Reply
Highlighted
New Visitor
Posts: 1
Registered: ‎12-07-2012
0

Defaulted Student loan settlements

I am looking to make a settlement offer on a student loan that has been in default status for many years.  I am unsure wether to try to make an offer to the Department of Education first or go striaght to the collection agency which is servicng the debt.  I am also fearful that if I go to the PCA with an offer that they may use the info. in the offer as a weapon against me to further thier collection attempts.  has anyone any expierence with settlement offers that they can share with me to help guide me abit?.

Established Member
Posts: 113
Registered: ‎12-04-2012
0

Re: Defaulted Student loan settlements

For Federal Student Loans, settlements rarely happen, if at all. They can just admin garnish you and would not even need a court order to shave some from your paycheck (if you do not have one they can just start taking it out of your SS and tax refunds). Given those facts, why did you not opt for federal loan consolidation?
Community Leader<br> Valued Contributor</br>
Community Leader
Valued Contributor
Posts: 1,349
Registered: ‎06-09-2008
0

Re: Defaulted Student loan settlements

As Barris said, you aren't going to see many settlement offers on federal student loan debt.  What you may be able to negeotiate are some of the penalties and interest that have built up while it was in default.  My reccomendation is, if you have the time, to contact the collection agency that is currently collecting on your loan and ask to go through the rehabilitation process.  With that process, you will make 9 on-time payments at a "reasonable" rate as determined by you and the CA.  Once that is done, your loan is removed from the default and sold to a loan servicer.  Your ability to borrow more federal loans, and from other federal programs, as well as your right to forberances, deferments and other benefits, is restored.

 

If you need this dealt with quickly (perhaps because you want to apply for a mortgage or similar), consolidation fixes the problem immediately, but the default status for the old account remains on your credit report.

Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on actual applicant approvals and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.