Consolidation vs Rehab for an outrageous SL debt

[notasailor]

Backstory! I graduated college 3 years ago with two absolutely worthless degrees and an absolutely obscene amount of student debt. I had no concept of credit and they just kept offering me more student loans! I have a grand total of 13 loans equating to about 80k in debt. One of the loans is a private loan for 20k that I am currently paying on and everything is just fine.

 

The other 12 are a combo of subsidized/unsubsized Stafford loans. I didn't even know that 6 of them existed until today. And guess what? Those 6 (worth about 30k) are in default. No one has contacted me and they were not attached to the rest of my loans on the AES website.

 

So now it is time to put on my big girl panties and figure out what to do. The other 6 of my loans will be coming out of forbearance/deferment within the next few months, so whatever I decide will affect them all. Well, except the private one.

 

The rehab seems like a good idea, but I have heard that you have to have someone who is willing to pick up your debt after you make your 9 payments? Well I make practically nothing at my current job (I am a photographer for a company that recently relocated to my area, and work is practically non-existent) and my husband is active duty military. So I don't know if anyone would be willing to pick up the debt of a poor young couple. We already have other debts we are paying and we are going to be moving in a few months (not buying, but we will need some savings for a deposit on a rental) and we need a second care when he returns from deployment in a few weeks. The ideal of a consolidation with a long repayment time and low payments would be perfect.

 

I don't know who is the most trusted company to talk to about this, as I don't want to hurt my credit even more (if that is even possible).

 

Thanks so much for your help!

[hodap2001]

I am going to withhold my tongue in reference to your first sentence; however, I will address the rest of your post.

 

Private Loan - You are on the right track by paying on them - If you are interested, there are a couple of companies who can consolidate your student loans for a lower interest rate, please check out Wells Fargo and CU Student Loans and Ihelp.

 

In reference to Rehabilitation - it is a one shot deal to clear your credit from the guarantor (not the original creditor) and you will be given a new trade-line once it has been reassigned to a new Federal Loan Servicer. You will need to contact the collection agency to set-up a repayment plan and they will offer you a reasonable monthly payment plan. They will ask for your income and expenses (don't over exaggerate your expenses such as $500.00 a month for clothing). You will need to make 9 monthly on-time, voluntary payments, and then your loan will be reassigned to a new loan servicer (if one is available). In addition, at this time, you could also consolidate all of your student loans once they have been successfully rehabilitated.

 

Call the collection agency and work with them to get the loans out of default; otherwise, they can perform Administrative Wage Garnishment, Tax Offset, Bank Levy, Social Security Offset, and more.

 

On a side note - since you're married and your husband is in the military, his Security Clearance could be in jeopardy if the military chooses to perform a periodic financial check on him. I have seen this happen to a lot of military families and its not a pretty process when his Commander finds out!

 

Call the collection agency today!

Edited June 17, 2013 by hodap2001

[notasailor]

I am going to withhold my tongue in reference to your first sentence; however, I will address the rest of your post.

 

Private Loan - You are on the right track by paying on them - If you are interested, there are a couple of companies who can consolidate your student loans for a lower interest rate, please check out Wells Fargo and CU Student Loans and Ihelp.

 

In reference to Rehabilitation - it is a one shot deal to clear your credit from the guarantor (not the original creditor) and you will be given a new trade-line once it has been reassigned to a new Federal Loan Servicer. You will need to contact the collection agency to set-up a repayment plan and they will offer you a reasonable monthly payment plan. They will ask for your income and expenses (don't over exaggerate your expenses such as $500.00 a month for clothing). You will need to make 9 monthly on-time, voluntary payments, and then your loan will be reassigned to a new loan servicer (if one is available). In addition, at this time, you could also consolidate all of your student loans once they have been successfully rehabilitated.

 

Call the collection agency and work with them to get the loans out of default; otherwise, they can perform Administrative Wage Garnishment, Tax Offset, Bank Levy, Social Security Offset, and more.

 

On a side note - since you're married and your husband is in the military, his Security Clearance could be in jeopardy if the military chooses to perform a periodic financial check on him. I have seen this happen to a lot of military families and its not a pretty process when his Commander finds out!

 

Call the collection agency today!

 

It really isn't a joking matter, but I had absolutely no concept of how credit worked and my parents filled out all of the loan information for me. No one ever really explained what would happen to my finances by taking on so much student debt (and I didn't even realize how much I was taking on at the time). I ever remember my dad telling me that, "defauliting on the federal loans isn't a big deal, just make sure you pay the private one since my brother cosigned it".

 

I appreciate your help, I am calling the collection agency right now!

[hrguy]

 

I am going to withhold my tongue in reference to your first sentence; however, I will address the rest of your post.

 

Private Loan - You are on the right track by paying on them - If you are interested, there are a couple of companies who can consolidate your student loans for a lower interest rate, please check out Wells Fargo and CU Student Loans and Ihelp.

 

In reference to Rehabilitation - it is a one shot deal to clear your credit from the guarantor (not the original creditor) and you will be given a new trade-line once it has been reassigned to a new Federal Loan Servicer. You will need to contact the collection agency to set-up a repayment plan and they will offer you a reasonable monthly payment plan. They will ask for your income and expenses (don't over exaggerate your expenses such as $500.00 a month for clothing). You will need to make 9 monthly on-time, voluntary payments, and then your loan will be reassigned to a new loan servicer (if one is available). In addition, at this time, you could also consolidate all of your student loans once they have been successfully rehabilitated.

 

Call the collection agency and work with them to get the loans out of default; otherwise, they can perform Administrative Wage Garnishment, Tax Offset, Bank Levy, Social Security Offset, and more.

 

On a side note - since you're married and your husband is in the military, his Security Clearance could be in jeopardy if the military chooses to perform a periodic financial check on him. I have seen this happen to a lot of military families and its not a pretty process when his Commander finds out!

 

Call the collection agency today!

 

It really isn't a joking matter, but I had absolutely no concept of how credit worked and my parents filled out all of the loan information for me. No one ever really explained what would happen to my finances by taking on so much student debt (and I didn't even realize how much I was taking on at the time). I ever remember my dad telling me that, "defauliting on the federal loans isn't a big deal, just make sure you pay the private one since my brother cosigned it".

 

I appreciate your help, I am calling the collection agency right now!

report back what they tell you, it will help others in the same situation

[notasailor]

This is ridiculous. I got online to where I found out about who had my defaulted loans and went to my account. The said that a company called Van Ru had taken over the debt so I called them. They told me that they no longer had the debt and gave me a number to call. I called it and it was the FAFSA number. They told me that they weren't managing my debt and gave me the number to the first site where I found my debt, myEdebt. Called them, and was told to call Van Ru!!

 

So now I am on hold with Van Ru (15 minutes and counting....).

 

I guess my next step is to call the Department of Education? I mean, someone has to have my debt!

[hodap2001]

Log into NSLDS to see who has your defaulted student loans. Defaulted student loans are transferred through several collection agencies; therefore, don't be angry or upset as the transfer of debt to various collection agencies always occurs.

[notasailor]

I got back in contact with the original company that I called and was able to speak with someone. She informed me that the lowest she would be able to go over the phone would be $315 for the next months, which simply isn't feasble. So she is sending me papers to make the monthly payments more doable since I have limited income right now.

 

In the meantime, she suggested I start paying whatever payments I think I would be able to make for the next 9 months while I wait on the paperwork to come. Honestly, that would be about $50 right now until my work starts picking up. Should I start paying, even if it is just that small amount? I mean, $50 a month is better than nothing!

[hodap2001]

For Rehabilitation, I recommend you get everything in writing. You can still send in voluntary payment of $50.00; however, that will probably not go towards the goal of Rehabilitation.

 

I strongly recommend that you go over your monthly budget to see what can be cut out for the the next 9 months. What household expenses can cut or reduced? i.e. Cable, Internet, Phone, Subscription Services Starbucks,etc. I know this is a lot to ask of during a very tough economy (believe me, I know the realities of this economy and how hard it is to stretch a dollar more than most people can comprehend). The Financial Information sheet they will be sending you will help you in determining what can be cut or reduced during your Rehabilitation Period to ensure your loans get out of Default and then you can consolidate them into an IBR program.

 

IF all else fails, you can consolidate right now; however, you will have a Defaulted Paid Collection on your credit profile for the next seven years. Its up to you.

 

Good Luck!

[notasailor]

Thanks for all the help! I would pick this time to man up and start looking after my finances considering all the expenses that we have coming up in the next few months. We will get it figured out somehow, I am sure! We will just have to wait to have kids for a few more years.

 

Thank you again, I really do appreciate all the help!

[hodap2001]

Your most welcome and best of luck to you and thank your husband for his service to the country!!!