I defaulted on my ~50k SL a few years ago. found this board and got some advice. I made the 9 consecutive payments (of $1000.00) and at the end of that, asked NY HESC to consolidate my loan with Direct Loans. I specifically asked for Direct loans and they sent me an application which was already filled out for consolidation with direct loans. I signed that on 1/17/08.

I'm confused about the timing here, but at a certain point (must have been 1/8/08), I visited these boards again and was cautioned that I may not in fact have completed the rehabb process. in order to clean up the credit report, before consolidating I must sign a contracting stating that my loan was rehabbed.

here's the link if you're really bored: http://creditboards.com/forums/index.php?showtopic=308053

I called HESC and stated my concern. the HESC person faxed me a form to sign: "Acknowledgement of Debt for Rehabilitation of Defaulted Student Loans" which I signed and faxed back. it is dated on 1/8/08 -- so I must have signed it before I filled out the direct loans application.

so that's 1/8/08, I signed the form to acknoledge debt for rehabilitation and faxed it back.
1/17/08, I signed the application with direct loans and mailed it back.

The Next week I received a bill from direct loans telling me my new payment amount would be ~$230 and when and where to pay. Cool! I thought! finally a break!

shortly thereafter I received a notice from HESC dated 1/17/08, tht my loan has been sold to Affiliated Computer Service and that I would receive payment instructions later and tht they would report default status from my credit reports.

I notice that my credit report is now showing that HESC removed default status from my report. also direct loans is reporting as the new lender and is showing Pays as agreed.

meanwhile, I made february's $1k payment to HESC.

I now have a bill for monthly payments in the amount of $1k payable to "ACS" and a bill for $233/month payable to direct loans.

I phoned up HESC. they say they sold the loan on 2/22/08 to ACS.
I phoned up DL and they say they bought the loan on 1/18/08.
I phoned up ACS and they say they bought the loan on 2/22/08.

its not split up or anything - it's the same amount which is now about 37k. what should I do?

who should I be paying? I'm afraid if I dont pay DL, they'll report a late. also dont want to do business wth ACS if I dont have to, but looks like I have to. but where is the definitive answer?

and who got the money for that 1k february payment I made?
what to do?

I hope this is clear - i know its long.

From past experience, I would say that Direct Loans now owns the loan...their payment redated your rehab funding. You made the payments required to rehab your loan but you did not in fact complete the rehab program......completion consists of your loan actually being funded by the new lender. This is why I always say DO NOT submit a consolidation application until after your rehab has completed.

HESC and ACS will probably end up doing as refund. As for your credit, it should be adjusted. However because you did not allow the rehab to complete, HESC negative information will or should remain.

too bad HESC didnt let me know that rehabbing ends with a piece of paper for me to sign, instead of just letting me know about the 9 consecutive payments. guess the person on the phone was too eager to get the consolidation commission.

is there no way to fix this?

what I'm saying is that I signed the paperwork in the correct order, so how'd I get screwed? and what can I do about it, given your experience?

The rule is the funding date always takes priority.

Nothing you can do about it.

well guess what? I got a letter from direct loans letting me know that my new balance with them is 0. so things worked out great after all; my loan is, apparently, now rehabbed and sold off to the new company.

credit report looks cleaner, and score jumped up a bit too. my next move will be to attempt consolidation through the new people to try to get the payments down to a more realistic number I can handle.