topic Re: Student Loan Rehabilitation in Student Loans

Student Loan Rehabilitation

Anonymous — Sun, 17 Feb 2019 14:56:23 GMT

Hi everyone. I just wanted to post a new thread about SL rehabilitation. So I just completed my rehab by making my 10th consecutive payment on 2/15. My rep told me within a week or two a new loan servicer will pick up my loans and to wait for a packet in the mail. I’ve been rebuilding my credit and this is the only thing that’s keeping me out of the 700 club. I’m excited to see when the negatives are removed from my report what my score will jump to. I’m anticipating to be in the 700s. Today (2/17) I am going to dispute on all bureaus the inaccuracies to help move along the process. I will continue to update.

Re: Student Loan Rehabilitation

Anonymous — Wed, 20 Feb 2019 13:37:58 GMT

UPDATE: 2/19 Equifax removed 4 SL from my credit report so far. Dispute still in process for the other 4 and as well with the other bureaus.

Re: Student Loan Rehabilitation

Anonymous — Wed, 20 Feb 2019 13:39:00 GMT

Re: Student Loan Rehabilitation

Anonymous — Wed, 20 Feb 2019 14:53:27 GMT

Congrats! Please keep us updated on your progress. I gave for more months in Rehab with National Recoveries inc.

Re: Student Loan Rehabilitation

Anonymous — Wed, 20 Feb 2019 17:08:33 GMT

You said you're disputing inaccuracies. What are they?

Re: Student Loan Rehabilitation

Anonymous — Wed, 20 Feb 2019 18:19:25 GMT

I disputed all the lates and default status for each SL

Re: Student Loan Rehabilitation

Anonymous — Wed, 20 Feb 2019 19:08:56 GMT

While this is a strategy that others have tried, some with success, it is important to note that your lates were likely not inaccuracies.
As part of the rehab your default is guaranteed to be removed. However, people have the mistake belief the lates will be wiped too. This means disputing them as inaccurate when you know that they indeed accurate is a slippery slope anyone should approach with caution.

Re: Student Loan Rehabilitation

Anonymous — Thu, 21 Feb 2019 03:39:12 GMT

@sabii Perhaps I was given incorrect info but I am under the impression that all the lates and default status will be changed to reflect on time payment. Is this not true? This is what I have been told by coast Professional who I just completed my rehab with. That’s why I did the dispute bc I read on here people had success and it sped up the process instead of just waiting.

Re: Student Loan Rehabilitation

Anonymous — Thu, 21 Feb 2019 10:06:02 GMT

Ar100: Unfortunately what they told you is incorrect. They are a collection agency but the actual process is from the Department of Education.
"When your loan is rehabilitated, the default status will be removed from your loan, ....Also, the record of default on the rehabilitated loan will be removed from your credit history. However, your credit history will still show late payments that were reported by your loan holder before the loan went into default."
https://studentaid.ed.gov/sa/repay-loans/default/get-out#loan-rehab

If someone wanted to get the default removed I would just wait. It gets removed as a part of the process.
As far as the lates, I would just wait to see if they get removed by themselves before I started a dispute. That's just what I would do. If there's anything getting a second chance at my credit health has taught me, it's patience.

Re: Student Loan Rehabilitation

Anonymous — Sun, 24 Feb 2019 05:22:14 GMT

Congratulations! I hope to hear about your entry into the 700 club soon!

Re: Student Loan Rehabilitation

Anonymous — Sat, 02 Mar 2019 16:39:42 GMT

*UPDATE

March 1, 2019
Equifax score went up 61 point s by having 4 of my SL deleted. TransUnion went up 46 points. Still waiting on the remaining 4 to be updated.

March 2,2019
Just received my new loan servicer letter in the mail from Great Lakes.

Re: Student Loan Rehabilitation

Anonymous — Fri, 08 Mar 2019 15:40:07 GMT

3/8
Experian and Equifax are both reporting a paid as agreed student loan dating back to 2009. It shows the loan for 6000 and a balance of 8323. Monthly payment of $5. I will knock this down very soon bc it made my utilization go up. The 4 remaining Nelnet haven’t been updated yet. I did call Nelnet and she told me it usually takes 15 days for them to get the paperwork and they update at the end of the month.

Re: Student Loan Rehabilitation

Anonymous — Tue, 12 Mar 2019 12:20:58 GMT

3/11 update

All three bureaus have updated and are reporting current and closed on all 4 of my old student loans.

Re: Student Loan Rehabilitation

HopeMission — Sun, 17 Mar 2019 18:39:57 GMT

Ap 100 congrats on the SL rehab!!!

How was the $5. Payment determined. I’m an at home mom and that’s about all I can afford.

Hubby makes money and we have a nice house but he wants to keep finances separate so I’m on my own.

This is my SL mess that happened before marriage.

Re: Student Loan Rehabilitation

Anonymous — Sun, 17 Mar 2019 23:12:55 GMT

If your husband and you file your taxes separately, once you get your plan again after rehab/ consolidation you can pick IBR, Income-based repayment, which is one of the IDR plans. The benefit of IBR is that if you are married but don't file jointly, it will take into account only your income. IBR takes 15% of your disposable income, after the subtraction of 150% the federal poverty level. You can find the loan repayment estimator on the student aid government website. You plug in your loans and your income and it will estimate what your payments will be (the lower end of the range they give, and often lower than that). Once you submit your IDR application they will put your loans on administrative forbearance, and calculate your actual payments then send you the amount you'll pay. Sounds like you'll get the $0 payment. You'll recertify each year.
If you file jointly, there's no way for your finances to be considered separate. His income will become a factor. REPAYE will likely be your best option. 10% of your disposable income, after the subtraction of 150% the federal poverty level. However it takes into account your spouse's income and federal loans.

For the collection agency, you'll have to ask them. They have you fill out a form with your income, assets and expenses for a lower payment than the standard repayment plan to be considered. It's very likely your husband will be responsible for some of the debt. You can always ask the Dept of Education.

Re: Student Loan Rehabilitation

HopeMission — Mon, 18 Mar 2019 18:18:38 GMT

Thank you Sabii. Great info put me on a great track. We used to file “Married separate” until we got a new tax man this year.

Huby always selected the “Filing Separate” box on his taxes but our new tax man said that’s only if we were separated and living separate. Said it would raise a huge flag. Filing separate would have also raised our taxes almost double. I didn’t make any money so I didn’t file a separate return.

At first I considered amending the taxes we already sent in order to change the filing status to “Married Separate” even if that meant paying a few thousand more taxes. But then I have been reading that filing status doesn’t matter (on StudentLoanHero website.)

IDR- Income Driven Repayment plans

IBP- Income Based Repayment

REPAYE- Revised Pay As You Earn

It sounds like IBR is just one of the four IDR plans offered by the Department of Education. 3 or the 4 take from both spouses income even if filing separate.

Its my understanding that IBR currently is the only one that doesn’t, even if filing married joint. To good to be true?

In my case IBR is also the only choice because my School Loan was incurred way before these other IDR programs and way before marriage again BTW.

My family might have one other choice way over in left field. A lender recently told me that the way they handle SL default is to add 5% of the amount owing in the FICO report to the qualifying ratio. In other words, with a 50K school loan they would add 50K @ 5% would be $208/mo to the qualifying ratio. Sounds to good to be true?

I would be very grateful for any info and thoughts on this. What do you think?

Re: Student Loan Rehabilitation

Anonymous — Mon, 18 Mar 2019 20:30:50 GMT

Not to give tax advice, but this is incorrect. It is up to married couples whether they want to file jointly or separately. There are many reasons to do so, but it does not mean you *are* separated. One of those reasons is because one spouse has a student loan and wants to pick a plan where both of their incomes are not counted. However, it is correct that most of the time it will raise the combined amount of taxes you will pay.
https://taxmap.irs.gov/taxmap/pub17/p17-013.htm
https://www.efile.com/married-filing-separately-tax-filing-status/

There guys news is that I that you may not have to use last year's tax return. It's not due yet. To make sure, instead of doing the online Income-driven repayment (IDR) application with the IRS-linked populate, complete the PDF, scan the signed copy, and upload with your tax return (see the income proof section of the application) for the previous year. That will buy you a year.
Yes, IBR is one of 4 IDR plans. There is IBR, REPAYE, PAYE and ICR (income-contingent). ICR is basically for consolidated PLUS loans because this is the only IDR plan they qualifying for or people who don't qualify for any other IDR plan because the payments will still be lower than the standard repayment plan (barely). PAYE is something most people don't qualify for or don't benefit from.
Typically people choose IBR or REPAYE. Each has its own benefits and pitfalls. IBR they will only take into account your income, even if your married (as long as you file separately). However, it won't take into account your spouse's federal loans. The payments are that 15% I was telling you about, though a few qualify for IBR at 10% (details on the website). Downfall is it has a cap of $50k(?) for income. It will mean the gov will pay a portion of some of your loan's interest (doesn't matter if you'll get forgiven anyway). In your case, I can definitely see you benefitting from this plan. Probably with $0 payments (at least for a year).

REPAYE is the 10% I mentioned. No income cap, so a lot of people can use it. Joint income no matter what, but also joint federal loan debt. Both have 20 years/ 240 qualifying payments until complete forgiveness (25 for graduate school loans). The forgiven amount will be counted as income unless you're insoluble which is not as hard as it sounds (mortgage, car loans, credit card debt, etc ). That's something you'll have to ask a pro about.
I don't know about you qualifying for more than IBR. REPAYE is fairly recent, after my loans, but I was able to transfer from IBR to REPAYE (interest consolidates and there is a $5 in-between payment).
I can't say about the other option, I'm not familiar with good options other than getting out of default. I don't know what qualifying ratio means. (Or do you mean privately consolidating the loan? Really, really bad idea!). I can say that anything other that getting your loan out of default and back with a servicer is unwise, especially when you have options. Staying in default, it is also possible your loan will get sent to an agency that reports. With you refreshing the debt with payments, I'm pretty sure there goes your credit score. Not to mention they can still go after your assets, for the rest of your life.
What do you think about what I've said so far? Any questions?

Re: Student Loan Rehabilitation

Anonymous — Mon, 18 Mar 2019 20:46:38 GMT

WEBSITES:
www.studentaid.ed.gov

* Update contact information
* How to repay your loans => Understanding delinquency and default
* Getting out of default (rehabbing vs consolidation)
* Repayment plans (standard, graduated, extended, IDR which includes IBR, REPAYE, PAYE, ICR, etc)
- loan forgiveness options with payment plans

Studentloans.gov
* Loan Repayment estimator, post-rehab (difference in plans, how many years, etc. Ignore the range, it automatically take into account annual raises.... What are those?
* General loan details

NSLDS.ed.gov
* Detailed student loan information, including status & current servicer or collection agency.

Several of those websites you will need to sign in. If you don't have the sign in information, don't try to guess. You'll get locked out.

When you do the paperwork with the collection agency you'll have to provide proof of income and proof of many expenses/ bills. Best way is to fax them. There is also an option I used when I was helping someone. I think the agency really wanted the tax returns but their current paychecks were lower. They ended up telling me if submitted one I would have to also do the income and expenses form (paycheck?) but if I submitted the other I wouldn't (tax return, all pages, signed?). I'm not sure if this will work to get you lower payments with the agency using only your income by just giving them your married filing separately tax return but it might be your best shot. It saves time if it will. They didn't want to tell me this and trued to make it seem like I *had* to give all my expenses and but when I asked them questions they had to admit the truth. Sneaky buggers.

Re: Student Loan Rehabilitation

HopeMission — Tue, 19 Mar 2019 06:44:58 GMT

Kudos and a special thanks again to you Sabii for helping us out. My hubby has commented before using this account. My name is Sandy and I am his spouse/wife with the massive School Loan. Like Beto O’rouke’s wife. I do all the heavy lifting and child rearing around here.

I think the “being separated” issue came up as we were discussing “Head of household” filing status. By checking that box, one could save a lot of money and claim the huge “earned income credit” etc. but the married couple would need to be living apart.

Those links you provided were GREAT. Thank you! I agree and about filing “Married filing separate.” To take my School loan out of 30 years of default and begin a repayment program… I DON’T want that payment to be based on my husband’s high income. Thousands of more dollars to file separate way because we are reporting a very high-income last year to help our chances or being approved for a mortgage loan… but we have to do it. The qualifying ratio that FHA uses is called DTI. Debt to Income. Hubby thought we had zero debt but then remember my defaulted SL.

I guess part of “Filing Separate” ---I am going to need to file… right? In my free time I’ve been selling little things on a website called Etsy. I made ~300 dollars last year. No business license or sellers permit but I think I should file my own taxes based on that little income. This is what they can use to base my repayment?

I just about freaked when I read that when taxes have been filed joint they cant be amended as separate. However since taxes arnt due yet (4-15) we can still amend.. I think?

I think IBR is the only repayment option for me since my school loan is over 30 years old. I misunderstood – I thought I read that IBR would just take from what I reported as being my income and not take from both of us filing joint.

Are you saying that IBR monthly repayment has to be 15%?

Or 15% of my terribly low income? Or 15% the massive school loan? Do you know of any resources that might give me an idea of what kind of IBR payment I might expect after a year of making around 300 dollars/yr?

On my families behalf-THANK YOU

Re: Student Loan Rehabilitation

Anonymous — Tue, 19 Mar 2019 08:32:01 GMT

You are most welcome!
So a I did more reading and a few things I told you are incorrect.
IBR and PAYE both only count your income if you are married filing separately. However because of the qualifying dates on PAYE that I was talking about, I don't think you qualify (it's only like 2007 to 2011 new loans). You do likely qualify for REPAYE. Not helpful though since it would be based on the joint income. Also, it depends on your loan types on older loans. IBR as an older forgiveness program is sort of a catch all. https://studentaid.ed.gov/sa/repay-loans/understand/plans/income-driven

Oops, I thought I explained how the calculation works. Due to your loans dates, it's 15% not 10%. The way they calculate your payment is they take 15% of your discretionary income ( they tell you which line to look at on your tax return) after they reduce it by 150% of the federal poverty level (FPL). You can look it up but you don't need to; it's over $15,000. So you could make $15,000 on Etsy and you'd still have monthly payments of $0. Also due to your loan dates, I think the forgiveness might be 25 years instead of 20. I'll double check later today.
Unfortunately I forgot to take into account rehabbing. Once you finish it'll be next year. If you do consolidation it will take less time, but it does not guarantee removal of the default. Since you're default isn't showing anyway, idk it might be okay. You guys would have to decide. If you rehabbed, you first year's loan payment would be based on this year's tax return. So for a year it would be your joint taxes. If this was the case, it would probably benefit you to be on REPAYE (if your loans will qualify) for a year. On REPAYE, they will take 10% of your discretionary income after reducing it by 150% of the FPL. Then the next year when you recertify, if you choose to file separately you'd be able to switch to IBR. If you consolidate, you can start with IBR but the next year would end up being joint again. The good news is since certification would be for a year there is a technicality you might be able to use to avoid this. It involves certifying early (you can certify at any time), as close to 2020 as possible, then filling your taxes for 2020 as earliest as possible in 2021. At most you'd have to do a payment based on your joint income for only a month or so. Let me know if you're interested in the details on this.

Anywho, a better visual is the government's loan repayment estimator. I wouldn't sign in because your loans won't show up correctly right now. From your account you'll get your loan total, interest rate, loan type and manually plug it in when you're not signed in. Then play with it so you can see the difference in the plans. Ignore the ones you don't qualify for and you'll see your amounts (the first number in the range). I've always found mine to be a little higher than my payment after my servicer calculates it but in your case it's clearly zero. I think you'll have to do it twice. Once for just yourself and again to see what they will be with your husband's income if you want to see what those payments will be.
https://studentloans.gov/myDirectLoan/repaymentEstimator.action
https://blog.ed.gov/2017/07/something-borrowed-how-marriage-impacts-your-student-loans/

I don't know much about mortgages ( & even less about FHA loans) but from what I've read until you get the loan out of default, you be disqualified because you won't clear CAIVRS. There's a post here about someone who said they got a FHA loans with a default but they never really answered how. I think once you do, for DTI ratio they'll count 1% of your loan as your required payment since they don't count $0 payments. People in the mortgage section here can give you both a much more informed answer on that.