So my original consolidated loan was around $50K which skyrocketed to just over $79k when it defaulted (you know, collections agencies gotta make their $18K in fees and then of course interest becomes due immediately).
Shortly after default I put my big girl pants on and enrolled in loan rehab. I just finished this month. Within days my loan was sold to a new lender ($79K in principal balance and a whopping $45K in interest). One saving grace is that my payments will be $20 cheaper per month than they were during rehab, but it's still a serious amount of cash to pay for a Bachelor's degree.
Lesson: DO. NOT. DEFAULT. I repeat: DO. NOT. DEFAULT. It would be better to go bankrupt. I ignored so many phone calls from American Student Assistance - for nearly 2 years - before my loan actually defaulted. Don't do that. You can pay it back, slowly, but surely. Anyway.
I am not expecting a massive increase in credit score because my loan was sold a few times and is repeated everywhere on my credit report - mostly bad but surprisingly 20 - TWENTY - "good accounts" from the years I was paying on it. (That's one of the downsides of having a large loan. They are very attractive so they are sold, and each time they are sold the new lender reports it).
Because the new lender isn't the original first, second, or third lender, I am not holding my breath that the negative marks will go away. Still, I am feeling blessed to be out of the awful default situation, knowing it only gets better from here.
Good luck to anyone going through this. Be faithful, make your payments on time, and sleep in the bed you made. It feels refreshingly good to have control over my finances again.
Starting Score '14: 638
@upwithfico wrote:
Lesson: DO. NOT. DEFAULT. I repeat: DO. NOT. DEFAULT. It would be better to go bankrupt. I ignored so many phone calls from American Student Assistance - for nearly 2 years - before my loan actually defaulted. Don't do that. You can pay it back, slowly, but surely. Anyway.
Can confirm this. :-/
Same thing with me and I make good money and just missed the payments.
I am doing the 9 month 400.00 a month and then they will sell it back. My loans were only 40k and I paid down a few k earlier. What are your loans showing now that you are paying again?
Also, did the interest penalty get waived once they were sold?
@klondike wrote:Same thing with me and I make good money and just missed the payments.
I am doing the 9 month 400.00 a month and then they will sell it back. My loans were only 40k and I paid down a few k earlier. What are your loans showing now that you are paying again?
Also, did the interest penalty get waived once they were sold?
So, the ASA marks came off COMPLETELY which is surprising. They had shown as defaulted. But the marks from the lender (ASA is guarantor) just prior to my loan going into default are still showing 120+ days past due, which is majorly affecting my credit score I believe.
However, the marks for the new lender are all good since I'm making my payments on time. That is helping.
What I hate about this is that for a single consolidated loan, I have a huge list of accounts - they never come off. So because the loan has been sold so many times, each lender has left it's little footprint. It's ridiculous.
Still, I feel GREAT that I am considered in good standing. I now pay my loan bill twice monthly (or basically on pay day; I pay it right then) and this small change in habit has had a great impact on my financial picture.
@klondike wrote:
Also, did the interest penalty get waived once they were sold?
I wish I was more knowledgable about this stuff but basically this is what it is now:
$55,465.23 original loan amount
$23,815.64 capitalized interest
$78,638.14 balance
The balance is moving VERY SLOWLY lol but I guess that is what happens when you have a 20-30 year loan. Once my car loan is paid off I will roll that payment into the loan payment and begin cutting the balance down as quickly as I can.