What should I do? a) Pay the Dept of Ed the full amt owed on an 11 yr old student loan. or b) Work with a collection agency to rehab the loan. Here's the catch - this loan has fallen off my credit completely AND I've been told that rehabbing will not stop the "wage garnishment process". Any advice?
That dosent sound correct. When you rehab the loan, you make a number of monthly payments to show your good faith effort and intent to repay the loan. After you make the payments, (I think 9 but maybe 12?) the DOEd or Loan servicer removes the loan from default status, removes all reference of the defaulted status from your credit report, and sells the loan back to the bank for servicing. I would think that once the rehab is started the wage garnishment would stop. Even if not then, it should stop when the loan is sold back to the bank. Definitly call the DOEd on this and get a definitive answer. http://www.ed.gov/offices/OSFAP/DCS/repaying.html
For what its worth, my loan balance was too low to rehab but I did start making payments. It was being serviced by NYHESC. I had to make a three month downpayment and the wage garnishment stopped. Now I just make monthly payments.
Thanks for responding. How is the repayment showing on your cr? Did they say how it would show when you are done? The dept of ed was the one that told me rehab would not stop the wage garnishment. This didn't make sense to me either... The ca has lied to me and harrassed me at work even after I told them to stop. I'm so tempted to just pay the DOE so the ca doesn't get a penny (I actually don't know if this is even true : )
Unfortunatly, I was not eligible for rehab, my overall loan balance was too small. So the account just shows 'collection account' the last payment and the current balance. Paying the Dept of Ed will not prevent the CA from getting their cut. The DOEd will still pay them for their efforts. My ex makes her living collecting DOEd paper. I would call DOEd back and talk to someone else. If they are offering Rehab, ask them why you should bother making payments if they are going to continue to garnish your wages. As far as I know, once a loan is rehabbed, they don't even offset your income tax return so it dosent make any sense that they would continue to garnish your wage.
Thanks again. I just talked to the Ombudsman's Office and she clarified that I would be able to rehab with the ca and it would stop the wage garnishment but that I can't rehab with the DOE directly. I really don't feel like working with the ca for the next 12 months. Any thoughts on if and/or what the DOE will post on my crs if I pay in full?
