Does entering SL rehab immediately affect TLs?

[Dural]

I've been reading through posts on this for a couple of hours, but I can't seem to find the answer to one basic question:

 

If I start the rehabilitation process on a student loan, will they update the trade lines to say the loan is being rehabilitated, or will it still be listed as in collection?

 

The reason why I ask is I'm trying to rent an apartment, and I can't get anyone to rent to me with defaulted student loans. I tried offering double the deposit, and that doesn't even satisfy them.

 

So, I need a short-term solution. Rehabbing the loan definitely seems like the way to go over the long-term, but that doesn't help me find a place to live right now. I'm living in a hotel.

 

The alternative is I can pay the lines in full. It's only about $5000, and that's no sweat. I'm actually surprised they haven't sued me over it, because I make six figures.

 

But I want to buy a house next year. If I pay it in full, sure, it tells me rent an apartment, but it seems like I'll regret it for the next three years or so until it drops off my credit report.

 

Any thoughts on the best thing to do?

 

I suppose I can start rehabilitation and then show landlords the paperwork. Maybe that will satisfy them. Still, I imagine they're going to wonder why I didn't pay in full since I have over 100K in cash.

[Clydesmom]

The TLs are not updated until you exit rehab. At that point they are updated to indicate pays as agreed, never late. If the amount is that low paying them off is probably better.

[Dural]

If I pay them in full, won't that actually reduce my credit score? Because it will make the TLs more recent?

[Time to fix]

I just exited rehab October or November of last year. The 4 loans that defaulted still showed as 'Defaulted, perm assigned to Govt'. Even once rehabbed they still showed the same. I had to dispute them and they where then updated properly (actually 2x fell off, the other 2 updated 'reassigned loan'.

[LynnInMN]

Even if you start making the paymnents towards rehab, there is no paper work to show a potential landlord.

 

There really is no short term solution other than paying your loan in full. Rehab takes 9 months of payments and up to 90 days after that to be reflected on your credit report.

 

FYI...they dont sue over $5000. They have the ability to garnish wages without a court order.

[hodap2001]

If you have the funds available, you should pay off the loan in-full so that you can get out of the hotel - which is exactly what you want to do. Your credit will show as a paid collection account. If you're aiming to buy a home within the next year, maybe you should sit down with a mortgage broker who can explain what you can do now - in terms of your credit profile, to ensure you will be eligible to purchase a home in 2014.

 

Good Luck!

[Dural]

Interesting. I called and talked with the collection agency today, and the collection officer said she would update my credit report within 30 days to show I'm in a repayment plan. She also said I could use the signed rehabilitation contract for evidence with landlords until it updates. If that's not enough, she even said she is willing to write me a letter to show landlords I'm now in rehabilitation.

 

Of course, it could all be lies, but she seems to be trying to help. I was surprised.

 

One question though: is there anything I can do to get them to update the trade lines faster than 30 days? Would disputing the default status do any good?

[buyrightfirst]

Interesting enough, I went into SL Rehab and the craziest thing happened...one day I was pulling updates and every SL Tradeline was gone!!! I mean I had about 20+ T/L's all in default or assigned government or collection comments underneath each of them.

 

I swear I almost started crying for joy!!! I know they will return at some point once they are reassigned but its been about 4 months since the rehab started.

[LynnInMN]

Generally on student loan accounts, the CA's dont report and the guarantor is NOT going to report current while you are in default.

 

FYI....technically there is no such thing as a "rehab program". The act of rehabbing occurs once you make the 9 payments....there is no program defined as such in the Higher Education Act. Any so called rehab contract prior to the 9th payment really means nothing. It outlines your contractual obligation but isnt really proof of anything.

[Dural]

True, but I'm not sure the legality of it really matters. What matters is how the landlord perceives the situation. If I give them the rehab contract plus a letter from the CA, that's pretty good evidence. Probably enough to get an apartment.

[LynnInMN]

A rehab agreement sounds like this..

 

This letter confirms your request to participate in the student loan rehabilitation programs authorized by Section 428F of the Higher Education Act of 1965, as amended. Upon successful completion of this program, your student loan will be removed from default status and restored to goodstanding. To participate, you must meet the terms and conditions explained below, complete, sign, date,and return the consent form.

 

It is an informational letter, not a contract.