Student Loan Rehab

[jimmyj]

Hello,

I recently received a call from a collection agency called "GC Services" and they offered a loan rehabilitation program for my defaulted student loans. Now I have signed up to pay $142.00 / month. After 9 consecutive monthly payments have been then the rehabilitation program will be complete, and all derogatory information on my credit reports will be deleted.

 

Does all of this sound correct? Has anyone else been through this program successfully?

 

Also, the letter I received says "Once rehabilitation is complete, collection costs that have been added will be reduced to 18.5% of the unpaid principal and accrued interest outstanding at the time of the loan rehabilitation. Collection costs may be capitalized at the time of the loan rehabilitation by your new lender, along with outstanding accrued interest, to form one new principal amount."

 

I believe the above quoted text is saying that the new lender can add outstanding interest due to the new principal, is that true? And what is this 18.5% business? Everything else in the rehab terms&conditions makes sense, but this one is a little confusing.

 

Thank you very much for your consideration,

Jimmy

[LynnInMN]

Hello,

I recently received a call from a collection agency called "GC Services" and they offered a loan rehabilitation program for my defaulted student loans. Now I have signed up to pay $142.00 / month. After 9 consecutive monthly payments have been then the rehabilitation program will be complete, and all derogatory information on my credit reports will be deleted.

 

Does all of this sound correct? Has anyone else been through this program successfully?

 

Yes....search the forum and you will find tons of people rehabbing.

 

Also, the letter I received says "Once rehabilitation is complete, collection costs that have been added will be reduced to 18.5% of the unpaid principal and accrued interest outstanding at the time of the loan rehabilitation. Collection costs may be capitalized at the time of the loan rehabilitation by your new lender, along with outstanding accrued interest, to form one new principal amount."

 

I believe the above quoted text is saying that the new lender can add outstanding interest due to the new principal, is that true? And what is this 18.5% business? Everything else in the rehab terms&conditions makes sense, but this one is a little confusing.

 

Collection charges on defaults are up to 25%. When you rehab, they will drop them down to 18.5% and they will be capitalized into your new balance. Your past due interest, if any, will also be capitalized.

 

Thank you very much for your consideration,

Jimmy

[jimmyj]

Thanks for the quick reply, and my apologies for not doing more research before posting - I just wanted to make sure everything they offered me added up.

 

One more question, how severe are defaulted student loans to your credit? After rehabilitation, should one expect their fico score to increase? Sorry for all of the questions, but I'm still trying to figure things out - as I've never even had a credit card

 

Thanks again..

JimJ

[helcat]

Also, the letter I received says "Once rehabilitation is complete, collection costs that have been added will be reduced to 18.5% of the unpaid principal and accrued interest outstanding at the time of the loan rehabilitation. Collection costs may be capitalized at the time of the loan rehabilitation by your new lender, along with outstanding accrued interest, to form one new principal amount."

 

I believe the above quoted text is saying that the new lender can add outstanding interest due to the new principal, is that true? And what is this 18.5% business? Everything else in the rehab terms&conditions makes sense, but this one is a little confusing.

 

Collection charges on defaults are up to 25%. When you rehab, they will drop them down to 18.5% and they will be capitalized into your new balance. Your past due interest, if any, will also be capitalized.

 

Thank you very much for your consideration,

Jimmy

 

Not to hijack your thread but I wanted to ask a question about this part. I'm in rehab through ECMC. If I recall correctly I was told about the reduction to 18.5 collection costs, but I got the impression that I would have once last chance before the loan got transferred to pay in full for a significant discount. I haven't heard anyone mention that so I thought I'd see if that sounds familiar to anyone.

[helcat]

bump

[LynnInMN]

Not to hijack your thread but I wanted to ask a question about this part. I'm in rehab through ECMC. If I recall correctly I was told about the reduction to 18.5 collection costs, but I got the impression that I would have once last chance before the loan got transferred to pay in full for a significant discount. I haven't heard anyone mention that so I thought I'd see if that sounds familiar to anyone.

 

You can settle the account at anytime before the account rehabs. Significant discount? Not really....usually they will take a portion to all of the collection costs off. They generally not waive principal or interest.

[helcat]

Not to hijack your thread but I wanted to ask a question about this part. I'm in rehab through ECMC. If I recall correctly I was told about the reduction to 18.5 collection costs, but I got the impression that I would have once last chance before the loan got transferred to pay in full for a significant discount. I haven't heard anyone mention that so I thought I'd see if that sounds familiar to anyone.

 

You can settle the account at anytime before the account rehabs. Significant discount? Not really....usually they will take a portion to all of the collection costs off. They generally not waive principal or interest.

 

Thanks. How many times can you be charged the 18.5% to 25% in collection costs. I dug up some of my old paperwork and my balance at the time I filed bankruptcy in 2005 was approximately $28K (on original loans of $21K), by the time my BK was dismissed and ECMC started contacting me it was up to $31,540. Now they are up to $41K+. If I ask will they give me breakdown of all the charges since the loan went delinquent?

[LynnInMN]

Not to hijack your thread but I wanted to ask a question about this part. I'm in rehab through ECMC. If I recall correctly I was told about the reduction to 18.5 collection costs, but I got the impression that I would have once last chance before the loan got transferred to pay in full for a significant discount. I haven't heard anyone mention that so I thought I'd see if that sounds familiar to anyone.

 

You can settle the account at anytime before the account rehabs. Significant discount? Not really....usually they will take a portion to all of the collection costs off. They generally not waive principal or interest.

 

Thanks. How many times can you be charged the 18.5% to 25% in collection costs. I dug up some of my old paperwork and my balance at the time I filed bankruptcy in 2005 was approximately $28K (on original loans of $21K), by the time my BK was dismissed and ECMC started contacting me it was up to $31,540. Now they are up to $41K+. If I ask will they give me breakdown of all the charges since the loan went delinquent?

 

Once. HOWEVER, if you are not paying on your loan, everytime it is placed with a new agency, the collection fees are adjusted. So if your balance goes up, so do your collection fees.

 

Keep in mind that interest is periodically capitalized. Interest adds up quickly, particularly if you have loans from years that had higher interest rates.

 

 

 

The agency holding the loan will give you a breakdown of the balance from the time they paid the claim.

[LynnInMN]

Information of Grad Plus Loans.

 

http://www.finaid.org/loans/gradplus.phtml

[helcat]

Not to hijack your thread but I wanted to ask a question about this part. I'm in rehab through ECMC. If I recall correctly I was told about the reduction to 18.5 collection costs, but I got the impression that I would have once last chance before the loan got transferred to pay in full for a significant discount. I haven't heard anyone mention that so I thought I'd see if that sounds familiar to anyone.

 

You can settle the account at anytime before the account rehabs. Significant discount? Not really....usually they will take a portion to all of the collection costs off. They generally not waive principal or interest.

 

Thanks. How many times can you be charged the 18.5% to 25% in collection costs. I dug up some of my old paperwork and my balance at the time I filed bankruptcy in 2005 was approximately $28K (on original loans of $21K), by the time my BK was dismissed and ECMC started contacting me it was up to $31,540. Now they are up to $41K+. If I ask will they give me breakdown of all the charges since the loan went delinquent?

 

Once. HOWEVER, if you are not paying on your loan, everytime it is placed with a new agency, the collection fees are adjusted. So if your balance goes up, so do your collection fees.

 

Keep in mind that interest is periodically capitalized. Interest adds up quickly, particularly if you have loans from years that had higher interest rates.

 

 

 

The agency holding the loan will give you a breakdown of the balance from the time they paid the claim.

 

Thanks for the info. I will go ahead and request the breakdown from ECMC.