Defaulted, applied for consolidation, now says "Permanently assigned to government"

[Anonymous]

I tried to consolidate two of DH's SL's that Direct Loan Servicing had sent to collections/default.  There was a mixup on the previous consolidation and they sent paperwork that showed there was no payment due on the income contingent plan.  Then the statements went to the wrong address (even though we gave it to them correctly) showing a payment due each month. It wasn't until I pulled his CR's in December that we even realized there was a problem with his SL's.

After a gazillion phone calls finding out what happened and sorting it out, I was told to file for a consolidation.  I did, and now he has three entries on his report.

What happened here?  Can anyone make sense of this?

 

• US DEPT OF EDUCATION 
  
• Reporting:  Claim filed with government/Collection account. Claim filed with the government as of Oct 2008.  Terms:  146 months.  Credit Limit:  $23,389  New Balance:  $0  Creditor's statement:  Student loan permanently assigned to government.

• U S DEPT OF ED/FISL/CHI 
• Reporting:  Collection account. $13,482 past due as of Nov 2008.  It shows 36 month terms.  Creditor's statement:  Collection as of Nov 2008

• U S DEPT OF ED/FISL/CHI
  
• Reporting:  Collection account. $12,507 past due as of Nov 2008. It shows 36 month terms.  Creditor's statement:  Collection as of Nov 2008

 I called the phone number to see if there is a garnishment on his taxes and none are showing.  

He qualifies for the Loan Discharge Program due to his disabilities.  However, I have not sent the paperwork in yet because the doctor still has it on his desk.  I am worried it's too late to apply. 

Any advice or insight would be greatly appreciated!

[LynnInMN]

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@Anonymous wrote:

I tried to consolidate two of DH's SL's that Direct Loan Servicing had sent to collections/default.  There was a mixup on the previous consolidation and they sent paperwork that showed there was no payment due on the income contingent plan.  Then the statements went to the wrong address (even though we gave it to them correctly) showing a payment due each month. It wasn't until I pulled his CR's in December that we even realized there was a problem with his SL's.

After a gazillion phone calls finding out what happened and sorting it out, I was told to file for a consolidation.  I did, and now he has three entries on his report.

What happened here?  Can anyone make sense of this?

 

• US DEPT OF EDUCATION 
  
• Reporting:  Claim filed with government/Collection account. Claim filed with the government as of Oct 2008.  Terms:  146 months.  Credit Limit:  $23,389  New Balance:  $0  Creditor's statement:  Student loan permanently assigned to government.

• U S DEPT OF ED/FISL/CHI 
• Reporting:  Collection account. $13,482 past due as of Nov 2008.  It shows 36 month terms.  Creditor's statement:  Collection as of Nov 2008

• U S DEPT OF ED/FISL/CHI
  
• Reporting:  Collection account. $12,507 past due as of Nov 2008. It shows 36 month terms.  Creditor's statement:  Collection as of Nov 2008

 I called the phone number to see if there is a garnishment on his taxes and none are showing.  

He qualifies for the Loan Discharge Program due to his disabilities.  However, I have not sent the paperwork in yet because the doctor still has it on his desk.  I am worried it's too late to apply. 

Any advice or insight would be greatly appreciated!

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The loans defaulted in Oct 08....the first tradeline looks like to the 2 loans put together.  The next two tradelines are the loans broken up showing the actual defaults, being collected by the USDOE collection division.  I see no sign of a consolidation being completed.

Hopefully you are aware the disability discharges are next to impossible to qualify for. 

[Anonymous]

Thanks Lynn. I was afraid the consolidation wouldn't go through.  The loan consolidation status showed an "error" page when I logged in.

Who would I contact about this?  The DOE or could I contact DLS to see if they can pull it back and process his paperwork?

As far as the discharge program, I'd think that getting shot in the head with an AK-47 machine gun would qualify someone...especially if they are completely incapable of working.  If that doesn't qualify...I don't know how anyone could.

The financial aftermath of his injuries has been profound.  I just want to get this resolved so we can get on with our lives.  If anyone could help, I would like some suggestions on how to fix it.  I'd pay it right now if we had the money, but we don't.

[OaimeeO]

Newbie here but I had issues on my Student loans also and they were sent off to collection dept of USDE. Just make sure you don't pay a secondary CA if you end up paying on these loans, as I did. I was told I would no longer qualify for Financial Aid because of the defaulted loan, unless I started making payment arrangements on it. I called USDE and they said that Regional Adjustment Bureau had purchased my loan so I had to pay through them. I did so, and thankfully have 2 payments left because when I printed out my new report it STILL said collection account, charged off, late 120+ days even though I had made proper payments for over 12 months and had my hold lifted from Financial Aid. I would be pretty mad if I finished paying through the CA because when I contacted USDE again they said I should have been offered the 'Rehab' program to fix my credit report in the first place, not sent to the CA. The CA will NOT fix your credit report.

Just thought I'd pass that info on in case you had no other options.

[LynnInMN]

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@OaimeeO wrote:

Newbie here but I had issues on my Student loans also and they were sent off to collection dept of USDE. Just make sure you don't pay a secondary CA if you end up paying on these loans, as I did. I was told I would no longer qualify for Financial Aid because of the defaulted loan, unless I started making payment arrangements on it. I called USDE and they said that Regional Adjustment Bureau had purchased my loan so I had to pay through them. I did so, and thankfully have 2 payments left because when I printed out my new report it STILL said collection account, charged off, late 120+ days even though I had made proper payments for over 12 months and had my hold lifted from Financial Aid. I would be pretty mad if I finished paying through the CA because when I contacted USDE again they said I should have been offered the 'Rehab' program to fix my credit report in the first place, not sent to the CA. The CA will NOT fix your credit report.

Just thought I'd pass that info on in case you had no other options.

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You have a lot of incorrect facts here,......student loans are NEVER sold to CA's, only assigned.  If your account is assigned to a CA, you MUST pay them.  Technically the CA does not have to offer you a rehab program....it is a good idea but they are not mandated do do so.  In a lot of cases, you must ask for it and set up an aproved payment plan towards rehab. 

CA's have nothing to do with credit reporting since they dont own the debt.  It is the guarantors responsiblity to report.

[OaimeeO]

Lynn, absolutely. This is why I was pointing out to make sure you (as in general, not meaning just OP)  know the entire process, from start to finish before doing anything with Student loans in collections. If I hadn't called to find out what the heck was going on before these last 2 payments were made, then my CR's would just say paid closed/collection account.

I also was unaware at the time that USDE was reporting as the gaurantor AND the collector (2 separate listings on my cr's)  even though my account was signed over to a new collection agency. Stupidly, I assumed when the CA (Regional Adjustment Bureau) offered me a payment plan to get my hold lifted off the financial aid that I was getting a 'rehab' program. That is how they made it sound. I should have read through it more to understand better instead of just dishing out money to them. But it is getting fixed now, so I am not worried about it.

[Anonymous]

Thanks for the help everyone.  A quick update...I forwarded the application to the DOE the first week of February and it just sat somewhere on a desk getting dusty, I suppose...because even though they signed for the paperwork no one could tell me where it was by the end of March.  LOL

I called the DOE Ombudsman office in DC and told them the situation.  They gave me the name of the person who oversees the process.  I sent copies of everything again and CC'd it to the Disability Discharge Unit.  They signed for it on April 4th.

By April 15th, everything was FINAL.  No conditional discharge period...it was DONE.

Now we have to wait to see how this reports in the next 30-45 days on the big three.  I already verified through the nslds.gov site that everything is zero'd out.  Additionally the CAIVRS system was cleared through HUD.gov so we are not rejected for future home loan applications. 

I framed the discharge letter the day I got it.  My attorney said he's never seen something get approved in less than 2 weeks before.  Sure, they lost it many times, but it paid to get it in the right hands.