Student Loan's Discharge Question? Update

[YHWHUDAH]

Good afternoon,

I can get my student loans discharge, because I became permanent disable with the Veterans Affairs. A total of only 9000 can be discharged. The question I have is, if I do discharge those will it negative impact my credit report? Will the trade line be erased? Will the trade line be noted or labeled as discharge or something to that effect on my credit report and will that impact my FICO or will I have to write an explanation to creditors. By the way if they will be decreased it will give me a higher AAoA, but lower my credit mix.

Thanks in advance

[YHWHUDAH]

Bump

[YHWHUDAH]

This forum...I guess no one had any advice. Thanks.

[IOBA]

I dont' think anyone knows the answer.

Have you called your lender to ask them?

Do you want the debt discharged?

Can you afford to pay back the loans?

What are your financial plans for the next  7 yrs?

[YHWHUDAH]

Yes, I want them discharged. Yes, I can afford the payment. I am closing on a home 28 Dec.

[IOBA]

My suggestion would be to wait until after you have closed on your house before discharging the loans.   Until then, make the minimum payment.   It would be painful to have something like a late payment, or worse, show up on the credit and ruin the closing.  

Have you called the lender to ask them how they report a discharge?  The person may not even know...but it would give you a starting point.

Other people have shared that when their student loan was discharged in BK, it stated that it was discharged in BK.   When it was charged off, paid by insurance (that the bank/lender had on the student loan) it stated it was charged off and paid by insurance.

Logically, it reason that the lender would report that the loan was discharged and paid by insurance.   Other creditors would look at that comment and wonder.   I am not sure how FICO would score that comment.   If you continue to make payments until it's officially discharged, it should also read paid as agreed, balance zero.

I don't know anyone who has had student loans discharged due to disability.   I hope you will continue to share your story with us.

[YHWHUDAH]

Thanks, IOBA:

You gave me a lot of valuable advice; You gave me a great idea also.  I will pay them in full and then I can get them discharged.  Once, I discharge them, I will get all my payments return to me and on the credit report it should report as paid as agreed with zero balance (I hope).  No, I have not contacted the creditor to ask. Lol...I never thought about that.  I think I will call to ask today to be sure. 

Yes, student loans that are discharged due to disabilities are common.  The information was forward to me by the Veterans affairs and the Fed gov student loan department once, I became permanently disable from the military. Thanks. I was just looking for a little help with handling this and you provided it. Thanks again and I will keep you posted. Regards.

[IOBA]

After your call, please post what they said!

And it goes without saying, but it needs to be said, thank you for your service.  

[YHWHUDAH]

Hey IOAB,

So, I talked to CSR for fed loans and she answered my question, and plus I found a booklet answering the same question on the Department of Education website; Basically, the credit history will say the same if the student loans are in the process of getting discharged.  Once, your application is receive the code your trade line in deferment status. They have two processes one if you were never late  and one if you were late or chargeoff.  Once, it is processed they and you discharge is granted they update the trade line to a code 65, which means that the account status is paid as agreed and the no longer report anything else. The balance due is 0 and there are no comments listed on your report.  All payments made before your total and permanent disability status you receive those back.  If you were late the only difference is you get a different code, but all negative listing on the trade line will be removed to reflect paid as agreed status.  However, during the deferment status when you application is once receive the history stays the same until your application is granted.  Discharge only works on loans dispersed before you became total and permanent disable. Veterans don't need to have their doctors feel out the doctor portion if their disability is 100% total and permanent or if they are considers unemployable with a rating of less then 100%, but being paid at 100% due to employability.  There are two regulations.  The first is for loans established and disabilities before the new regulation of 2009. 2009 is more beneficial because your loans are discharged immediately following your application being accepted.  It takes about 30 day for your application to be processed. Pre 2009, you loans can't be discharged for 3 years, which is a probation status.  During that time they follow you to see your income and work history.  During the 3 years your loan status is coded in deferment and once the 3 years are up you get the 65 code. All loans taking before 2009 are still under those rules.  Hope this helps anyone who needs this info.

[caitsyaya]

since my sischarge was prior to 2009 does that mean the total of loans stays on credit as if I have loans due in that amount or should they be 0?