Greetings,

I've got some questions about rehabbing a student loan. I've defaulted on approximately $19,000.00. I'm presently in a financial position to take care of my mess. With rehabilitation, I've heard people getting an immediate penalty of 15-20% of the defaulted amount tacked on to their amount owed. Is this true? Is there a way to negotiate on this? Also, before defaulting, my monthly payments were just under $200.00. I can now afford that, but no more. Is this something that can easily be negotiated? I've heard people talk about money down and $500+ a month payments. OUCH!

In addition, I realize after the 12 months of on time payments you're out of default. This should come off of your credit reports. I talked to an attorney who said he's had success on getting the default status removed from the reports within 5 months if not immediately after entering rehabilitation. Does this sound legit to anyone?

Should I reahb through the latest collector (sallie mae owns them) or can I go to the DOE who gurantess them....I've heard the DOE removes all negs from your credit report when out of default. Perhaps sallie mae collection does fall under the DOE?

Lastly, would I be better off negotiating this on my own or do you think this attorney (he's negotiating my credit card payoff also) should do the legal dance for me?


Thnx


GREAT BOARD!!!!

stratus

First let me welcome you to the Student Loan Forum. Here, the education never stops and it is free. No additional student loans required.


fla-tan
Forum Moderator

FLA-TAN


Thnx for the info!

Another question,

These "collection charges" of 20%, are they to be paid immediately or are they tacked on to the balance of the loan?


Stratus

They're tacked on to the balance. When you finish rehab, some of that (I don't know what the guidelines are, so I don't know the exact amount -- it might be all of it, but it could also be just sometimes) is taken off. As an example, after my last rehab payment, my amount due was about $84,000 (law school loans -- ick!!), but, the amount that was transferred over to the consolidation lender was only about $76,000. They removed
the rest of it, which I think was the collection costs/penalties.

As far as figuring out an "affordable" amount, it's just negotiating with the CA. You'll probably have to fill out some sort of financial information form giving them info about your expenses, income, etc., but in my case, which may not be typical, I filled it out after they'd already agreed on a payment, so it was just a formality. I do know that some did have to fill it out before they would agree to an amount. Just fill it out as honestly -- and completely (don't leave any expense out) -- as you can and it will work out.

Good luck!! Like Fla-tan said, you don't have to pay more than you can afford. You should be fine. Just make sure that you make every one of those 12 payments and make them on time or else you have to start the whole thing all over again.