Instead of paying student loan in lump sum, should i plan it
My private student loan company refused to allow me to rehabilitate the loan in any way other than my paying the third-party collections agency it had been sent to. The collections agency offered me a settlement of $10,500 ($2K less than the loan amount), which I paid them three months later when my mother's life insurance paid out.
A Federal Perkins loan was in default and I was offered the option to consolidate it with my other remaining loans. This would allow me to be eligible for further Federal financial aid within months rather than after a year. So I consolidated the remaining loans.
Now my remaining student loans are consolidated and in deferment again (due to my being back in school). I have also paid my two credit cards off, and paid off the outstanding medical debt that I had.
My question is essentially, instead of paying the private loan off in a lump sum, should I have insisted on a payment plan (at a very high interest rate) and paid it off over a year to show timely payments? Will that defaulted loan negatively affect my credit report for the next seven years? I do have correspondance to the effect that my debt would be paid in full after the $10500 payment; is there something else I should have gotten in writing, or something I should write them for now?
[quote=sarafist]My question is essentially, instead of paying th
[quote=sarafist]My question is essentially, instead of paying the private loan off in a lump sum, should I have insisted on a payment plan (at a very high interest rate)
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If you had opted for a repayment plan over 1yr with high interest rate, you could not save $2000 what you did.
As per as your credit report is concerned, timely payments help to improve your score, but it seems that you have an agreement with the collection agency already and your account is going to be reported as ???paid in full'. It sounds pretty good.
Once you pay $10,500 to them, check your credit report for the status of the said account. If you find any discrepancy at that time, contact the collection agency with all the agreement papers. You can also file a consumer dispute with the credit bureaus.
Bryan
Did I do the right thing?
I was in a similar situation like sarafist. The collection agency told me that if I pay a lump sum they will report it as paid to collection. But I went for rehabilitation, though the installments were high. The loan is rehabilitated now and my report is showing it current.
Now my question is did I do the right thing? Or I should have paid the whole amount and saved some money?
student, Paid to collection clearly reflects that your loan w
student,
Paid to collection clearly reflects that your loan was defaulted and sent to collection agency. So creditors might not accept it as a positive sign.
It's true that you're paying more by going for rehabilitation, but your credit report is improved and you are ready to get a good score also. Needless to mention that credit score is an asset and we should take care of it.
In my opinion, you took the right decision. You could also go for consolidation. It has lots of advantages also.