Student Loan Rehab with GC Services…confused?

[creditpump]

Hi everyone! So I have finally convinced my husband to do something with his defaulted student loans. GC Services now holds the loans and my husband called them yesterday to tell them he wanted to enter the loan rehabilitation program. The told him his balance was down to $1228. Our taxes have been witheld for the past 2 years so this would make sense but I am worried that it isn't right. My husband's credit report shows 4 different defaulted student loans with ECMC wich would end up totaling over $5,000. Why would GC Services say we only owe $1228? Maybe the have not paid ECMC in full yet? I am confused about how this works but want to make sure we do this right. They also want him to give them our banking info for auto debit payments. Does that sound right? We want to apply for an FHA loan next year (hopefully) so I need to make sure all federal loans are in good standing. Any advice? Thanks much!!!

[jaybee]

Hi everyone! So I have finally convinced my husband to do something with his defaulted student loans. GC Services now holds the loans and my husband called them yesterday to tell them he wanted to enter the loan rehabilitation program. The told him his balance was down to $1228. Our taxes have been witheld for the past 2 years so this would make sense but I am worried that it isn't right. My husband's credit report shows 4 different defaulted student loans with ECMC wich would end up totaling over $5,000. Why would GC Services say we only owe $1228? Maybe the have not paid ECMC in full yet? I am confused about how this works but want to make sure we do this right. They also want him to give them our banking info for auto debit payments. Does that sound right? We want to apply for an FHA loan next year (hopefully) so I need to make sure all federal loans are in good standing. Any advice? Thanks much!!!

I would begin by calling ECMC and determine if GC actually owns the loan, or is just trying to collect for ECMC. You then need to talk to whoever holds the loan and figure out exactly how much you owe, and what was paid through tax offsets.

 

You should definitely set some time aside and read through these forums. GC is a collection agency, and regardless of what they tell you over the phone, you should never give a collection agency your banking information (you should give them as little personal info as possible).

[snowpuppy]

Hi everyone! So I have finally convinced my husband to do something with his defaulted student loans. GC Services now holds the loans and my husband called them yesterday to tell them he wanted to enter the loan rehabilitation program. The told him his balance was down to $1228. Our taxes have been witheld for the past 2 years so this would make sense but I am worried that it isn't right. My husband's credit report shows 4 different defaulted student loans with ECMC wich would end up totaling over $5,000. Why would GC Services say we only owe $1228? Maybe the have not paid ECMC in full yet? I am confused about how this works but want to make sure we do this right. They also want him to give them our banking info for auto debit payments. Does that sound right? We want to apply for an FHA loan next year (hopefully) so I need to make sure all federal loans are in good standing. Any advice? Thanks much!!!

 

NEVER, NEVER, EVER give your banking/credit card/debit card info to a debt collector. It is ILLEGAL to force you to pay your Federally defaulted SL's with this method by requiring you to do so. They cannot deny you the right to send a check/money order, etc.

 

Ask DH to get his FAFSA Pin # at PIN.ED.gov. Then go out to the National Student Loan Database (NSLDS), log in and see where all of his loans are. He may have some with one CA and the balance with another CA. Make sure you know who is holding the debt before you talk to anyone.

Edited May 10, 2012 by snowpuppy

[creditpump]

Thank you both for your input. Ecmc refuses to talk to us about the loans and keeps sending us back to go services. Go services refuses to let us do the loan rehab because the balance is too low. Hubby unfortunately gave them our checking account info so I am hoping we don't get screwed. I tried calling the dept of education and they told me that now that it is in collections that go services can basically make their own rules. My question now is since we can't fix our credit with the rehab should we just pay the amount in full to get out of default? Will that even effect his credit report? Any other suggestions? I am worried that ecmc has not reported that any of the loans have been paid and they won't talk to us!

[jaybee]

Thank you both for your input. Ecmc refuses to talk to us about the loans and keeps sending us back to go services. Go services refuses to let us do the loan rehab because the balance is too low. Hubby unfortunately gave them our checking account info so I am hoping we don't get screwed. I tried calling the dept of education and they told me that now that it is in collections that go services can basically make their own rules. My question now is since we can't fix our credit with the rehab should we just pay the amount in full to get out of default? Will that even effect his credit report? Any other suggestions? I am worried that ecmc has not reported that any of the loans have been paid and they won't talk to us!

Giving them your checking account information was an extremely bad move. What exactly did you agree to with GC? What did they tell you they will take out monthly?

 

You must have a minimum principal and interest balance of $500 at the time of rehabilitation (after you make your 9 payments). My guess is that they set you up with monthly payments that will bring you under the $500 threshold, that's why they are giving you the line "your balance is too low."

 

Anyways, as long as they have your banking information, don't expect them to work with you at all. They don't care now, they have access to your money. I'm not sure if you signed any binding payment agreements with them, but if not, I would check this forum for advice on what to do if you accidentally give a collection agency your checking info. Paying off debts in full will not remove negative tradelines from your credit report.

[creditpump]

I know giving them our account info was extremely dumb and wasn't too pleased about it myself … but too late now I guess. My DH agreed to pay them $205 per month for 6 months to pay them off. He didn't sign any type of agreement. I am still pissed about not being able to do the rehab. I know the balance was low but I feel like they could have done it anyways. I know paying it off won't remove any negative tradelines but I don't know what other options we have. They really weren't helpful from the beginning so I am thinking to just pay them off in full now and be done with them and then close our current checking account and open a new one so they won't have our info anymore…

[snowpuppy]

I know giving them our account info was extremely dumb and wasn't too pleased about it myself … but too late now I guess. My DH agreed to pay them $205 per month for 6 months to pay them off. He didn't sign any type of agreement. I am still pissed about not being able to do the rehab. I know the balance was low but I feel like they could have done it anyways. I know paying it off won't remove any negative tradelines but I don't know what other options we have. They really weren't helpful from the beginning so I am thinking to just pay them off in full now and be done with them and then close our current checking account and open a new one so they won't have our info anymore…

 

If this were me, I would close the checking account immediately. The reason you didn't get any 'agreement' in writing is because it's illegal for them to require this info in advance. It's a violation of federal law. That, and if they mailed you an agreement, you would have something in writing to use against them when they empty your account into their own pockets.

[creditpump]

OK closing bank account today and will never make that mistake again.

 

Planning to have DH call the evil GC Services tomorrow. Need advice - we are going to tell them that we will send a money order for the full amount due instead of doing monthly payments so we can just be done with this. Should we request something in writing from them before sending in the payment?

 

Any thoughts on what to do with ECMC? Should we just dispute after we pay off the defaulted loan since they are showing so much still being owed and have duplicates on the CR? They actually show different amounts on each CR???

 

Can't wait to get this over with. I am NEVER going to let my kids get into this mess

[thecollector]

I work for GC services. The reason you are confused is because the dept of ed does not contract your loans to the same collection agency unfortunately. they probably only have about 1 or two of your loans. there is no need to cancel your checking acct. Just call them back and tell them you want to stop the rehab program and you want a 30 a letter ( balance in full letter ) and you will send them the balance in full.

 

 

I see on here that alot of you are confused about how defaulted student loans work. The loans never get "bought" by a collection agency , they are always with the dept of Education at all times. These companies are contracted by the govt to collect for them. They never buy loans ever. Its not like credit cards where they buy other depts. All GC is contracted tp do is get you into a voluntary repayment program before the us govt starts wage garnishment , tax offset or litigation against you. all payments never go to GC services but directly to the dept of ed.GC does not handle any money at all. All payments are made in due to the dept of ed just fyi. but unfortunately when you default on your student loans your now ingovt default and must work with the collection agency as the dept of ed will not work with you any longer directly :-(

[creditpump]

I already closed my checking account. Made me too nervous having them have my info since they are oh so helpful on the phone. We paid the loan in full with a bank check. We would have been happy to pay monthly if they would have done the rehab but they wouldn't, just monthly payments which would do nothing for our credit. Live and learn I guess

[creditpump]

Question though, why did they have us make payment out to go services if we are paying the dept of education?

[jaybee]

Question though, why did they have us make payment out to go services if we are paying the dept of education?

I'm interested in the answer to this too.

[johnny5]

Perhaps the amount was too small but when I researched defaulted federal loans for my roommate I remember reading that they have to offer you a rehab program unless you've already failed to be the obligations of a previous rehab program.

 

I also remember someone posting here that if the CA was being unreasonable with a rehab program you should contact the Ombudsman office at the Department of Education or Direct Loans to assist you. There reasoning was since they are basically a contractor if the Ombudsman office got lots of complaints and issue with a CA that might affect their future contract renewals so as soon as the Ombudsman office gets involved they are a lot more reasonable.

 

Heres the link...

http://www.ombudsman.ed.gov/

 

Anyways nether here nor there since you've already resolved this with the payoff, but thought it was worth sharing.

[JUNOCME]

I too am in 'rehab' with GC services. I have now made my 9th payment and called them to check on the status of getting my loan purchased. After being transferred a few times I was told that come December (now its up to 14 months) that my account would go to ECMC who would find a qualified lender?!

 

I was never told that it would be up to 14 months and that after that I would have to continue to make payments to ECMC. I sent an email to Ombudsman and hope to find a resolution.

 

Please update me on how far you have gotten with these guys.

[LynnInMN]

I too am in 'rehab' with GC services. I have now made my 9th payment and called them to check on the status of getting my loan purchased. After being transferred a few times I was told that come December (now its up to 14 months) that my account would go to ECMC who would find a qualified lender?!

 

I was never told that it would be up to 14 months and that after that I would have to continue to make payments to ECMC. I sent an email to Ombudsman and hope to find a resolution.

 

Please update me on how far you have gotten with these guys.

 

You qualify for a rehab after 9 months...but sometimes it takes longer. It is not GC services fault....there have been issues with funding of the rehabs at the guarantor level and this is not anything that the ombudsman can help with or change. You just have to be patient and keep paying.

[yikesidid]

 

Hi everyone! So I have finally convinced my husband to do something with his defaulted student loans. GC Services now holds the loans and my husband called them yesterday to tell them he wanted to enter the loan rehabilitation program. The told him his balance was down to $1228. Our taxes have been witheld for the past 2 years so this would make sense but I am worried that it isn't right. My husband's credit report shows 4 different defaulted student loans with ECMC wich would end up totaling over $5,000. Why would GC Services say we only owe $1228? Maybe the have not paid ECMC in full yet? I am confused about how this works but want to make sure we do this right. They also want him to give them our banking info for auto debit payments. Does that sound right? We want to apply for an FHA loan next year (hopefully) so I need to make sure all federal loans are in good standing. Any advice? Thanks much!!!

NEVER, NEVER, EVER give your banking/credit card/debit card info to a debt collector. It is ILLEGAL to force you to pay your Federally defaulted SL's with this method by requiring you to do so. They cannot deny you the right to send a check/money order, etc.

 

Ask DH to get his FAFSA Pin # at PIN.ED.gov. Then go out to the National Student Loan Database (NSLDS), log in and see where all of his loans are. He may have some with one CA and the balance with another CA. Make sure you know who is holding the debt before you talk to anyone.

This makes me very nervous. I called AES to make payment after receiving some very unprofessional calls from a CA attempting to collect on my defaulted SL.

 

Ok, long story... I knew I wanted to go back to school but was inelligible for FA because I was in default. Around the same time my sister began getting collection calls for my SL. I called the CA to confirm that they had my correct information. When the woman read my listed contact information and listed my sister's phone number, I informed her that that number was not my number and has never been my number and insisted she remove that number from my file immediately. I don't know where they got my sister and BIL's phone number but they had my correct number on file. Anyway, so the woman then gives me an attitude and says that I must obvisiously know the person with that number. So I ask her if she owed a debt, would it be ok for a CA to call her neighbors to try to collect her debt. She then told me that she would remove the number and asked me something along the lines of "So, is that the only reason you called or are you going to pay your debt or what?" I told her I was unemployed and could not make a payment but when I was able to do so, I would call AES and pay them directly because the CA calling my sister's house and then this woman's attitude was completely unprofessional and I would not deal with a company like that. Then I hung up. A few weeks later I got a letter from AES, they transferred my default SL to a different CA. I found that CA's website and signed up with an account to make payments. Then I called the CA just to verify that I was making payments to the right CA for my default. They confirmed and then explained rehab and asked if I wanted to do that. Of course! So, they explain that I have to pay a specific amount on specific dates using an automated debit. That I can't just go on their site and make the payment with my credit card or pay by check. They told me that I have to do automated payment with my bank account.

 

I entered into the SL rehabillitation agreement and I have been making automated payments for the last 8 months. After my 6th payment I made some phone calls requesting confirmation that I was ellibible for FA again to go back to school. Everything seems ok with that, my classes start a little over a week from now.

 

I've been researching online and I'm getting more and more nervous. I read things warning that you should never make payments to a CA because they can take your monthly payment for months and then when you are about to pay off the debt, they can sell the debt to a new CA for the original amount and you get hosed. Now, reading here that you should never give them your account information. EEK!

[LynnInMN]

 

NEVER, NEVER, EVER give your banking/credit card/debit card info to a

debt collector. It is ILLEGAL to force you to pay your Federally

defaulted SL's with this method by requiring you to do so. They cannot

deny you the right to send a check/money order, etc.

You are fine making automated payments to student loan collection agencies. Student loan collections agencies are tightly regulated and audited. These are multi-million dollar contracts and no collection agency on the DOE or any FFELP lender contract is going to risk loosing this contract by putting thru ACH transactions that are unauthorized. Student loan commission rate to the agency is about 9% meaning your $100 payment nets them about $9. If the DOE gets complaints the agency risks loosing placements or loosing their contract all together,. The warning applies to credit card accounts and other dubious agencies.

[JERRYJACK]

ACCORDING TO GCC MY BALANCE IS AROUND $30,000 THEY WANT TO PUT ME ON THE REHAB PROGRAM AND KNOCK IT DOWN TO 25,000.00. NOW MY LAST YEARS GROSS INCOME WAS $5600.00 CAN I HAVE A CHANCE OF GETTING THE BALANCE DOWN? PLEASE HELP...SINCERELY,JERRYJACK

[stroked89coupe]

/>ACCORDING TO GCC MY BALANCE IS AROUND $30,000 THEY WANT TO PUT ME ON THE REHAB PROGRAM AND KNOCK IT DOWN TO 25,000.00. NOW MY LAST YEARS GROSS INCOME WAS $5600.00 CAN I HAVE A CHANCE OF GETTING THE BALANCE DOWN? PLEASE HELP...SINCERELY,JERRYJACK

Try making your own thread for better results in getting your question answered. If you need help contact any of the staff. We're here to help.

Edited August 18, 2013 by stroked89coupe

[LynnInMN]

There is no legal requirement for a down payment on a rehab....they can ask but they cannot make it a condition of rehab.

[marqedsade]

I just finished loan rehab with GC back in June. I made 9 on-time payments, and once I was out of rehab, they cancelled the remainder of scheduled payments. They have transferred my loan to a new company, and since I have been unemployed since Jan., the new company has allowed me a deferment. The old loans are no longer showing being "in default", and the new loans are showing "paid as agreed" Here's some info:

 

34 CFR 682.405 - Loan rehabilitation agreement.

There are 3 Updates appearing in the Federal Register for 34 CFR 682. Select the tab below to view, or View eCFR (GPOAccess)

 

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§ 682.405

Loan rehabilitation agreement.

(a) General. (1) A guaranty agency that has a basic program agreement must enter into a loan rehabilitation agreement with the Secretary. The guaranty agency must establish a loan rehabilitation program for all borrowers with an enforceable promissory note for the purpose of rehabilitating defaulted loans, except for loans for which a judgment has been obtained, loans on which a default claim was filed under § 682.412, and loans on which the borrower has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining title IV, HEA program assistance, so that the loan may be purchased, if practicable, by an eligible lender and removed from default status.

(2) A loan is considered to be rehabilitated only after—

(i) The borrower has made and the guaranty agency has received nine of the ten payments required under a monthly repayment agreement.

(A) Each of which payments is—

(1) Made voluntarily;

(2) In the full amount required; and

(3) Received within 20 days of the due date for the payment, and

( All nine payments are received within a 10-month period that begins with the month in which the first required due date falls and ends with the ninth consecutive calendar month following that month, and

(ii) The loan has been sold to an eligible lender.

(3) After the loan has been rehabilitated, the borrower regains all benefits of the program, including any remaining deferment eligibility under section 428((1)(M) of the Act, from the date of the rehabilitation. Effective for any loan that is rehabilitated on or after August 14, 2008, the borrower cannot rehabilitate the loan again if the loan returns to default status following the rehabilitation.

( Terms of agreement. In the loan rehabilitation agreement, the guaranty agency agrees to ensure that its loan rehabilitation program meets the following requirements at all times:

(1) A borrower may request rehabilitation of the borrower's defaulted loan held by the guaranty agency. In order to be eligible for rehabilitation of the loan, the borrower must voluntarily make at least nine of the ten payments required under a monthly repayment agreement.

(i) Each of which payment is—

(A) Made voluntarily,

( In the full amount required, and

© Received within 20 days of the due date for the payment, and

(ii) All nine payments are received within a ten-month period that begins with the month in which the first required due date falls and ends with the ninth consecutive calendar month following that month.

(iii) For the purposes of this section, the determination of reasonable and affordable by the guaranty agency or its agents must—

(A) Include a consideration of the borrower's and spouse's disposable income and reasonable and necessary expenses including, but not limited to, housing, utilities, food, medical costs, work-related expenses, dependent care costs and other Title IV repayment;

( Not be a required minimum payment amount, e.g. $50, if the agency determines that a smaller amount is reasonable and affordable based on the borrower's total financial circumstances. The agency must include documentation in the borrower's file of the basis for the determination if the monthly reasonable and affordable payment established under this section is less than $50 or the monthly accrued interest on the loan, whichever is greater. However, $50 may not be the minimum payment for a borrower if the agency determines that a smaller amount is reasonable and affordable; and

© Be based on the documentation provided by the borrower or other sources including, but not be limited to—

(1) Evidence of current income (e.g., proof of welfare benefits, Social Security benefits, child support, veterans' benefits, Supplemental Security Income, Workmen's Compensation, two most recent pay stubs, most recent copy of U.S. income tax return, State Department of Labor reports);

(2) Evidence of current expenses (e.g., a copy of the borrower's monthly household budget, on a form provided by the guaranty agency); and

(3) A statement of the unpaid balance on all FFEL loans held by other holders.

(iv) The agency must include any payment made under § 682.401((4) in determining whether the nine out of ten payments required under paragraph ((1) of this section have been made.

(v) A borrower may request that the monthly payment amount be adjusted due to a change in the borrower's total financial circumstances only upon providing the documentation specified in paragraph ((1)(iii)© of this section.

(vi) A guaranty agency must provide the borrower with a written statement confirming the borrower's reasonable and affordable payment amount, as determined by the agency, and explaining any other terms and conditions applicable to the required series of payments that must be made before a borrower's account can be considered for repurchase by an eligible lender. The statement must inform borrowers of the effects of having their loans rehabilitated (e.g., credit clearing, possibility of increased monthly payments). The statement must inform the borrower of the amount of the collection costs to be added to the unpaid principal at the time of the sale. The collection costs may not exceed 18.5 percent of the unpaid principal and accrued interest at the time of the sale.

(vii) A guaranty agency must provide the borrower with an opportunity to object to terms of the rehabilitation of the borrower's defaulted loan.

(2) For the purposes of this section, payment in the full amount required means payment of an amount that is reasonable and affordable, based on the borrower's total financial circumstances, as agreed to by the borrower and the agency. Voluntary payments are those made directly by the borrower and do not include payments obtained by Federal offset, garnishment, income or asset execution, or after a judgment has been entered on a loan. A guaranty agency must attempt to secure a lender to purchase the loan at the end of the 9- or 10-month payment period as applicable.

(3) Upon the sale of a rehabilitated loan to an eligible lender—

(i) The guaranty agency must, within 45 days of the sale—

(A) Provide notice to the prior holder of such sale, and

( Request that any consumer reporting agency to which the default was reported remove the record of default from the borrower's credit history.

(ii) The prior holder of the loan must, within 30 days of receiving the notification from the guaranty agency, request that any consumer reporting agency to which the default claim payment or other equivalent record was reported remove such record from the borrower's credit history.

(4) An eligible lender purchasing a rehabilitated loan must establish a repayment schedule that meets the same requirements that are applicable to other FFEL Program loans of the same loan type as the rehabilitated loan and must permit the borrower to choose any statutorily available repayment plan for that loan type. The lender must treat the first payment made under the nine payments as the first payment under the applicable maximum repayment term, as defined under § 682.209(a) or (h). For Consolidation loans, the maximum repayment term is based on the balance outstanding at the time of loan rehabilitation.

© A guaranty agency must make available financial and economic education materials, including debt management information, to any borrower who has rehabilitated a defaulted loan in accordance with paragraph (a)(2) of this section.

(Approved by the Office of Management and Budget under control number 1845-0020)

(Authority: 20 U.S.C. 1078-6 )

[59 FR 33355, June 28, 1994, as amended at 60 FR 30788, June 12, 1995; 64 FR 18980, Apr. 16, 1999; 64 FR 58965, Nov. 1, 1999; 66 FR 34764, June 29, 2001; 67 FR 67080, Nov. 1, 2002; 68 FR 75429, Dec. 31, 2003; 71 FR 45707, Aug. 9, 2006; 71 FR 64398, Nov. 1, 2006; 73 FR 63254, Oct. 23, 2008; 74 FR 56000, Oct. 29, 2009]

[marqedsade]

Oops......that was a bad cut and paste. Link to good info is here....http://www.law.cornell.edu/cfr/text/34/682.405