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New Visitor
Posts: 2
Registered: ‎06-12-2015
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Re: Student Loan Disability Discharge

Hello everyone,

 

I've been granted a discharge on my student loans through Total and Permanent Disability after the three year monitoring period. Does anyone know what happens if you *have* to go back to work at some point in the future? My husband is also disabled and we barely make ends meet. If I'm forced to go back to work at some point to avoid us essentially being out on the streets, will my loans be reinstated?

 

Sarah

Established Contributor
Posts: 569
Registered: ‎09-14-2007
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Re: Student Loan Disability Discharge


sarahp wrote:

Hello everyone,

 

I've been granted a discharge on my student loans through Total and Permanent Disability after the three year monitoring period. Does anyone know what happens if you *have* to go back to work at some point in the future? My husband is also disabled and we barely make ends meet. If I'm forced to go back to work at some point to avoid us essentially being out on the streets, will my loans be reinstated?

 

Sarah


Because you're asking about a 3 year monitoring period, I assume that your discharge was granted due to SSDI, and not VA disability.

According to the monitoring guidelines, if you work and your income is above the poverty guidelines for a family of 2 in your state, or if you get a notice from SS that you are no longer disabled (or similar situation), your SL debt will be reinstated.

 

Even if your income would be under your states poverty level for a family of 2, the fact that you're working, if you are doing work that SS based your award on because you had shown you were unable to do that work, then they may find you no longer disabled. (hope that makes sense.  SSA can be difficult to understand)

 

http://disabilitydischarge.com/Monitoring-Period/



gardening until July 1, 2017
New Visitor
Posts: 2
Registered: ‎06-12-2015
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Re: Student Loan Disability Discharge

Correct, mine was SSDI. I'm already past my 3-year monitoring period...it was completely discharged last year (I got the letter saying my monitoring period was completed with no issues), so this is actually year 4 for me and I've already paid taxes on the discharged amount this year.

Established Contributor
Posts: 569
Registered: ‎09-14-2007

Re: Student Loan Disability Discharge

[ Edited ]

sarahp wrote:

Correct, mine was SSDI. I'm already past my 3-year monitoring period...it was completely discharged last year (I got the letter saying my monitoring period was completed with no issues), so this is actually year 4 for me and I've already paid taxes on the discharged amount this year.


oh, ok. I misunderstood.  My discharge was based on VA 100% P&T (though I have SSDI also), so I'm not familiar with the nitty gritty of the 3 year monitoring period and beyond.

 

I honestly can't find anything about the post monitoring stage and would imagine that the final discharge that comes with the end of it must be just that, permanently discharged.

 

I believe the 3 year monitoring probably has more to do with the guidelines of SSA's  'is expected to last for at least a year or more or result in death...' (or however it's worded.. the point being that it doesn't state 'forever'.  Unlike the VA, where the VA awards us either '100% Temporary', or '100% P&T (permanent and total) with no future exams',  where our condition(s) have been evaluated by (often many) specialist and their opinion is that there is no likelihood that our conditions will get better.  I beleive this is probably the reason why we don't have a 3 year monitoring period, because only the 100% P&T qualifies us for a discharge.

 

You might want to consult with a disability attorney just to be sure, but I do know that you can receive student loans after the 3 year monitoring period ONLY IF a doctor signs a smiliar form stating that you are capable of gainful employment (so that you can pay your student loan back after school (and NOTHING is mentioned about having to pay back the ones that were discharged if the doctor states they can once again earn gainful employment)..  So, that makes me think that it's probably ok to return to work after those 3 years, without worry of having the discharged loans reinstated.

 

Hope that makes sense Smiley Happy



gardening until July 1, 2017
New Visitor
Posts: 1
Registered: ‎06-19-2015
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Re: Student Loan Disability Discharge

[ Edited ]

If you are past your 3-year monitoring period then you can return to work and your student loans will never be reinstated, no matter how much you earn. The Department of Education can only reinstate student loans during the monitoring period. I confirmed this with Nelnet.

New Contributor
Posts: 50
Registered: ‎03-18-2015
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Re: Student Loan Disability Discharge

anyone have any numbers or contacts to remove the history on these so accounts once your approved for the TPD? Also, as far as taxes, I don't have the funds to hire an accountant, pretty confident I can figure it out going the insolvency route, but where do I start? Thank you.

Member
Posts: 12
Registered: ‎03-03-2015

Re: Student Loan Disability Discharge

Capz,

 

I'm not sure exactly what you mean regarding numbers or contacts to remove the "history".  These accounts will remain on your credit report for at least 7 years for negative reports and potentially much longer than that for positive accounts (in good standing) which you want to have as many of those as you can to establish a longer credit history.

 

My husband and I filed an extension on our taxes so we could figure out the insolvency as well.

 

What you need to do is first obtain the paperwork/forms from the IRS website right now I don't have the information in front of me, but if you google "IRS form insolvency" you'll be able to find it.  There are actually 2 forms for this.  What you need to do is have the date of the TPD and use that date to go over ALL of your debts and all of your assets. For example, my husband had bought a new car a few months before I received the TPD (he travels a lot for his job) and so that was over 26K debt right there.  Then we added up any credit card debt, for which there wasn't much as we pay everything off as we go, and we have no assets really, except some savings, so between the car and some medical bills and some other random things, the $9,000 ish' in TPD will be offset and therefore we'll be considered insolvent and won't have to pay taxes on it.

 

It's not very difficult you just have to pay attention to all of your accounts and add them up accordingly.  If you have any amount of difference, of an asset then you'd have to pay taxes on whatever that may be.

 

Feel free to pm me if you need any more assistance, I"d be glad to help.  

 

Also, make sure your creditors that you got the original student loan with do NOT write "permanently transferred to the government" if that is on your credit report, you will be incorrectly given a low credit score because the algorithm with MY FICO interprets the coding for that (AL) as if your account was seriously delinquent.  This is very important to pay attention to.  It took me over 7 months of back and forth between My FICO , the National Resource for Higher Education and my bank to get it all corrected.  My score had dropped over 120 points from a high of 825 to a low of 690's for some of the reporting.  Now it's back up to "exceptional" because the bank removed the coding and put "closed, paid as agreed".  

 

Best of luck!!

New Contributor
Posts: 50
Registered: ‎03-18-2015
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Re: Student Loan Disability Discharge

Thank you so much for the information. Just to clarify, the TPD date given by nelnet is 06/01/15,  so I need to get the insolvency paperwork for the IRS for this date? Do I submit it with annual taxes or now? I searched last night but found 2014 forms. 

in essence you answered my question regarding reporting methods, I was not clear on how to phrase the question. You have been very helpful. If the reporting method is considered transferred to the government (it should not be with a TPD approval, right?); who did you contact to get the correct reporting method changed?

thank you.

Member
Posts: 12
Registered: ‎03-03-2015

Re: Student Loan Disability Discharge

Yes, if on your credit reports (get all three not just from My FICO but also the 3 credit bureaus as they are NOT the same as they would like you to think) make sure you use the date that NelNet/Dept. of Education discharged the loan, so if that's June 1, 2015, then use that date.  Also confirm this date with NelNet as well.  Then when you file your taxes for next year you will have to use that date and then figure out if you have to pay any taxes on that amount.  What's great is you can do this now (Use the 2014 forms as a guideline and then when you actually file next year download the 2015 forms) so that way you won't be shocked months from now.  

 

I learned that the US banks are told to put a code "AL" which translates to "student loan permanently assigned to the government" there's another one that said "transferred to another office", code "05" (account transferred to another office).  My accounts had both of these "verbiage" in them.  The "permanently assigned to the government" was the one that killed my score.  Once they took that code off it went up again into the mid 800's.  The bank had never heard of this happening before, they had NO idea that their reporting tanked my score and believe me, it took a LOT of convincing and also My FICO sending a letter to me telling me that I had to have the bank change the coding/verbiage or else my negative score and derogatory remarks would remain for the next 7 years.

 

I still have a lot of work to do in order to help the thousands of folks that are receiving student loan forgiveness/discharges and have NO idea that this type of reporting is going to harm their credit unnecessarily.

 

I need to somehow gather folks to get behind me to form some sort of petition to be sent to the organization that tells the banks to use this coding, to request them to change it.  The CDIA (Consumer Data Industry Association) is the organization who makes these rules.  I was told this by some officials at the National Council of Higher Education Resources (Formerly The National Council of Higher Education Loan Programs, Inc.) that CDIA "are the ones who make those rules".

 

The coding is not usually seen by us, it's sent to the credit bureaus and then it is translated into a verbiage such as "permanently assigned to the government" in the status section, remarks or comments section.  The 3 credit bureaus do NOT consider it a derrogatory comment, HOWEVER My FICO does, and 90% of all credit cards and folks that give out car loans etc., use the My FICO scoring system.  I had found out about my score droppng from having a credit card that also let you access your "my fico score monthly" on their website by clicking on a "My FICO" icon.  This is how I found out my score went from an 825 to a 717!!  Then the journey to find the truth came along Smiley Wink

 

Mortgage lenders usually do not use the "My FICO" system however, they go directly to the 3 credit bureaus and get your scores and reports from them.  So if anyone is looking for a home that's a bit of info. I got from my local banks.

 

Let me know if you need anything else.  I had such a struggle/challenge over the past 7 months and if there's anything I can do to help others NOT have to go through that I will as it will make all the time and energy I spent getting this all corrected worth it! Smiley Happy

 

Take care!

 

 

New Contributor
Posts: 50
Registered: ‎03-18-2015
0

Re: Student Loan Disability Discharge

Thank you for all of this information, I started the process today. I don't know who to ask about how the loan holders are reporting to the the CRAs. Some student loans haven't even received the discharge papers. Which I faxed today. Looks like this is goimg to be a up hill battle.

 

just to clarify on the wording of how the loans will eventually report, I do NOT want the reporting as "transferred to government" is that correct? And if you don't mind, did you have to go through each lend or or navient to get this squared away with proper reporting procedures.

 

thank you in advance. 


Maidendance wrote:

Yes, if on your credit reports (get all three not just from My FICO but also the 3 credit bureaus as they are NOT the same as they would like you to think) make sure you use the date that NelNet/Dept. of Education discharged the loan, so if that's June 1, 2015, then use that date.  Also confirm this date with NelNet as well.  Then when you file your taxes for next year you will have to use that date and then figure out if you have to pay any taxes on that amount.  What's great is you can do this now (Use the 2014 forms as a guideline and then when you actually file next year download the 2015 forms) so that way you won't be shocked months from now.  

 

I learned that the US banks are told to put a code "AL" which translates to "student loan permanently assigned to the government" there's another one that said "transferred to another office", code "05" (account transferred to another office).  My accounts had both of these "verbiage" in them.  The "permanently assigned to the government" was the one that killed my score.  Once they took that code off it went up again into the mid 800's.  The bank had never heard of this happening before, they had NO idea that their reporting tanked my score and believe me, it took a LOT of convincing and also My FICO sending a letter to me telling me that I had to have the bank change the coding/verbiage or else my negative score and derogatory remarks would remain for the next 7 years.

 

I still have a lot of work to do in order to help the thousands of folks that are receiving student loan forgiveness/discharges and have NO idea that this type of reporting is going to harm their credit unnecessarily.

 

I need to somehow gather folks to get behind me to form some sort of petition to be sent to the organization that tells the banks to use this coding, to request them to change it.  The CDIA (Consumer Data Industry Association) is the organization who makes these rules.  I was told this by some officials at the National Council of Higher Education Resources (Formerly The National Council of Higher Education Loan Programs, Inc.) that CDIA "are the ones who make those rules".

 

The coding is not usually seen by us, it's sent to the credit bureaus and then it is translated into a verbiage such as "permanently assigned to the government" in the status section, remarks or comments section.  The 3 credit bureaus do NOT consider it a derrogatory comment, HOWEVER My FICO does, and 90% of all credit cards and folks that give out car loans etc., use the My FICO scoring system.  I had found out about my score droppng from having a credit card that also let you access your "my fico score monthly" on their website by clicking on a "My FICO" icon.  This is how I found out my score went from an 825 to a 717!!  Then the journey to find the truth came along Smiley Wink

 

Mortgage lenders usually do not use the "My FICO" system however, they go directly to the 3 credit bureaus and get your scores and reports from them.  So if anyone is looking for a home that's a bit of info. I got from my local banks.

 

Let me know if you need anything else.  I had such a struggle/challenge over the past 7 months and if there's anything I can do to help others NOT have to go through that I will as it will make all the time and energy I spent getting this all corrected worth it! Smiley Happy

 

Take care!

 

 


 

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