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Has anyone defaulted, then did a settlement?

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Anonymous
Not applicable

Has anyone defaulted, then did a settlement?

Like I posted in another post.  As a single mom, I couldn't afford to pay my student loan.  It was at times a choice between food and rent.  No way could I afford to pay the loan.  So, it went into default.  I then refi-d it with direct loans.  I still couldn't make the payments.
 
Then in 2003 I filed Bk.  I thought the loan was taken care of in the BK.  Later I learned, if you filed before 2001, it would have been.  So, I am paying the debt off.  I am doing the rehab plan.  HOWEVER, they have taken my 2006 & 2007 Taxes, Plus I am sure they are going to take the stimulus check.  So after that I would be left with a $1500 balance. 
 
Just wondering if you think I could call them for a settlement?  Or write?
Message 1 of 5
4 REPLIES 4
Anonymous
Not applicable

Re: Has anyone defaulted, then did a settlement?

I did a settlement in 2005. However, just so you know the settlement is just as bad as a collection. Under manual reviews it is looked upon quite unfavorably. I recently agreed to loan rehabilitation on the $483 I had left over. I could have left it alone, but I wanted the default status gone.

But yes it is possible to settle with Direct Loans.
Message 2 of 5
pattycake
Established Contributor

Re: Has anyone defaulted, then did a settlement?

Actually, student loans haven't been dischargeable since the 1980's - there were apparently a LOT of students who took out tens of thousands, spent the money on cars and houses, then declared BK.  I missed the deadline by only a couple of years (in 1991).  I'm still paying on mine as a result. 
 
The Feds are a lot more flexible than other loan options, reducing your payments, letting you defer, etc.  Stick with them and try to pay as much as you can, and good luck!!
pattycake's FICOs: 6/2/10 - TU: 708; EX: ???; EQ: 749
Message 3 of 5
Anonymous
Not applicable

Re: Has anyone defaulted, then did a settlement?

DCS contacted me and offered a settlement option. After paying in 2005, my credit report reflected "Settled-less than full balance"

When applying for credit I had to explain this to a few different companies. I decided to call the Department of Education and ask them if I could pay back the left over amount to get the settled off my account because it was hurting my credit. After several minutes on hold I was offered the rehab.

I am not sure if "dischargeable" is the same as settled. It is my understanding that the amount I settled for did include interest but did not include collection fees.

Student Loan Account Student Loan Account Us Dept Of Education
Status as of [?] Jun, 2004
Date opened [?] Jan, 1997
Date of last activity [?] Aug, 2006
Date paid out [?] Not Reported
Date closed [?] Jun, 2004
Account number [?] XXXXXXXXXXXXX7020
Loan type [?] Student Loan
Credit limit [?] Not Reported
Largest past balance [?] $6,456
Terms [?] 36 Monthly
Account Type [?] Installment Account
Account holder [?] Individual Account
Scheduled payment amount [?] $464
Account status [?] Account is Closed
Descriptions [?]

* Settled—less than full balance
Message 4 of 5
pattycake
Established Contributor

Re: Has anyone defaulted, then did a settlement?

Dischargeable is not the same as settled.  When a debt is discharged in BK, you don't have to pay it back.  You always have to pay back SL's, but the Feds are pretty good about working on payment arrangements. 
 
 
pattycake's FICOs: 6/2/10 - TU: 708; EX: ???; EQ: 749
Message 5 of 5
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