information (shocking, I know). Unless you rehab the loan, it will stay on your CR as defaulted even after you pay it off. Do yourself a favor and deal with people you can trust. That means rehabbing the loan. If possible, work with the guarantor agency, and get any agreements in writing. Then stick to them -- you are only supposed to get one shot at rehabbing, so make it count. Here is a link with info on consolidating. Before you do anything, go over it with a fine tooth comb, and make sure that any deal you agree to will result in getting the default off your report in a year.
Do a search with my name or sal826. We have discussed this dilemna at length. I have several threads just about sl. If you need more help email me.
The CA is trying to pull a fast one on you. Plus, I'm not sure that you even can consolidate with it in default (at least not with a decent place). Who is the OC? Try contacting them to get it reported correctly and also talk to the Guarantor about rehab.
I would agree about rehabilitation. It does take 12 months of consistent, on-time payments. At the end of the 12 months you'll receive a letter stating that all derog info will be removed from your CR's. I just finished rehabbing my loans in Febraury of this year. Once they are rehabbed, they will no longer be in default and will be sold to a new lender. At that point a new payment plan will be established and you can do what u want from there ie: defer payments for a while or whatever you decide. You will probably have to send the letter to the CRA's demanding deletion. And you want deletion not an update of info. New tradelines will show from the new lender. hope this helps
OK, here's another question. When does a student loan drop off of your credit report? This loan was originated in December '96. First missed payment would have been in early '97. Last payment made was in early 1999, and it defaulted in March 2000. Since the OC is listing it as a closed, approx what date would the items from the OC drop off the report? I still don't get which date you use to start the 7 year clock ticking.
The collection agency wants consolidation because it gets them their money right away. Further, when you consolidate, you allow them to capitalize all the collection fees (as much as 25% of the principal) on the loan. If you rehab through the guarantor and not the CA, you should be able to avoid those CA fees. Another tidbit, when a defaulted loan is consolidated. Your federal default status on the previous loan continues to make you ineligible for any further government guaranteed aid. This can be very significant for anyone who might ever seek additional schooling. CAs lie and say anything they can to get your money from you. They are usually ignorant and contemptuous of the very laws that govern them. Greg
kbanger, I tried to respond to your e-mail, but got an error back saying you've exceeded your storage allocation. Got anything in there you could delete?
OK, who's got some good pointers to reliable info on rehabilitation? I've been on the phone about this loan all day. The guarantor, who currently owns the loan, says that for rehab, my payments should be 50 a month for the year, and all my collection fees will be waived. The CA, who is actually servicing the loan, tells me that my payments need to be 151 a month, and that I'm still liable for the full amount INCLUDING their collection fees (which, as I understand it, is a bald faced lie). I need some concrete info that I can use to argue with these guys.
Why argue with the CA when you have differing info from the very guarantor that the CA works for? Get everything in writing from the guarantor and tell the CA to go fly a kite.
You can go to the US Department of Education website and look for the rehab information. I imagine you can also talk to them on the phone for even more details. No matter, your guarantor should be in a very good position to explain your options, and, unlike the CA, should not have a vested interest in screwing you over.
Well, I'm trying to get ahold of them right now to give that a try. Given some things that were said during the last phone call, I'm not real hopeful that the guarantor is going to step up to the plate for me on this.
http://www.ed.gov/offices/OSFAP/DCS/rehabilitation.html That's all the info I could find at the Dept of Education's website. Calling them on the phone gets me nothing but a referral to call the guarantor.
Hi OOPS, Whatever you do, make sure you go with what the guarantor says. If they say they will allow you to REHAB for $50 month then by all means go for it. Don't let the CA fool you into thinking this will all go away by simply consolidating - you CR's will state "paid as agreed, was a collection" NOT GOOD. Good Luck, Sal
