Afraid to let student loan fall into "default" status for this reason

[trying2begood]

Hi everyone,

 

I read on here some time ago that it is better to let your student loan fall into default status so that you have the option of getting into the "rehabilitation" program and make the 9 consecutive on time monthly payments so that the loan can be removed from your credit report. Is this still accurate?

 

They told me over the phone that my loan wasn't defaulted yet and couldn't understand why I "wanted" it to go into default! The representatives over the phone told me "You don't want the IRS to come after you or for them to garnish your wages!"

 

Well that scared me since I want to buy a home within the next year or two.

 

How soon after default do I wait? My loan is the FAFSA and I owe a bit over 4K.

 

Thank you everyone.

[Feech]

Your topic really confuses me. What exactly are you trying to do? what is the situation you're in now? I guess I'm confused on why anyone would want to default a school loan.

[trying2begood]

Feech, I've had my loan consolidated and am behind in my payments.

 

 

I've read thru this board that the only way to get student loans OFF the 3 credit agencies is to have the loan rehabilitated which can only be done if the loan itself is in default status.

 

Which means I have to keep 'not paying'.

 

I hope this serves as a bit of clarification.

[LynnInMN]

Hi everyone,

 

I read on here some time ago that it is better to let your student loan fall into default status so that you have the option of getting into the "rehabilitation" program and make the 9 consecutive on time monthly payments so that the loan can be removed from your credit report. Is this still accurate?

 

NO....it is NOT a better option. Only the guarantors negative tradeline is removed....not the lender/servicers. Plus if you have a FFELP loan, you have to deal with collection fees.

 

They told me over the phone that my loan wasn't defaulted yet and couldn't understand why I "wanted" it to go into default! The representatives over the phone told me "You don't want the IRS to come after you or for them to garnish your wages!"

 

Well that scared me since I want to buy a home within the next year or two.

 

I really dont understand your thinking. Your student loan is NOT going anywhere nor will it be removed from your credit report.

 

How soon after default do I wait? My loan is the FAFSA and I owe a bit over 4K.

 

Thank you everyone.

 

No you loan is NOT with FAFSA...FAFSA is an application. Your loan is with a lender servicer like Sallie Mae, Citibank, Nelnet or Direct Loans. You really need to do some reading and educate yourself on your loan.

[trying2begood]

Lynn,

 

Thank you for your response. I meant to say my loan is with "Direct Loans".

 

 

It's odd, I read a few places about the rehab "benefits" here which include removal of it on your credit report once 9 monthly consecutive payments are made.

 

Am I nuts, or is this not on this forum a few places?

 

Thanks

[trying2begood]

The below is a link to an example of the rehab loan working for someone and have their fico increased (if you scroll down a few replies after the OP)

http://creditboards.com/forums/index.php?s...=rehab+benefits

[trying2begood]

Lynn, you said yourself on this link that rehabbing has benefits......

 

 

http://creditboards.com/forums/index.php?s...ion+forbearance

 

 

 

????? What type of benefits vs. consolidating?

 

Please clarify

[Feech]

Rehab is a benefit if the loan is in "default" already. If your not there you don't want to put it in default. Lynn has made the point pretty clear I think take her advice.

[trying2begood]

Thanks Feech, although I disagree that the point was "clear" I now realize that consolidating before the loan is in default is better than rehabbing after default since they will always remain on the 3 credit reporting agencies no matter which route is taken.

 

If anyone disagrees, I'd love to hear your thoughts.

 

thank you

[Saria]

Lynn, you said yourself on this link that rehabbing has benefits......

 

 

http://creditboards.com/forums/index.php?s...ion+forbearance

 

 

 

????? What type of benefits vs. consolidating?

 

Please clarify

 

That poster was already in default. Once that happens, rehab is generally a better option than consolidation if a person's credit report is the main concern. There is absolutely no reason anyone should intentionally default in order to qualify for rehab. It's a shame you misinterpreted other posts, but that's the reality.