Hi there, my sister in law is trying to get her student loans rehabed. My questions are these: 1.) The department of Ed has turned the loans over to a collection agency (I can't remember the name) they said they can get approval for the rehab. In general, I know it's a bad idea to work with collection agencies but I'm not sure the Dept of Ed will take the loans back.. what would you do? 2.) The collection agency wants 6 preauthorized payments from a checking account in order for her to enroll in the program - is this wise (legal?) 3.) The collection agency is not willing to put anything in writing until after the approval and even then isn't sure the terms favorable to my SIL will be on the letter (just payment terms). Has anyone had any luck getting the terms in writing in advance? Any input or advice would be greatly apprecitated! Myschae
You should look at the US dpt. of EDU office of the Ombudsman loan rehabilitation program. I'm not sure what conditions you must meet with regards to getting your guarantor to accept payments, but once you have made twelve consecutive monthly payments you are eligable for a complete cleansing of all derogetory reporting on that loan. 1.) As I understand it there is no reason for the guarantor to not accept your payment. I think you can even make less than the full monthly amount, so long as you are making an effort. (Understand this is only what I think to be true, I don't have it as fact in hand.) 2.) It's certainly not wise, and could be illegal depending on whether they notify you correctly before depositing said checks. I know when my loans defaulted Van Ru was very anxious to get post-dated checks from me. Probably best to talk to your guarantor and see what you can work out with them. 3.) You should, as a general rule, never agree to anything, especially with a collection agency, unless you can get that agreement up-front in writing. As you have probably found just in reading a few message boards, collection agencies can and do say just about anything if they think you will send them some money. I'm not a lawyer and I have just started the process of repairing my own credit, but I think the questions you had can be answered the same way you would if we were talking about buying a car or renting a home.
I tried like hell to work with original lender on mine, but no sale, had to work with CA. Twelve payments went by uneventfully and the loans were rehabbed without any trouble. I don't know anyone who has successfully gotten around this.
