I am way behind on my Sallie Mae loans. I pay when I can, but am always behind. They have not called me, but have called my parents. From reading previous posts, it appears that I can rehab if I am in default, but cannot rehab if I am not in default. I am way behind, but they have not yet defaulted me because I do pay here and there. I have not been able to pay anything for about three months. At what point do they default the loan? Do they then immediately send it to the collection agency? Are there then collection fees added to the loan amount? If it goes to the CA, can I still rehab? Things are getting better and I can catch up in the next two months. I would like to rehab then. I have already gotten one forbearance, and they will not give me another while I am so far behind. So, How do I keep the loans from going to the CA's, but still get to the default stage so that I can rehab? Or, am I totally confused on this whole thing? Any help is greatly appreciated. They do not have a current address for me so I get nothing in the mail from them. But, they do have my correct phone number and have not called me.
You need to make up your mind to either pay regularly and on time, or stop paying at all. Paying here and there is forcing yourself to live in the worst of both worlds, because it ruins your credit, yet leaves you no options to fix it. If you decide to go the rehab route, expect it to take 18 -24 months: about 6 - 12 months to go into default, and then a year of on time payments to get out of default. The upside is that you'll have a totally clean record with regards to your student loans when you're done. Starting to pay regularly now will probably take longer to clear up -- the late pays won't come off for 7 years, but your scores will gradually improve over time, as long as you pay when you are aupposed to do so. On balance, rehab is probably better for most people imo -- it's guaranteed to work as long as you do your part -- but if you're planning on buying a house or other credit-intensive thing in the near future, you might do better to just start paying, and try to fix your credit by using some of the techniques found on this board. I've been in your spot (kinda) and wish you luck.
You said six to nine months to go into default. I assume that is measured from the last payment? At that time, do they say it is now in default? Or, do they just send it to a collection agency? I am at the point where I think rehab is the way to go. But, I do not want it to go so far as to have them turn it over to the collection agency. I don't want the extra costs tacked on. At what point do I know it is in default and when do I go to them for rehab? And, can I still rehab if it has gone to collections? Thanks
Another question. Does Sallie Mae even send these to collections? Or do they just collect on the guarantee? If so, would it ever go to collections? Actually, that's three more questions.
To your question above, yes they can go into "collections". Why you're worried about collections and not default, I don't quite understand... My opinion is, unless you are already in default, don't intentionally sit on your hands and let them go there hoping to re-hab down the road. The probelms with this are: 1. added costs, fees etc. 2. possible collector harrassment 3. possible garnishment of wages (from what I understand, once in default, they [the feds] will *sometimes* act quickly to start garnishing your wages, and I don't think they need a judgement to do it.) 4. Time frame. To go from where you are now to complete re-hab, you're looking at almost 2 years. 5. Although another poster said that re-habbing will eliminate all of the baddies on the trade-lines, this is not always the case. There are many people who have re-habbed only to find stubborn CAs, OCs, etc who are reluctant to remove all of the bad marks. 6. One last thing to consider. They are very strict about re-hab (ussually). And, the payments during the year-long process can be higher. So, it can be tough to stick-it-out through the re-hab process. Sorry to make this so long, I just think you need to consider everything before making a choice like this.
I am still confused a little. I want to avoid "collections" because I understand that it adds extra costs such as collection agency fees. I have heard these can be from 25% to 40% on student loans. I am looking at "default" because it is my understanding from reading here that I have to default first before I can rehab. And, I understand that I have a good chance of getting the bad marks off my credit reports after the rehab period. I can live with a two year time frame if that is what it takes to rehab. The other option I see is to keep paying and to bring the loans current. Then my record is screwed for seven more years. I understand that some creditors may not remove the bads marks if I rehab, but I have read enough here to believe it is worth the effort to try. It looks better than the alternative. Garnishment is not a problem. I do contract work around the country, not working for the same employer very long. I have enough of a reputation that the work is now steady. The problem was getting to this point. I am sufficiently established now that I can honestly say I will keep up with the payments. At what point do I need to ask for rehab? When do they turn it over to the collection agent? I guess timing is the key here. Any comments are appreciated.
I would just lower your payments as much as you can, gt it automaticlly deducted from your paycheck [so you cant screw up pay, missing a payment] then in 6-12 months use a 'good will letter' [found on this board] to try to get the lates removed.....thats what I am working on doing...cause you never know what is going to happen later in life..... I have sallie mae as well and they wont call you to tell you you are late....they will wait send you a letter about 60days late then someone will try to call once at 80 days late from a company called usa loans, then after 90 days they will report to your credit report and if they dont get it touch with you, they will contact your refrences and ask for your new address and telephone #....I really wouldnt screw with them.
why don't you just ask for a hardship forbearance? If I remember correctly... you can ask for one for up to a year (retroactively, by the way). Interest still accrues on it all... but no payments are posted late. If you can't catch up right now and you can't make payments... you can ask for a forbearance from now for 6 mos or a year or whatever they allow... they can make your payments income contingent (lower)... there are so many options before default how you can keep the loans from going further down the tubes... call and ask them your options... deferments, forbearances... I bet they have info on their website... but you have to take the initiative to call them or look online and find out what you can apply for right now...
Rabbit, I would go the "goodwill letter route" if I was in your situation. You have nothing to lose by making a deal the the creditor for removal of lates and a lower payment (as long as it hasen't gone into default you have quite a few options available to you that you will not have if you let it default) Remember TRY do strike a deal with them first - you can always let it default if that doesn't work. Good Luck, Sal
Are there any Federal regulations that say they cant remove the late/neg info? I just recieved that response form a Sl servicer last week.
No. The OC can report whatever they wish. The bureaus MAY keep information for 7/10 years but are NOT required too.
The regulation is that they are required by law to report defaulted loans to at least two CRAs. I know I tried every argument, every approach imaginable to get mine off my credit report when my loans first went into default, and came up empty. They just don't have to deal with you because of the lack of an SOL, so it costs them nothing to adopt a hard line. Somewhere in this thread someone said the collection fees are between 25 and 40%. If I remember correctly, there is a statutory maximum of 20% on the default fees they can charge you. I know when mine went into default, I was given lots of warnings and the opportunity to start repaying before the fees were assessed, but simply didn't have the money to pay them at that time. The laws have become harsher since then, though, so it's possible they will immediately assess the charges. Of all the people I've dealt with who were coming after my money, Sallie Mae was the most helpful and honest. I'd call them and ask exactly what happens in the case of a default and see if you can get a credible answer. Not what can happen, but what typically happens, if there is a grace period before they assess extra fees and so on. Try asking anonymously, just to be on the safe side. ;-)
Re: collection fees I cosigned on a private student loan that was obtained from PLATO, a subsidiary of Wells Fargo. I was never notified of any late payments, nor was I notified that there was any problem. I found out by accident. I was charged $2000 in "attorney fees" for collecting on a $5000 loan, which calculates to 40%. They had me convinced that the attorney had just stopped by with the lawsuit papers in his hand and that he was on his way to the courthouse to file. The only way to save myself from the lawsuit was to pay immediately over the phone and they would call the attorney at the courthouse and tell him not to file. That was during my Stupid days, or pre creditnet. I later learned it had been at the collection agency less than a week, and that they defaulted the loan on the 91st day and sent it to the collection agency the same day. But, they did charge 40% in collection fees. After almost two years, they have still refused to document the "attorney fees". Please don't tell me how stupid I was. I know I was and I still believe I hold the world record for stupidity based on this experience. If you knnow of some rule that limits collection fees on student loans, please let me know.
Re: collection fees http://www.collegefinancingguide.com/defaulted.html I did a search on the web and found the figure of 25% as a maximum in several spots. I'm pretty sure they got me for 20%, and that it was the maximum for that time period. I think they assessed the fees in 1997 or so, ie, after my loans had been in default for 6 years. I doubt they would be so generous with time nowadays, but the author of this article is under the impression that once you are in default they do try to contact you before tacking the fees on. As an addendum, as a result of this search, I found a lot of interesting stuff on student loans. I sure wish there were resources like the web several years ago. If I were having problems now, I'd be all over articles like this one. By the way, the loan you co-signed for was private, which suggests it isn't covered by the same regulations that regular student loans are. The fact that you had to cosign for it suggests it is very much like a regular loan, since student loans don't need to be cosigned for, in my experience. I've known people with almost impossibly bad credit who were able to get student loans without a problem, as long as they weren't in default on other student loans.
