Pay my default loan in full?

[degs138]

I had 3 student loans that I thought were consolidated but are not.  I owe 10202 total on them including fees and interest.  The CA that has my loan would only be able to get me on a rehab program that would have them paid off before the 9 months so they would not be picked up.  The other option is they sent a Paid in full option into Direct loans to do a Paid in full option for 8201 dollars.

If I do the paid in full option will I get this off of my credit report when I make the payment?  Are they going to stay on my credit report for 7 years again?  I want to get these removed so I can get a good home loan rate.  Would a lender work with me if I showed that these are paid?  It is the only ding i have on my credit report.  If I can get these to show paid as good credit lines that would be optimal.  Otherwise I just have an auto loan and 5 credit cards that show 100% payment history.

Any advise is helpful.  Last thing I want to do is pay for something that will not help my credit file.

[SCF]

Am I reading your numbers correctly that the 9 rehab payments would pay off a $10,000+ loan?  How are they figuring $1000+ payments for your rehab?  Generally speaking, the CA is supposed to do its best to allow you to complete rehab, even with a low balance loan (and this generally applies to much lower balances, in the $2-5k range).  I would contact them again and press them to find a payment plan that will allow you to make at least 10-11 payments before the loan is paid off so that you can complete rehab.

If you do want to take their settlement offer, treat it like any "pay for delete" situation.  Make sure that they document, in writing, that you are paying the debt in full and what changes will be made to your credit report in exchange for the payment.  Paying the loan in full should certainly clear you out of CAIVRS and will definitely improve how the situation is viewed by mortgage lenders, but simply have the collection report "paid" will not be nearly as beneficial as the changes that come with rehab.

[degs138]

Per my income my payment would be such that the loan is paid off in 10 payments.  If my loan isn't picked up right away it will be paid off before rehab can be completed.  I am trying to get them to accept a 400 or 500 monthly payment so rehab is possible.  I understand that world be most favoriable.

[Anonymous]

You should give them "updated" income information.  I'm just sayin'......

[Anonymous]

The CA wants you to pay it off rather than go to rehab because they will get a larger commission.   If they won't contact the Dept of Ed ombudsman and tell them that the suggested payment would be a financial hardship.

[degs138]

The problem is the payment is not a financial Hardship. Sending in my 2014 income my payment world be 1152, which is fine. Only problem is it doesn't get me out of rehab. I asked them if i could make a 500 payment and they said only if i can prove financial hardship. I don't have any bills other then a car loan and a few utilities. pif option seems good. I can settle for less and have no debt when i shop for a home loan. I want to get a good rate so I'm looking for the way too get it off my record or show a good trade line.

[Anonymous]

They can't make you "prove" your income, but unfortunately you may have already done so.  I told my CA that I made about half of what I actually make.  I basically told them that after I pay all of my bills and pay for necessities I have a couple hundred left over at the end of the month.

[Anonymous]

Tell them your sick mother is staying with you, tell them you're paying a crapload of child support.  You don't have to prove a hardship.  You just have to arrange a "reasonable" payment.  Paying off a loan that had an origilnal term of several years in 9 months is not reasonable.  I think you're being played by the CA.  Just my $.02.

[SCF]

There's really no need to lie, and although you may be able to get away with it, you certainly don't want to face any consequences if you are caught (I am sure there is a clause about civil and criminal penalties on everything you sign relating to this loan and the rehab).  If the CA won't work with you, I would contact the Ombudsman.  Generally, I think the goal is to enable borrowers to complete rehab, even if their affordable payments would pay off the loan before the 9 payments are completed.  They may be able to provide you some more specific guidance or even advocate on your behalf.