Studen Loan Rehabilitation Question

[KurtCobain23]

I asked this in the Student Loan section, but didn't get any replies. I have to make a decision within the next two days.
    
I have 2 Federal Loans (FFEL) that I Defaulted on in 2007 totalling $6,500.  I noticed that in 2014 both of these loans fell off my Credit Report.  Since 2014, Credit Adjustments Inc. has been Seizing my federal income tax. They are now wanting to garnish my wages. My question is, If I sign up for the Federal Student Loan Rehabilitation program will the negative history that I had on my Credit Report from 2007-2014 go back on my credit report?

My understanding from researching online is that I will receive a new tradeline without the late payment history of the old one (07-14), And that the new tradeline will be labeled as defaulted and will date back to 2007. Is this Correct?

Basically, I am asking how will this appear on my credit report once I begin Rehabilitation?

Also. Would Consolidation be a better route for me to take given my sitiuation?

Thanks

[Anonymous]

Your defaulted loan can bounce from collection agency to collection agency. As long as it's in default, one if them may choose to begin reporting until it's paid off. There is no statute of limitations for federal loans.
"If I sign up for the Federal Student Loan Rehabilitation program will the negative history that I had on my Credit Report from 2007-2014 go back on my credit report?"

I'm not sure. It seems from other people that the answer may be no, the payment history will start when the new account starts. I would suggest asking someone under the student loans these who had completed rehab. There are several recent ones.

"the new tradeline will be labeled as defaulted and will date back to 2007. Is this Correct?"
This is correct. You'll likey also retain the two tradelines which is even better for your AAoA and payment history. If you have not been garnished yet, you can set up the rehab. They will need to be for the full amount of a payment agreement (15%?) In order to stop the garnishment. If you miss this, I would definitely go for reduced payments by submitting your income and expenses on the form to get a reduced payment for the 9-10 months. Even if your default reappeared, finishing your default would remove it. You won't see results until you finish rehab and mostly when you are picked up by a new server. It may take a few months for your credit reports to reflect all changes.I would also seriously consider an Income-driven repayment plan such as IBR or REPAYE. There are benefits to this once it comes to FHA loans too and IDR plans have forgiveness. How much are your loans?

"Would Consolidation be a better route for me to take given my sitiuation?"
That's up to you. I don't know your situation. I usually recommend rehabbing. The patience pays off imo. The default is removed only with rehab and the consolation creates a new, 100% utilization on your reports. It also locks in an APR using a calculator based on the APR of all if the loans.
Any more questions? Feel free to ask.

[KurtCobain23]

Thanks Sabii for taking the time to reply. I've read alot of your post on here, and you have really been helpful to a lot of people.  I have 2 federal loans in default (both FFEL) totalling $6,500. I just got the intent to garnish letter about 4 days ago. My gross yearly income is pretty close to the poverty line and I read somewhere on here that they take that into consideration when setting up monthly payments through the rehab program. One last question that I have that may sound dumb. After they set up my 9 month rehab payment plan, do I have pay them one payment each month, or can I make 9 consecutive payments to them in say like 3 months?  

Thanks,

Josh

[Anonymous]

You're welcome and thank you. I didn't reply because I wasn't sure about how the account looks but I probably should have anyway.
The letter they gave you with the intent to garnish had some fineprint. There is a way to get out of the garnishment if your wages are under a certain amount. I would notify them before the deadline passes to stop the garnishment, though you can still request a hearing afterwards. Even if it goes through, keep in mind you may not have a payment anyway because your employer will have to make these calculations start excluding a certain amount of wages. Without this, to my knowledge you'll have to do both the garnishment and the payments. We're probably not taking much money though (because again the rehab can be based on your income and expenses). It's as low as $5/ month.
No, those payments must be made on time for 9-10 months. Think of them as a rehabilitation of behaviors that get people's into default; the payments usually don't make much of a dent. The consolidation is for 3 months, or right away if you want to be put only on IDR. But like I said... You would lose the account history.
That's not a significant amount in loans, but if your income will remain consistent, you may still get something forgiven. Your payments once rehabbed can be as low as $0 (I estimate the cutoff for $0 is around $19k income/ year).
You can plug your numbers manually into the repayment estimator. Ignore the second number in the range.
https://studentloans.gov/myDirectLoan/repaymentEstimator.action

[KurtCobain23]

I've decided to go the rehabilitation route. It seems way better for my situation than reconciliation. I like the idea of adding a 13 year old tradeline to my Average age of accounts. I will come back here and let people know if all the the bad history on my CR from 2007-2014 with these 2 loans show back up. I plan on contacting my Servicer in the morning by e-mail. I don't know if they will agree, but hopefully all communication will be through e-mail so that i will have a record of everything. I would like to get them on record to cancel the Garnishment.

Thanks again Sabii!

Josh

[Anonymous]

I'm glad, though I'm totally biased about rehab vs consolidation, lol! Rehab is a great option.
The loan is probably with a collection agency right now; you can find out on the NSLDS website if you don't have that contact information or you want to verify the agency. You should be able set up the payments as soon as they calculate them from the form you'll turn in. It might take a few days but I was also told by one they could move faster with an upcoming garnishment.
While the garnishment night have been initiated by the collection agency on behalf of the Dept of Education, it is separate. To stop it you will need to contact the gov dept in the form. Before I even called the collection agency, I would call them or send in whatever information the asked for ASAP.
One last thing, if I haven't said it already, make sure to update your information with the student loan people and the collection agency. You can update your contact information with the department of education on their .gov student loan website.
Can't wait for the update. Thanks for that, Josh.