@Anonymous wrote:
Well first off...I am so glad I found this board...the wealth of knowledge here is beyond amazing. I was in the process of trying to save up to lump sum pay off really old student loans without even knowing about Rehabing them. Rehab started this month and will probably still try to lump sum them but in 9-10 months once they start looking prettier on my CR. --- that works right? once the 9 month rehab is complete and the loans are updated I can pay in full and I should see a bump in my Credit Score, right?
Main Question.
Along with my main student loans (around 20k) I have an odd ball Perkins loan for the State Univ I went to. Was $4800 and now is reporting as $2800 on all my credit reports due to it being assigned to the Attorney General's office and my tax returns being offset.
Well I had just saved $2800 and thought, let me knock this one out. Well the Attorney General Office sent it to a Collection Attorney... and they want $3700 which includes like $850 attorney fees and interest on those fees. I really want to pay my debts... and want even more not to give some sc^m bag attorney close to $1k in fees to pay my debt.
Emailed the Attorney General and they said all they can do is reduce their fees by like $62. But they advised me to contact the University to see if I could rehab this. Which I thought was odd, can my Perkins Loan be added to my current rehab? Start a separate Rehab.. (would that rehab be for the $2800 or the $3700?)
Finally, if I just let this offset my tax returns, would it be satisfied at the $2800 as that is what is being reported to credit bureaus?
It's just so frustrating when you want to pay your debt and people pile on. I stopped paying on them due to financial hardship, trust me I am not cracking lobsters and driving a Benz. I'm working 2 jobs supporting 3 people and just want to clean up my Credit.
Thanks in advance for any advice!
It will not be added to your current rehab if it is with a different servicer.
Me and my SO have SLs spread all over with different servicers, dozens of them (SLs, not servicers). I currently have 3 servicers, so 3 rehabs and my SO has 2 servicers, so 2 rehabs. I started 2 rehabs before the 3rd one. Each has their own payment amd qualifying 9 payments (I believe 10 for perkins?).
You will need to set it up. They are probably collection costs added on and depending if it is a private servicer, which it sounds like it is, they can legally add up to 16% in collections costs.
I would *hands down* do rehab over just paying it off.
When in default you cannot get a mortgage, any other fed loan programs for SLs, or access to your transcripts in some cases (or all? I will need fact check on the last one).
Reasoning for rehab is the CA will come off your credit reports. If you simply pay it off then it remains until 7 years from DoFD. That is reason enough to go through with the rehab in my book.
Another reason are the collection costs I mentioned above. They may require the entire extra amount you quoted where as with rehab it could be scaled back to 16% or even less. For me: 1 servicer is 0%, 1 servicer is 8%, and 1 servicer is the whole 16%. For SO: 1 servicer is 0% and the other is 8%.
If you continue garnishments, the collection costs increase annually as well as the interest. So every year your taxes are held, the amount will continue to go up. The $2700 amount has come and gone, but at least could likely be reduced some if not a lot more than the $62 currently on the table if you rehab.
Good luck with whatever you choose!
