Hello all, I am a newbie and have a situation that I don't know how to deal with. Recently, I was contacted by Pioneer Credit Recovery about my defaulted loans from Sallie Mae. They sent me paperwork to consolidate these loans and said that I had 7 days to get back to them. They said that if I consolidate they will put on my credit report that the loans are paid while I'm making payments on the consolidation. I've been reading that rehabbing my loans may be better then consolidating right now but I'm currently in between jobs so I don't have much/any money that I could send right now. Could anyone tell me what would be my best plan of any action? TIA


My apologies right away if this has been discussed on this board?

More people will post if you can give out some more information such as the total amount of money you owe.

If you consolidate prior to rehabbing, the negative info will stay on your credit reports for 7 years. It will show that you are paying, but the negative stuff will remain. If you have a balance over $1,000, you can rehab. You will be required to make 12 consecutive on time payments that are reasonable to you. If you are unemployed tell them that and see if you can't do a payment of maybe $100-200 a month(you will have to provide some financial info). If Pioneer gives you a hard time, contact the ombudsman's office and they can step in and contact your lender and work out something you can afford.

Try to rehab; you can consolidate after rehabbing. The negative student loan info will impact the interest rate you pay on your existing credit cards, the amount you pay for car insurance, etc.

Definitely rehab first.

If you consolidate, you are paying off the old tradeline and creating a new one. Since you indicate that you cannot make payments even on a consolidation, you are just creating ANOTHER negative entry on your report. The old sallie Mae negatives WILL NOT go away unless you rehab.

Ok, I owe over 45,000 dollars on my student loans.

Note that you have to have the $1,000 (I think it's actually $1,500 for a few lenders, but $1,000 is the common one) remaining AFTER you make the 12 payments (the 12 payments aren't rehab; they're the process to get your loan rehabbed -- getting the loan re-insured, which is what happens after the 12 payments, is actually "rehab"). I think that's what you meant, but I read it the other way the first time, so just wanted to make it clear for everyone.

FYI -- Pioneer is very nice on the phone (at least they were with me), but, if you do rehab with them, MAKE SURE you say straight out to them "I want to rehabilitate this loan" and, if possible, get it in writing (they aren't required to give you a written confirmation, but it could help, if possible). They screwed me on rehab and I don't want the same thing to happen to someone else. I think my case was the exception, but it's still out there. Otherwise, I'll agree with everyone else -- rehab is definitely the option of choice, if possible.

Good luck!!

Okay, then my post about needing at least $1,000 AFTER the 12 payments won't be an issue for you, huh? And, don't worry about this being impossible -- after penalties and fees and everything, I owed almost 2x that amount and there are lots of people here with at least that loan amount who have rehabbed while unemployed (do a search for Cheech's posts on rehab -- she was unemployed during rehab and had at least as much as you did in loans -- I'm also fairly sure that she had Pioneer and it worked out fine).

Good luck!!