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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
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?
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
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?
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.