topic Re: should I default? in Rebuilding Your Credit

should I default?

jcstarkey8826 — Sat, 28 Jul 2012 16:40:05 GMT

I have 2 student loans (one payment) with mohela. Tried GWing for about 6 months now with no luck AT ALL!!! I did a forebearance two different times, about a year apart. both for 6 months. I now have 6 months consecutive lates on both loans from 2008 and 2010.

The conclusion ive come down to is... If I default and then make 9 payments via rehab program, they take all of the derog away, but I've been making on time payments for 2 years now and they wont even give me a chance.

So default and hurt my score, but get everything removed in 9 months, or keep going as most hit the 2 year mark soon enough and hope that helps to where those lates wont matter. It has my on-time percentage as 84% which is terrible, but I didnt know they would count those forebearances as late payments. Ive only paid late (knowingly) 2 times on that loan, but its killing my on-time payments history.

Re: should I default?

calihlove75 — Sat, 28 Jul 2012 17:06:07 GMT

That seems so unfair that you have to default all the way to fix this. I would not purposely default. I would imagine the score damage would be terrible. I would keep making ontime payments and attempting to goodwill.

Re: should I default?

jcstarkey8826 — Sat, 28 Jul 2012 17:10:42 GMT

thats the frustrating part. They tell me they dont revise payments, but they did for people who defaulted, just not the ones that paid on their own goodwill. Now I have to let it default to prove I can pay 9 months payments for them to remove lates.

Doesnt make sense, but I cant get anyone to explain it at their dept either so I dunno?

Re: should I default?

calihlove75 — Sat, 28 Jul 2012 17:36:07 GMT

I know it would be very frustruating but don't do anything you will regret because time heals. A score of 644 is not that bad and in a manual review it can be explained. I would be scared you would fall into the 500's. Do you have any other credit cards? If so, a score decrease might cause them to cut limits and jack up interest rates and create a domino effect of trouble. Keep going forward..that is what I would do if it were me. Sorry you are going through this.

Re: should I default?

jcstarkey8826 — Mon, 30 Jul 2012 13:15:55 GMT

Yeah I guess not. I dont want to, but It just frustrates me. Hopefully once they hit the 2 year mark they wont hurt as much.

Re: should I default?

Walt_K — Mon, 30 Jul 2012 14:53:03 GMT

@jcstarkey8826 wrote:
Yeah I guess not. I dont want to, but It just frustrates me. Hopefully once they hit the 2 year mark they wont hurt as much.

I don't know how student loan rehabs work, so can't really advise you on that. But I can say that the two year mark can make a world of difference. I had 7 accounts that went seriously late in 2008. Two went to 150 days, two or three to 120 days, the others 90, and maybe one of them only got to 60. In any event, it was a bad stretch for six months. As they all went past two years, I moved back into 700+ range.

Re: should I default?

jcstarkey8826 — Mon, 30 Jul 2012 14:58:51 GMT

thats good to know. I saw a nice jump when my 60 hit the 2 yr mark, now I have a 90 and four 120s to hit that by december. crossing my fingers

Re: should I default?

Anonymous — Mon, 30 Jul 2012 16:37:49 GMT

I read this, and my heart just broke a little.

My initials are JC too, so as one JC to another, let me be superhonest. The stupidest thing I ever did was let those loans go to default. I started my rebuilding with a terrifying 450 score. That was a lender pull, BTW. And I can’t see you, don’t know you – but my eyes well up just writing that. It’s pretty humiliating to be 37 years old and be facing that level of credit problems.

I have spent a great deal of time over on the Bankruptcy boards, pondering how people fresh out of discharge can be 100 points or so ahead of me. I would give my front teeth to have 2 years worth of on-time payments. And if you default, the rehab only takes away the derog info from when the loan went into default – so it really wouldn’t help remove the previous lates, anyway.

I have years to go to clean this up. Your 644 would thrill me to bits. Look how far you've come! Don’t default – not worth it in the long run.

Re: should I default?

tboy1977 — Mon, 30 Jul 2012 16:50:41 GMT

MY kindred spirit. JD Byrider pulled a 420 EQ Jan 2011. I received a bankruptcy discharge in Mar 2011 and these credit scores have been STILL under 500, nearly a year and a half later. I don't know how some people get scores in the mid 600s after a mere year. But for me, this has been a challenge and comtinues to be an uphill climb. I am hoping for scores above 600 by the end of next year. Years of financial stupidity because my decline, but it NEVER was intentional.

I will add my two cents. While it may seem better to let it default and rehab it, what happens if some unseen circumstance causes you to fail to rehab the loan. Then you are SCREWED. I say keep trying to GW, or dispute the late with the CRA. But save the default for if it happens.

Re: should I default?

jcstarkey8826 — Mon, 30 Jul 2012 17:02:53 GMT

I agree. I guess I was just a little upset that I can't get an answer. I just want to know why I can't get help, but people that didnt pay it got a get out of jail free card. I dont think that they shouldnt be eligible for it, dont get me wrong. I just think everyone shouldve gotten a chance to make up for their past mistakes the same way.

That was just my way of "sticking it to them" like they care lol but I figured It would show how stupid these lates really were.

Oh well. They are gone for now, and if all the derog doesnt go away then there would be no point anyways.

thanks for the input guys. Im content with my scores growth. I remember my apt pull 2 years ago and I could literally see the score... 410. I was ashamed. I knew nothing of credit or how it worked or what it did until I got out on my own and took charge of my finances. I did a PFD on a student loan and jumped 100 points. That kicked me into credit mode and since Ive been doing everything I can to tie up all lose ends.

You'll get where you wanna be soon enough. Good things happen to good people and you guys seem like good people giving good advice.

Thanks again

Re: should I default?

Anonymous — Mon, 30 Jul 2012 17:14:58 GMT

It's not fair but companies would have never gotten the money without offering defaulters a clean slate.

Honestly, I'd try asking/writing up the chain. I'd also ask them to put in writing that the only option you have is strategic default.

Re: should I default?

cracksmeup — Mon, 30 Jul 2012 17:30:18 GMT

Just a point of clarification. The student loan rehabilitation process is by no means a "get out of jail free card". I successfully rehabbed my loans 2 years ago. The derogatory remarks DO NOT go away, the only thing that is removed is the defaulted status. My credit report still lists all of my previous loans as having a zero balance, but 120+days lates. I was grateful for the chance to rehab, and still am, but was by know means given a clean slate.

Re: should I default?

jcstarkey8826 — Mon, 30 Jul 2012 17:55:26 GMT

@cracksmeup wrote:
Just a point of clarification. The student loan rehabilitation process is by no means a "get out of jail free card". I successfully rehabbed my loans 2 years ago. The derogatory remarks DO NOT go away, the only thing that is removed is the defaulted status. My credit report still lists all of my previous loans as having a zero balance, but 120+days lates. I was grateful for the chance to rehab, and still am, but was by know means given a clean slate.

I guess they differ somehow. My sister did a rehab with mohela and got a clean slate, nothing negative continued reporting. lates, status, etc. everything was cleared away.

Ive also read many others posts in the SL section claiming the same. Guess each lender may be different, but I know mohela clears all negatives previously reported.

Re: should I default?

Anonymous — Mon, 30 Jul 2012 19:04:44 GMT

I'm not trying to be TMI, but honestly? I got behind when my child was diagnosed with cancer. I always intended to pay it, but her illness was devastating financially. She's fine now, but had treatment at hospitals in three different states. I never plotted to screw the system or anything like that; I was just in waaaaay over my head.

I know I could have made smarter decisions, but the past is the past and beating myself up isn't going to help.

I know the grass may look greener over here in RehabLand, but it really isn't. If you look at my history as a whole, it's not one to envy.

Re: should I default?

jcstarkey8826 — Mon, 30 Jul 2012 19:30:18 GMT

@Anonymous wrote:
I'm not trying to be TMI, but honestly? I got behind when my child was diagnosed with cancer. I always intended to pay it, but her illness was devastating financially. She's fine now, but had treatment at hospitals in three different states. I never plotted to screw the system or anything like that; I was just in waaaaay over my head.

I know I could have made smarter decisions, but the past is the past and beating myself up isn't going to help.

I know the grass may look greener over here in RehabLand, but it really isn't. If you look at my history as a whole, it's not one to envy.

First off, thats tragic to have to go through what you did to begin with. You should be able to rehab all of your debt!!! Im glad things worked out and health is priority. I think anyone would go into a mountain of debt for their child.

That being said, I dont think people shouldnt be able to rehab their loans. Im just wishing more people were able to do the same thing and clear up some derogs, but like I said, I'll just sit back and wait until the 2 year mark is finished. Best of luck with yours!