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Rehab or pay off?

Valued Contributor

Rehab or pay off?

Hi everyone,
My Original federal direct student loan is for $3500 it is now $5000 and it defaulted in 2013 I never made a payment and of course it is in collections. It is being reported 4 times on my credit report. I recently received a moderate settlement from the va. Now here is the dilemma. I'm a 70% disabled vet who doesn't work. I'm am about to apply for tdiu which would make me 100% disabled which could take years to get approved. When I spoke with the student loan collection agency ( the one and only time I have which was last week) they said if I got 100% they would wipe out my debt completely. I don't want to potentially wait years for my credit to be clear and this could take 9 months or 6 years I don't know! So should I rehab the loan then pay it off after it is out of default or just pay it off now and try to get the negative accounts removed by goodwill letters? This whole thing is making me anxious either way I will be calling them Monday with my decision. Unless you guys think it would be best to just wait and see if I can get rated at 100%. Thanks for any input.


     $500         $1,000        $1,300        $1,500        $1,850         $3,400        $3,500                            $9,500        $1,000
Message 1 of 23
22 REPLIES
Established Member

Re: Rehab or pay off?

Hi @Disabled-Vet, if you rehab your loans you will get the benefit of having the negative remarks originally reported by the Department of Education removed.  This is a 9-month process, but it may appear as if your loans were never in default after the completion of the rehab.  The repayment is based on your income, so you *may* qualify for payments as low as $5.00 per month.  Once you finish your rehab, you *may* be able to continue repayment at that same amount.  Of course, that amount is based on your total income picture and this is not advise on what to furnish to the collection agency or, ultimately, your new servicer.

 

After that you may qualify for Total & Permanent Disability write off (if you're considered 100% disabled, never to return to work again), but at least the negative remarks will be removed.

Student Loan Expert

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Message 2 of 23
Valued Contributor

Re: Rehab or pay off?

Chris thanks so much for the response. That's what I was thinking as well. While I'm waiting for tdiu to just go ahead and rehab the loan. I would give anything to be able to work again unfortunately it doesn't seem to be in my future. I'll make the call Monday to start the process, thanks again and have a great weekend.


     $500         $1,000        $1,300        $1,500        $1,850         $3,400        $3,500                            $9,500        $1,000
Message 3 of 23
Senior Contributor

Re: Rehab or pay off?

Always go with the Rehab if you are given the opportunity, paying it off wil only remove the debt but them bad Tradelines will remain for up to 7 to 10 years. Now if you rehab it gives you the benefits of having all the negative notations of default removed and possibly even the lates along with a fresh clean trade line. I would rehab wait for all that to get done and get the benefit of it then if you are still wanting to pay it off do it after rehab.
Message 4 of 23
Valued Contributor

Re: Rehab or pay off?

Thanks for the advice Aduke. I'm making the call Monday to begin the rehab process and like you said get it all straightened out then I will reassess everything and figure out what I'll do. Thanks aging for the advice.


     $500         $1,000        $1,300        $1,500        $1,850         $3,400        $3,500                            $9,500        $1,000
Message 5 of 23
Valued Contributor

Re: Rehab or pay off?

Just got off the phone with them made the first $5 payment set up the second payment for the 5th of October and now I'm just waiting for them to email me the documents for me to review, sign and send back along with my disability income information. All in all i spent an hour on the phone with them and I recorded the entire conversation and I informed them of course. They also said that all negatives would be removed at the end of the rehab period along with all collection costs. So that's good to have if that doesn't happen.


     $500         $1,000        $1,300        $1,500        $1,850         $3,400        $3,500                            $9,500        $1,000
Message 6 of 23
Senior Contributor

Re: Rehab or pay off?

Great idea about recording , I wish I would have done the same , but I started my rehab bf I joined Myfico so I was clueless about everything pretty much , glad you got it started , trust me you made a great decision. No news for me today 😕 getting very anxious and impatient being I already waited 9 mths ..
Message 7 of 23
Valued Contributor

Re: Rehab or pay off?

After reading all the posts on here about people saying that collection agencies saying they will do pay for deletes verbally but not put it in writing I searched for phone call recording apps. It's just a way for me to protect myself in case something like that ever happens. It also let's me email a copy of the recorded conversation so I email it to a few email addresses and I upload it to my Google drive account. I feel good about getting the ball rolling. The hard part is over for you, just keep doing what you're doing and the loan will be picked up. Thanks for all your advice and support and keep me updated. I know it's hard not to be anxious but honestly don't waste the anxiety on this you overcame the true obstacle and now it's just a waiting game but you've already won the game so it really doesn't matter!


     $500         $1,000        $1,300        $1,500        $1,850         $3,400        $3,500                            $9,500        $1,000
Message 8 of 23
Senior Contributor

Re: Rehab or pay off?

Thanks for the encouragement I needed to hear it !
Message 9 of 23
Valued Contributor

Re: Rehab or pay off?

You're welcome, that's what we are here for!


     $500         $1,000        $1,300        $1,500        $1,850         $3,400        $3,500                            $9,500        $1,000
Message 10 of 23