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My daughter took out several US Dept of Edu loans. She never continued her education and was supposed to pay back these loans from a few years ago. My constant nagging her to call and set up a payment plan with them fell on deaf ears. She's a 23 year old who just thought the debt would just go away. I even offered to help her financially and that meant me paying 95% of it.
Her failure to communicate and set up payments has her now with a collection letter from Reliant Capitol. I am looking for some good advise that I have used on this board before. My question are?
What's the best way to handle this? I would do a payment plan with them to pay the loan fully with monthy installments. Is that the best way to go? The collections is very new. It hasn't been reported yet on her credit report. Although she has negs from DOE for her lates. I would of coarse ask for a pay for delete or I'll pay as long as it doesn't get reported type deal? There is so much information out there and I want to do the right thing. I felt this board has the best proven information.
Thanks for reading!!
WOW! You really have helped! Thank you so much on the overwhelming amount of information. I'm going to have to read it several times to digest it...lol. I've read about the REHAB on here and didn't quite understand with whom I get that started with.
Because the loans have defaulted to collections, do it set this up with them?
@glockrunner wrote:WOW! You really have helped! Thank you so much on the overwhelming amount of information. I'm going to have to read it several times to digest it...lol. I've read about the REHAB on here and didn't quite understand with whom I get that started with.
Because the loans have defaulted to collections, do it set this up with them?
You would contact the collections agency and they should be able to walk you through it, and when the rehab is finished they'll send you back to the servicer or might give you a new one.
I am also a huge fan of the rehab over consolidation option (for a few reasons), but your daughter is luck to be able to use these options, and even luckier that she has you to help her out.
Thank you so much for the reply and words of ecouragement. I will call and set up a rehab. I will come back and post my results.
I know some parents/family have a hard time with this, but the right thing here is that you also need to let her drive this one. Help provide information if you want, but she needs to do the work and take the actions. If she doesn't, you need to let her sink unless your name is also tied to the loan, in which case you work through it and take it as a personal lesson learned to never tie your name to her finances again.
If you swoop in and try to do the work for her (again), is she suddenly going to become an adult and figure out how to be more financially responsible? No, she isn't. If she isn't taking this at least as seriously as you are, and doing twice as much to fix it, then it's time to step back and let her deal with it alone. Perhaps the damage this will wreak on her life might be exactly what she needs to wake up and learn it's time to become an adult.
On friday we contacted the Collection agency and went over all the details of her account. She was offered 2 methods. One was a consolidation which consisted of paying the loan balance in 3 consecutive payments for 3 months or a rehabilitation program. She chose the rehab because it allowed her a better outcome for her credit and it was income based. The main details are:
1. Pay a fairly low income based monthly payment for 9 consecutive months.
2. ED will waive any collection costs incured as a result of the rehab , unless it is defaulted
3. After sucessful rehab the loan will be transfered to ED''s Loan Servicer..
- ED will credit all money paid during rehab to the loan balance
- ED will request the CRA's remove the defaulted loans from the report
4. Set up a new payment plan/amount with the Servicer to finish off paying the loan.
note: Rehabilition can only be used one time once it was rehabed successfully.
I hope this information helps people out that had questions like myself. My daughter has realized that you can't let things go because they won't go away and it's usually not as bad as it may seem. The collection agency was super helpful and friendly! Thanks for all the replies.
Hey Sabil,
Thank you again for your input. I did get a credit report on her from Experian. I plan to get the rest this week. Her score is prettty bad because of the defaulted loans. Although when using a simulator her scores can improve 40 points in the next 3 months. Once she has rehabed and the report gets cleard up she will be in great shape. Just a fyi for people, when I did the math on her as far as what was calculated for the rehab income based payment it amounted to .5% of her yearly income paid per month. We could have had it adjusted lower if we chose to calculate her monthly debt too but the payment was quite reasonable already.