expensive education

Discussion in 'Credit Talk' started by hootowl, Aug 21, 2001.

  1. hootowl

    hootowl New Member

    Hi im glad to find you guys. Ive been a bad boy. I have avoided paying my student loans and they eventually fell off my cr. I have reestablished some credit by paying faithfully on a car loan and a retail card. Last week I received a statement from NCO for $12,000 (principle is $6,000). These loans first defaulted in 1988 and I only ever made a few payments in 1995.

    I know that I owe this money and would like to finally get serious about paying it back but would like my cake and eat it too. Is there a way I can pay this without it being reported? I had been trying for quite awhile at getting a major credit card but have not been able to. My credit reports are pretty much clean, they just lack sufficient history. In about a month I would be able qualify for a mc or visa but now it looks like it may never happen with this going to be slapped on my cr.

    1 Has anyone had any experience in dealing with NCO for their student loans?

    2. Can I rehabilitate my loans although I defaulted on my payments in 1995?

    3. How can I avoid having this collection account being reported to the cra?

    4. What is my next step?

    5. What can I expect to happen?

    I don't have the money to pay off in full. As a matter of fact I am unemployed as of a week ago. Will they be willing to work with me and what kind of payments would they expect from me?

    Thank you for any advice.
  2. kbelle72

    kbelle72 Well-Known Member

    They can only report for 7 years from the last payment date whenever that was. But, if you pay, you run the risk of restarting the clock. If you could find some way to pay in full, you may be able to get them to agree not to report it.
  3. EdG

    EdG Well-Known Member

    Try the William D. Ford Direct Loan program. They will pay off all you student loans and consolidate them into one.

  4. MikeB

    MikeB Banned

    If they were federally guaranteed student loans (like Direct Loans), then the 7 year rule does not apply. They can be reported as long as Uncle Sam likes.
    I would contact the original lender and try to rehabilitate the loans.
  5. roni

    roni Well-Known Member

    THIS STATEMENT IS INCORRECT. sTUDENT LOANS DO NOT HAVE A LIMIT ON REPORTING TIME UNTIL they are paid. And, There is no restarting of clock on paying collections. The last sentence is correct however. sorry ..just didnt want anyone to get confused.
  6. marci

    marci Well-Known Member

    1. No, but if it is a federally guaranteed student loan, then it doesn't matter which CA is collecting the loan. Read the Higher Education Act (search for it at http://www.ed.gov/) re your rights and responsibilities on Federal student loans.

    2. Yes. Read the Higher Education Act for more information. Also the William D. Ford Foundation (http://www.ed.gov/DirectLoan/) will send you a consolidation packet that explains both consolidation and rehabilitation and the respective pros and cons of each decision. Just ask for a packet on consolidation - you don't have to apply for it.

    3. Well, you can't be sure, but if it isn't already reported it may not make it if you consolidate or rehabilitate it in time. If it does get reported and is then rehabilitated, then the credit report is a moot point - b/c it will be deleted anyway.

    4. Call 1-8004FEDAID to find out which guarantors/servicers own your loans, whether the loans are eligible for rehabilitation, and the principle amounts. I'd also apply for a PIN # with the Dept. of Education so that you can access the National Student Loan Database (http://www.nslds.ed.gov/) online and examine your own disbursement dates, principle amounts, and interest.

    Read up on consolidation and rehabilitation (William D. Ford and http://www.carreonandassociates.com/sl1.htm) to decide which course works best for you (I personally prefer rehabilitation). Once you do one, you can't go back and do the other - so think it through carefully.

    Contact your guarantor with your willingness to repay the loan under one of the two above options. Ask them for copies of your promissory notes, and an itemized description of your principle, interest and collection costs.

    They will refer you to the CA (NCO in this case). When you talk with them - agree on a monthly amount to pay for consol. or rehab. If you rehab: have the CA send you a rehab agreement form (good faith agreement), sign it and send it back rr/cc. If you consolidate: I recommend doing it through William D. Ford (http://www.ed.gov/DirectLoan/) rather than whoever the CA suggests. You will have to pay the CA directly, but they have to credit the amount to the guarantor/servicer.

    5. You'll come out of default with the consolidation or rehabilitation. You will have a clean credit report as a bonus with the rehabilitation (though your new priniciple is higher). You may (and knowing NCO, will) get the run-around re rehabilitation from the CA. Stick by your guns and do your main communicating with the guarantor. Get all correspondence in writing. If the CA or guarantor keep being uncooperative, then call the DOE Ombudsman's Office and ask for a case specialist to intervene for you (http://osfaombudsman.ed.gov/).

    Concerning payment amounts - I was told they needed 1.5% of the total loan amount. Others here have posted paying 1%. I also - for one loan - payed less than my required amount and still had it eligible for rehabilitation.
  7. kbelle72

    kbelle72 Well-Known Member


    The way I read the FCRA and have gotten some confirmation from some people regarding is that the clock can restart on payments if the debt occurred prior to 1/1/1998. After that date, the clock can't restart. Do you have some personal knowledge that this is incorrect.
  8. roni

    roni Well-Known Member

    yes, i do. The FCRA reads that way. But most lenders do not restart the clock at all. I called the FTC and they confirmed this. Kristi has been on this site several times and explained this and for some reason it still remains a matter of confusion. STudent loans however, do not follow these guidelines at all. What creditors follow is if you charged off an account before the revised FCRA it stays on 7 years from the charge off date. But if you charged off after the date specified on the revised FCRA it stays on 7 years from the last date of delinquency. In addition, I charged off a discover account in 1995. I made my last payment in 1997. It was removed from my report by Discover this month. They used 7 years from the charge off date and then went by 6 months for the first date of delinquency b/c most people allow 6 months (180 days) before they charge off. The matter of restarting the clock is dead and I wish it would stay buried. I am aware the Discover cut me a break but I wasnt complaining.
  9. hootowl

    hootowl New Member

    Thanks folks for all the information. Thank you Marci for the extensive reply. Its very infomative.

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