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Sallie Mae auto-defaults??

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gelidstar
Member

Sallie Mae auto-defaults??

Today I'm learning that when my BK was discharged last November, that according to Sallie Mae and the fine print when obtaining a loan, anyone who files for bankruptcy automatically has their loan defaulted.  For the past few months I've been waiting for a balance and payment to show online thinking I'd be making payment arrangements.  When in fact the loan had been charged off last August.  Does this sound right?

 

It is still with Sallie Mae and their recovery department but I was told my only options are to pay in full, or make payment arrangements.  While I don't mind making payments, what good would it be to make payments on a $25k loan to see nothing but a negative mark?  Is there something I can do to resolve this with payment?

Message 1 of 7
6 REPLIES 6
redneck18
Contributor

Re: Sallie Mae auto-defaults??

Call the Dept of Education. You should be able to do a loan consolidation that will bring it out of default and do income based repayment. Also, if you've never rehabbed before that could be an option too.
Message 2 of 7
gelidstar
Member

Re: Sallie Mae auto-defaults??

Does this apply to private loans?  I'm already paying on my fed loans, this is just a side private with SM.

Message 3 of 7
redneck18
Contributor

Re: Sallie Mae auto-defaults??

My apologies, I thought Sallie Mae was federal. If it's a private loan it should have been IIB (included in bankruptcy) and ultimately discharged. Something doesn't sound right for sure. You might ask your BK attorney and/or look at your BK paperwork to see if it was included, if so I would dispute the crap out of it.
Message 4 of 7
Anonymous
Not applicable

Re: Sallie Mae auto-defaults??

Private loans will not be discharged!!


Your best bet would be to make payments on it. It's far better to have it as a negative mark, but as a paid collection, than a negative mark that remains in chargeoff/unpaid collection status.

 

I went through this same thing, I thought I'd be able to go back to paying the original lender (private loans), but they had auto-defaulted as well. It took me weeks to track them down, two were with collection agencies, and I had no choice but to settle, so my CR now states "settled for less than owed" but only caused a 6 pt drop in my score. Before that, it said "$14,000 past due" and my CS was like 650. They removed that remark and had it marked as just plain closed and my score rose to around 685. A few days later they changed to to "settled for less than owed" (which is legit, even though I wanted to pay them in full, but over time, but they forced me to settle since I couldn't afford to pay the whole lump sum at once.) and my score dropped 6 pts. So it's a much more minor negative than having it show past due or just plain charged off.

 

One somehow managed to stay with BofA's internal collections department, shows as closed on my CR, so I got lucky there as there was no adverse report on my CR. But I am making payments anyway.

They WILL get their money, somehow. Whether by suing, or wage garnishments or whatever. BK won't discharge any student loans, they don't go away, and as far as I know, they're exempt from any statutes of limitations for debt. So it's better to just pay them off and get them off your back, rather than whatever other negative thing may come from not paying them. As silly as it seems to have to pay on something that is showing negatively on your CR.

Message 5 of 7
Its_Me
Regular Contributor

Re: Sallie Mae auto-defaults??

As a previous poster mentioned, student loans are not discharged under typical circumstances. I would suggest finding out who holds your loan(s) and make whatever payment you can because all the while interest is accruing. Just my two cents.

Message 6 of 7
gelidstar
Member

Re: Sallie Mae auto-defaults??

I think my post was misread, I never denied the fact SL are not discharged in BK.  My issue was the fact that they are automatically reported as a charge off and put into default, even if you weren't late on payments.  From reading across several sites, it would seem the best course of action is to wait it out until I can settle in full or for a partial amount since it is a private loan.  I just think it's ridiculous that this company can get away with putting the account into default status even when payments were being made prior to the discharge.  Oh well, lesson learned.

Message 7 of 7
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