Rehabilitation Denied

[dman23]

Damn I am pissed off! I made arrangements with the holder of my federal student loan to undergo the rehabilitation program. We set up a monthly monthly payment and I thought I was on my way. I was waiting for an email from them to sign some agreement and send it back. I never received it so I called them. Turns out they tell me I am not eligible for the rehab program because there was a judgement in 1994. I called Dept. of Ed. to see if there are any exceptions and they said no but they would mail me a dispute letter.

Has anyone ever had or heard of anyone in this situation where they were given an exception and allowed to undergo the rehab program?

Who has the authority to make the exception? Dept. of Ed or the Current holder of the debt?

The loans I had were consolidated into one loan and from looking at nslds website I defaulted in 1995. If I can't rehab and pay loan off in full how bad will this hurt my credit reports?

[dman23]

Been researching judgements and found out that,

New York State Residents Only (must be current resident)

• Satisfied judgments remain on your credit file for five years from the date filed.
• Paid collections remain on your credit file for five years from the date of last activity/date paid.

http://blog.equifax.com/credit/faq-how-long-does-information-stay-on-my-credit-report/

Based on that, and being a NY State resident it would seem to me that if I pay off my student loan and satisfy the judgement then there should be no affect on my credit report.

The date filed was in 1994. I should be ok...Correct?

[SCF]

Honestly, I've never heard of anyone being denied rehab unless they rehab'd a loan previously and allowed it to default a second time.  This might be one to refer to the Ombudsman.  It may be that your situation was more common in the past, but with the loans being as old as they are, we just don't hear about it much anymore.  The Ombudsman should be able to investigate and find the relevant rules for you.

[dman23]

I'm pretty sure back then I rehabbed the loan and defaulted again. I'm guessing that's why there is a judgment. Going to call Dept. of Ed to get details of the judgment just to see if that was the reason.

From what I understand if you have a judgment you can't rehab. However, I did come across this: "

The option to rehabilitate (bring current) a loan is not automatically available if the creditor has already gone to court and obtained a judgment against you for the debt. Lenders have the choice to rehabilitate these loans but are no longer required to do so."

Based on that it looks like the lender has some discretion in allowing me to rehab the loan. Going to call and find out now.

Thanks for the Ombudsman advice too.

Will follow up.