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Established Contributor
MBOhio2
Posts: 946
Registered: ‎02-07-2011
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Anyone have defaulted private student loans?

I'm not necessarily looking for advice, but instead just some comiserating...

 

As a result of unemployment in late 2009, I had 11 private loans charge off. I desperately tried to pay them, even calling the lender and saying "what's the minimum I must pay to prevent default?" but I still couldn't prevent it due to the large amount of the payments.

 

Since there is no rehab program, I understand that really all I can do is make informal payments on the defaulted loans until they are paid off and then let the 7 years pass. The loans will continue to be reported as charged-off until they are paid in full and drop off. Unfortunately, these defaults are KILLING my credit score and it will be years before I can pay off the $100K total.

 

Has anyone else experienced default/charge-off of privtae student loans? When did it happen and what was your experience over the long-term?

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
Jan 2012 Current Scores: FICO EQ 604 FICO EX ??? TU98 623
Feb 2012 Goal Scores: EQ 620 EX 620 TR 620 (or just the middle to be 620!!)
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jbellz13
Posts: 5
Registered: ‎10-09-2008
0

Re: Anyone have defaulted private student loans?

Unfortunately, I can't offer much of a success story as I am in a similar boat.  My first year out of school I thought I consolidated all my loans with the exception of SallieMae.  All these loans were through NHHEAF and I thought they were all Fed. Loans, especially since when I consolidated I flat out asked if this would included ALL loans I had with them and had been paying on (my statements just lumped them all together before the consolidation).  I guess that wasn't the case though and I 4 loans worth a total of $20k couldn't be consolidated and with an illness and a move, got lost in the mix.  (I know, I should've been more dilligent, known what I was getting into etc.).

 

A few years later, I happened to receive a collection notice, called NHHEAF in a panic asking what was up and was told there was nothing they could do since they already sold the loan.  So basically I was SOL.  Now I am at a total loss of what to do.  I have about $48k in other student loans that I have worked very hard to pay on time as much as possible. I'm going to be turning 29, I work 2 jobs to somehow pull in $38k/year, but should actually be cutting down on hours due to a medical condition.  

 

If you find any coping strategies that work for you, please pass them along.

 

  

*************************
3/26/12: TU=550 (pretty bummed I haven't budged)

2/7/11: EQ: 549 - (After slacking for 2 years)
10/9/08: TU: 518/ EQ: 515/ EX: 519
Frequent Contributor
gangof4
Posts: 310
Registered: ‎07-19-2010
0

Re: Anyone have defaulted private student loans?

I'm 62 and (I'm) supposed to be cutting back on work for medical reasons.  My student loans won't be paid off until I turn 71.

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Senior Contributor
laz98
Posts: 4,298
Registered: ‎09-06-2008
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Re: Anyone have defaulted private student loans?

don't they just stay on for the regular 7 or 7.5 years & then come off?

Latest scores: Walmart TU: 769. MyFICO TU: 769. DCU EQ: 716. MyFICO EQ: 780. PSECU EX: 756. MyFICO EX: 780.
Senior Contributor
O6
Posts: 3,626
Registered: ‎10-13-2009
0

Re: Anyone have defaulted private student loans?


laz98 wrote:

don't they just stay on for the regular 7 or 7.5 years & then come off?


Not necessarily.

 

Student loans are handled differently when it comes to credit reporting.  While as a negative tradeline they can only stay for up to 7 years, the problem is the "trigger event" that starts the CRTP.  Unlike most conventional debt, DoFD is but one of several trigger events and CRAs can chose the trigger event which works most to your disadvantage.

 

For example, one trigger event is when the lender gets reimbursed by the government guarantee agency for the student loan (or part of the student loan) that you've defaulted on.  This could take years from the day you've defaulted.  Taking a student loan that you defaulted on in, say, March 2011, the lender may try to collect for a year or more, turn it over to outside collections for another year or more ... and then begin the process of getting reimbursed by the government guarantee agency only actually getting reimbursed half a year later.  So, if they get reimbursed in, say, March 2014, the bad debt can be reported until April 2021. 

 

Student loan and child support debt, though not able to live forever, can live long enough to cause you untold grief and ulcers.

IAALBNYL
Established Contributor
MBOhio2
Posts: 946
Registered: ‎02-07-2011
0

Re: Anyone have defaulted private student loans?


laz98 wrote:

don't they just stay on for the regular 7 or 7.5 years & then come off?


In my case, yes, this is what the lender is telling me will happen. My credit reports also show the expected drop off date in 2016 (7 years from the first late); however, it's very frustrating that my loans will just sit on my credit report as "past due" and "charged off" even though I am making payments on them. I get zero credit for the paydown/pay-off efforts I'll be making for the next 5 years until they drop off. All the while the COs (the ONLY negative items on my credit report) are destroying my credit score.

 

I hate SL lenders :smileysad:

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
Jan 2012 Current Scores: FICO EQ 604 FICO EX ??? TU98 623
Feb 2012 Goal Scores: EQ 620 EX 620 TR 620 (or just the middle to be 620!!)
Established Member
lseangel
Posts: 16
Registered: ‎02-09-2008
0

Re: Anyone have defaulted private student loans?

I have a question, MBOhio2, as I am possibly in a similar situation...

You mention you are making informal payments towards this charged off private student loan. Is that something you just started doing yourself (sending in payments) or something they agreed to you doing? Have you received any communication from then since you started?

I have a charged off CItiAssist loan that I haven't heard anything on for years reporting as $13 late and charged off. I am getting ready (or trying to) contact them to see what my options are but I'm afraid they will either A) tell me they will only accept full payment immediately or B) sue me. Although I understand they can still sue at any time (even if making payments they have agreed to).

Though I understand your loan is not through Citi, since you are doing it with another lender, I wonder if there's a chance that I could simply start mailing Citi payments and I may not have to actually speak with them. I would certainly love to do that if they will accept the payments. At least it could be another option for me I hadn't thought of.

Established Contributor
MBOhio2
Posts: 946
Registered: ‎02-07-2011
0

Re: Anyone have defaulted private student loans?

My loans are with Key Bank, whom is simply miserable to deal with. However, my payments are made to them through an agreement that I made with them. It's not very formal (no formal paperwork, etc) I just agreed to pay them X per month in exchange for them ceasing collection activity. It doesn't improve the credit reporting piece, but I'm paying my debts (as I always planned to do) and they are happy to collect their money, so they're not harassing me with collection phone calls and letters.

 

I don't know the real risks here, but it seems to me that if you reach out to Citi and say "hey, I have an old charge-off with you and would like to enter into a payment arrangment" they would be happy to accept it and not take any legal action. It's expensive to sue someone and if they haven't done it yet (when they weren't getting any money), then I would be absolutely shocked if they decided that, now that you're willing to voluntarily pay them, it's time to sue. It just makes no sense because all they really want it their money anyway.

 

As a caveat... it you set up payments with them and then abruptly stop again, that may encourage them to sue you since they know that, at least to some degree, you have money. But if you plan to pay until the loan is paid off, I think Citi would be happy to work with you. As another sidenote, it's likely that, if you call Citi, the person will really pressure you to pay in full (maybe even threaten a little) but that's just a collection tactic. Of course, they would prefer you to pay in full, but if you say "listen, I can't afford that, but I want to make payments" and stand your ground, I am sure they will agree and set something up.

 

Don't be scared... the most important thing is to get this debt paid off and move on. SL debt is stressful!!

Mid-2010 Starting Scores: FAKO EQ 476 FAKO EX 506 FICO TU98 575
Jan 2012 Current Scores: FICO EQ 604 FICO EX ??? TU98 623
Feb 2012 Goal Scores: EQ 620 EX 620 TR 620 (or just the middle to be 620!!)
Frequent Contributor
PixieQueen80
Posts: 292
Registered: ‎01-05-2010
0

Re: Anyone have defaulted private student loans?


lseangel wrote:

I have a question, MBOhio2, as I am possibly in a similar situation...

You mention you are making informal payments towards this charged off private student loan. Is that something you just started doing yourself (sending in payments) or something they agreed to you doing? Have you received any communication from then since you started?

I have a charged off CItiAssist loan that I haven't heard anything on for years reporting as $13 late and charged off. I am getting ready (or trying to) contact them to see what my options are but I'm afraid they will either A) tell me they will only accept full payment immediately or B) sue me. Although I understand they can still sue at any time (even if making payments they have agreed to).

Though I understand your loan is not through Citi, since you are doing it with another lender, I wonder if there's a chance that I could simply start mailing Citi payments and I may not have to actually speak with them. I would certainly love to do that if they will accept the payments. At least it could be another option for me I hadn't thought of.


My Citiassist loans went to collections/default in 2004.  They started legal action in 2007 and got a judgment in 2008.  I made arrangements to pay of judgement in 2009 and made final payment November of 2010.

 

Here is the big stinker.  Each payment that was made "re-aged" my account.  So now my DOFD is 7/2010 and 10/2010 so these loans will not fall off my credit report until 2017 even though they went into default 7 plus years ago. 

 

You should definately pay the debt because the relief of no longer having it hang over you is the best feeling however please go into it knowing that it is possible that your DOFD will be updated to the month in which your last payment was made and you would have to wait 7 plus years from then for a complete removal from your credit report.

Starting Scores (7/26/2010): EQ 517; TU 508; EX 527 (lender)
Scores Along the Way (11/4/2010): EQ 542; TU 547; (11/8/2010) EX Plus 641
Scores Along the Way: (4/15/2011): EQ 516; TU 622; EX 585 (lender)
Scores Along the Way: (8/25/2011): EQ 617; TU 627; EX 625 (lender)
Scores Along the Way: (11/28/2011): EQ 617; TU 645; EX 667 (lender)
Current Scores: (8/9/2013): EQ 634; TU 662; EX 694 (lender)
Closed on a Home: 12/30/2011 Goal Scores (8/25/2014): 700 club
Established Member
lseangel
Posts: 16
Registered: ‎02-09-2008
0

Re: Anyone have defaulted private student loans?

Thanks for replying!

I actually did end up paying them on 4/9/2011 though it was like pulling teeth just to get ahold of someone to take my money. I don't have time to go into all the details but the short version is:

I requested, via the studentloan.com website, for someone to contact me regarding my account. Took them almost a week before someone called me back.

It is near impossible to get anyone to answer the phone in their recovery department. It always goes to voicemail and most times their voicemail box is full. I probably made over 100 calls in a few day span and got someone to answer the phone only 2 times and that was only because I just redialed over and over and over until someone finally answered - > 30 min worth of constant redialing each time.

I have still been unable to get anyone to send me a letter or anything indicating this is now paid. When I paid I was told it would take 2 or 3 days and that they would then fax and mail me a letter indicating it was paid. Well, I never received it and got to play phone/fax tag for almost a week demanding my letter. One of the faxes they sent me was a letter stating the full amount was still owed. Ooooo, this pissed me off. After several more unsuccessful phone/fax attempts (during which time I filed complaints with a couple of agencies primarly for their poor service (promises not kept, not willing to acknowledge I paid, impossible to reach anyone, etc), they finally left me a voicemail telling me the rep was incorrect and that they do not completely have it updated in their system and consider it paid until 30 days AFTER it has been paid and they will not send/fax a letter stating paid until that point.

I'm going to wait the 30 days and then begin the fun game of trying to contact them again to request the paid in full letter.

Grrrr....


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