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Student Loan Help

Regular Contributor

Student Loan Help

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

-loan consolidation

-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

 

PLEASE HELP

Started at 586 EQ and 604 TU in 8/2009
565 EQ Oct 09
614 EQ Dec 09
624 EQ Feb 10 ---604 TU Jan 10
643 EQ March 10 --from lender
Current 573 TU (myfico) 632 EQ (from lender) Jan 11
Message 1 of 7
6 REPLIES
Established Contributor

Re: Student Loan Help

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.


Starting Score: Eq: 662 Tu: 532 (03/02/2011) CH7BK 01/12/2009 Discharge
Current Score: Eq: 712 (02/03/2017) Tu: 717 (04/03/2013)
Goal Score: Eq: 760 Tu: 760

Wallet: PenFed Power Cash 25k | AMEX Blue Cash (AU) 49.5k | Cap One QSMC 26.5k | AMEX Platinum NPSL | LFCU Visa 10k
Message 2 of 7
Frequent Contributor

Re: Student Loan Help

Two bits of advice from personal experience with this situation:

 

  • Make sure you know what the benefits and pitfalls are of each option before making a choice
  • Don't agree to pay more than you KNOW you will be able to pay each month
With student loan rehabilitation, the negatives DO NOT magically disappear from your credit report when you have successfully completed the rehabilitation process. All the lates will still be there, and will eventually drop off on the same schedule as any other late payments on your credit report.

 

EX myFICO 850 - EQ myFICO 849 - TU myFICO 850
Goal Score: 800+ across the board! *DONE!!!*
Message 3 of 7
Established Member

Re: Student Loan Help

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.


Starting Score: 438
Current Score: 563
Goal Score: 620


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Fico challenge is based on Equifax and Trans union score is 532
Message 4 of 7
Regular Contributor

Re: Student Loan Help

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.

 

Started at 586 EQ and 604 TU in 8/2009
565 EQ Oct 09
614 EQ Dec 09
624 EQ Feb 10 ---604 TU Jan 10
643 EQ March 10 --from lender
Current 573 TU (myfico) 632 EQ (from lender) Jan 11
Message 5 of 7
Regular Contributor

Re: Student Loan Help

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.

Message 6 of 7
Highlighted
Regular Contributor

Re: Student Loan Help

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?

Started at 586 EQ and 604 TU in 8/2009
565 EQ Oct 09
614 EQ Dec 09
624 EQ Feb 10 ---604 TU Jan 10
643 EQ March 10 --from lender
Current 573 TU (myfico) 632 EQ (from lender) Jan 11
Message 7 of 7