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My wages were garnished as well but as soon as I made two payments into my rehab program they halted the wage garnishment. It was also in my agreement that I signed with the collector (GC Services).
Jvar, have you spoken with ConServe about stopping the garnishments?
I'm not understanding your statement about taking another loan out once the 6th payment goes in, nor how that would clear up your lates. If the loan is paid off before you finish rehab, how is ConServe going to report? Did they say?
How much is your loan total?
How much is the garnishment (roughly), and how much is your payment to ConServe?
Rehabs are usually "nine payments over a 10 month period", so if you've made payments for February and March, you'll be cutting it close. You could be finished by October but at $80/week you'll be paid off by then. The $2100 is the total loan? Usually there are collection fees, etc. added on to this.
Personally, I would be inclined to stick it out with the rehab if it were me. If you take the settlement, that will stay on your credit report for a lot longer. I would also call and ask them directly what happens if the loan is paid off through wage garnishment before the 10 months is up - how will they report, then?
I didn't do the math, but is there any way that you can have them lower your monthly payment since they're already garnishing your wages any way? That way maybe it would still leave some leftover.
Jvar, I was thinking about your situation as i was sitting in traffic on my way to work this morning. If this were my situation, I would ask ConServe straight up what would happen if the garnishment paid the loan off before the end of the rehab period. Here's the thing: you entered into a good-faith agreement with them to rehab a loan, and as long as you are keeping up your payments as agreed, you have a right to argue for getting the default notation removed from your credit report. Even if the loan is paid off prior to the 10-month period.
Call them up. Explain that you are being garnished AND making rehab payments, and this could pay off the loan before the end of the rehab period. Make them tell you what happens then - if they agree that yes, you will have successfully completed rehab and your credit report will be cleaned up, then great. You'll have finished early, and that's awesome. If they say no, you didn't make nine payments and the default notation will stay - ask to speak to their supervisor. Then have that same conversation with someone who is in a higher-authority position. Go up the chain if you have to. Don't be afraid to advocate for yourself. It will be to your advantage in the end.
I say this because in the last couple of weeks it's become increasingly clear to me that sometimes, the customer service people are misinformed. I had a situation myself just this week where I had to ask for supervisors three separate times. I was polite, but those calls aren't easy for me. In the end, I was glad I did it.