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"Fresh Start Program" bad or good idea??

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HectorVictorious
Regular Contributor

"Fresh Start Program" bad or good idea??

Hello,

 

So I am rehabilitating some of my student loans right now... One of my defaulted federal loans did not get picked up by the rehabilitation program that I went through.

 

The other day I was contacted by EdFinancial on the loan.. I called them right back and she told me that I qualified for a "fresh start program" for this loan.  This is the info she sent me:

 

Repayment Obligation / Schedule Disclosure Statement

Finance Authority of Maine

This document is the Repayment Schedule Disclosure Statement for Finance Authority of Maine administered federal student loan(s) listed below. You must repay your loan(s) in compliance with the schedule set forth below.   This document in no way replaces the original promissory note nor relieves the liability of any endorsers who the signed the original promissory note. The acceptance by the lender / holder of any delinquent installment shall not constitute a waiver of any rights to the lender / holder.  Should there be a failure to make your installment payment here under when due, the unpaid balance shall become immediately due and payable at the option of the lender / holder.  If your interest rate has been discounted and you default on the loan, the interest rate will no longer be discounted.

LOANS INCLUDED IN THIS REPAYMENT OBLIGATION

 

1st disb date

Estimated Unpaid Principle Balance

Estimated Unpaid Interest

 

01/05/2006

 

$   3545.02

 

$  637.64

 

 

Number of payments:

Amount of payments:

Payments Due:

 

42

 

$105.10

 

02/03/2014

 

 

            Total Amount to be REPAID

 

 

Total Unpaid Balance on Repayment Start Date:

Total Amount of interest not capped:

Total Interest to be Repaid:

Total Amount to be REPAID:

$   3,545.02

$      637.64

$      143.43

$   4,326.09

 

 

 

Anyway, she said that as soon as I signed this paper, she would remove the default status from all 3 reporting credit bureaus.  She said she will delete the default with a press of a button and bring the loan current. 

 

I was wondering if this is a good idea to get into, or is it something that I can haggle, and maybe ask for ALL the lates to be removed on my credit report??? I have the finances to be able to push through this, but before I signed anything I wanted to get my peers opinions and expertise.

 

Thank you all.

 

~Hector

 


Starting Score: 503
Current Score: 591
Goal Score: 700


Cards: First Progress Secured Card $600.00; U.S. Bank Secured Card $500.00

Goal: AMEX Rewards Card, Purchase House by the end of 2014
Message 1 of 6
5 REPLIES 5
SCF
Valued Contributor

Re: "Fresh Start Program" bad or good idea??

What specific type of loan is this?  For instance, was it a Stafford or Direct loan?  A Perkins borrowed directly through your school?  Or some type of loan specific to your state?

 

Because Perkins loans are issued directly by your school from a pool of money they administer, they are usually not picked up in a rehab agreement for your other federal loans (Stafford, Direct, Plus), and the rehab agreement works differently because the money goes back to your school not the feds.  The agreement below is definitely not a standard rehab agreement, but if you're dealing with a Perkins (or a loan from your state education agency) this may very well be what they offer instead of the standard rehab.

 

Did they send you anything in writing supporting how/when the default status will be removed and how they will update your credit reports?

Message 2 of 6
HectorVictorious
Regular Contributor

Re: "Fresh Start Program" bad or good idea??

SCF, thank you for the quick response.
This is what I have via email. From the loan officer.

Thank you for your quick response by leaving me a voice mail message. I was off for a couple of days, but wanted to make sure you knew I received it. I have attached the disclosure notice that reflects the details of your loan, and by signing the form, I can remove the default status from your account. This is a great opportunity for you as this is a fresh start program that allows us to bring your loan current, update your credit report to all three national credit reporting agencies, and cease all collection activity.



You can fax the document to me at XXXXXXXXXX or scan / email back to me. Once I receive it – I will take care of everything on my end with a press of a button. Please let me know if you have any questions. Have a great rest of your week.

I think you are right with the Perkins loan.. I already am rehabbing one Perkins loan with my school though, and this loan is showing on my credit report through MyFico. I guess I am mainly wondering if there is any chance that I would be able to get all the latest removed or should I just count my blessings and suck it up...

Starting Score: 503
Current Score: 591
Goal Score: 700


Cards: First Progress Secured Card $600.00; U.S. Bank Secured Card $500.00

Goal: AMEX Rewards Card, Purchase House by the end of 2014
Message 3 of 6
HectorVictorious
Regular Contributor

Re: "Fresh Start Program" bad or good idea??


Does anybody have any insight on this and whether it is a good or bad idea?  I would like to get back to them tomorrow and start setting up a payment plan.  Any opinions would help.

 

Thanks,

~Hector


Starting Score: 503
Current Score: 591
Goal Score: 700


Cards: First Progress Secured Card $600.00; U.S. Bank Secured Card $500.00

Goal: AMEX Rewards Card, Purchase House by the end of 2014
Message 4 of 6
SCF
Valued Contributor

Re: "Fresh Start Program" bad or good idea??

I'm not really sure how it could be a bad idea.  It sounds like they've agreed to remove the default status from your report, but the loan back in good standing and offered you a payment plan.  Is that payment affordable for you?  Unless you have some reason to doubt what they've offered (does the written paperwork tell you to expect something different than what you're hearing from the rep?), I would take it.

 

Is there something making you nervous?

Message 5 of 6
scvbd99
Frequent Contributor

Re: "Fresh Start Program" bad or good idea??

If it's a federal student loan (not private), then the guaranty agency controlling the loan MUST give you a chance to rehabilitate it. 

 

If it is a federal loan, and you really want to rehab it, you need to get on the phone with them, and negotiate a 9-month payment amount that you can reasonably afford.  Document your conversation with them, and inform them that you will be contacting the Federal Ombudsman if they don't agree.  I pretty much guarantee they'll play ball.  Remember, you have to make 9 on-time payments that are REASONABLE given the amount you owe and your own financial situation.  If they try talking down to you or tell you that you have to pay off a certain % of the principal, they are in violation of federal law.  If they still don't play ball, then contact the Federal Ombudsman by email, and explain the situation.  They will usually call you back withing 2-3 business days.  

 

I had one loan that defaulted, and it got sent to a collection agency.  They tried telling me I had to pay $4000 in order to "rehab," which was half of the amount of the loan.  I told them that was unacceptable, and they started berating me.  When I said I wanted to negotiate a fair and reasonable rehabilitation payment schedule, or I would contact the federal ombudsman, they started listening.  I ended up paying $50/month for the 9 months, and then it was sent back to the original loan holder, which was my university. 

 

In closing:

 

1) The entity controlling the loan MUST offer a one-time opportunity to rehab the loan as long as it's not a private loan

2) Negotiate a fair and reasonable repayment schedule, and tell them you want an official rehabilitation agreement sent to you immediately that lays out the monthly amount you'll pay, when it's due, etc.

3) Contact the federal ombudsman if they don't do it.  (https://studentaid.ed.gov/repay-loans/disputes/prepare/contact-ombudsman)

 

You CANNOT just trust them to remove the default status from your credit report unless you do an official rehab agreement.  They might, but they might not. 

 

800+ for all 3 CRAs.

Student loan forgiveness/discharge FINALLY complete.
Message 6 of 6
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