So my boyfriend defaulted on his student loans a few years back. We recieved a letter today from Financial Managment systems stating that the U.S. department of Education (ED) has placed your account with us for collections. they go on to say that:
-we have 30 days to respond (or dispute)
- we can either compromise a settlement
-we can do loan rehabilitation
-or we can make reasonable and affordable montly payments
My questions are
1. Should I even talk to this company or should we ONLY deal with the Department of Education?
2. If we should talk to this company, how can we insure that the negative status be removed from his report?
3. If we should deal with the Dept of Education what is our next step
Was it Direct Loans that was holding/servicing the loans? If at all possible I would recommend trying to do a rehabilitation program with the company that originally held the loans. This way, if all the payments are made on time over the 9-12month period then the loan can be rehabilitated and the baddies wiped from the credit report. Though a loan consolidation may offer cheaper payments, it will not allow the baddies to be wiped from the credit report. Neither will any other options mentioned in the letter. If the previous lender does not want to work with you directly, then I would talk with the Collection Agency about the rehabilitation option and go that route.
Two bits of advice from personal experience with this situation:
That is FMS you are dealing with!!!! Don't ignore them. They will have the right to garnish your federal tax returns until the debt is paid. That's a serious company and they ain't no BS! Ask the IRS, they are affiliated with them. Hope this helps... I hope to never have to deal with them. I rather go without heat and a car then to deal with them.
Thanks for the advice, I got updated info from the Dept of Ed that said to directly talk to FMS to make arrangements. We will try and do the rehabilitation program, the problem is that he is self employeed with a very unstable salary right now but I guess anything is better than nothing.
do you have enough cash on hand to negotiate a settlement? i would at least ask them what they would settle for, and try to come up with the $$ if it's possible.
not really, the letter they sent said they would settle for $8,000 and since we dont have that we could either try and take out a personal loan with our credit union to make a settlement or we could do the montly rehab option. I think the rehab option is our only choice. Also how many people can activly report on a student loan that is in default?