Student Loan Rehabilitation In a nutshell...you can resolve your default by rehabbing your student loan. This requires 9 on time monthly payments for Stafford/GSL loans and 12 on time payments for Perkins/NDSL loans. Standard payments to qualify for rehab is a 1% payment. If you cannot afford this payment, the Higher Education Act permits you to ask for a "reasonable and affordable payment". Generally you must supply whatever supporting documentation they ask for...pay stubs, financial statement. Defaulted Direct Loans will generally waive the collection costs upon completion of the rehab. FFELP lenders will not. http://www.ed.gov/offices/OSFAP/DCS/rehabilitation.html
Administrative Wage Government Rules If you receive a notice of AWG, you MUST return the paperwork within 30 days of the date on the letter. Call the CA to set up a payment plan to avoid AWG, but still return the paperwork. http://www.ed.gov/offices/OSFAP/DCS/awg.html
Direct Loan Consolidations Direct Loans is the only program that offers "Income Contingent Repayment Plans". FFELP consolidating lenders only have to offer "income sensitive"...these are not the same. This program will also write off any balance remaining after you have been in repayment for 25 years. http://loanconsolidation.ed.gov/
Student loan Ombudsman The student loan Ombudsman is available to assist you if the CA or guarantor is not following the rules set forth in the HEA. You should not be contacting just because you don't want to deal with the CA assigned to the account or the payment is not what you want to pay vs what you can afford to pay. They will not intervene in FRCA issues nor can they assist with private loan matters. http://www.fsahelp.ed.gov/about/about.html
HEA Link affecting FRCAhttp://www.ed.gov/policy/highered/leg/hea98/HR6.pdf Notwithstanding paragraphs (4) and (6) (FOOTNOTE 1) of subsection (a) of section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c(a)(4), (a)(6)), a consumer reporting agency may make a report containing information received from the Secretary or a guaranty agency, eligible lender, or subsequent hold regarding the status of a borrower's defaulted account on a loan guaranteed under this part until - (1) 7 years from the date on which the Secretary or the agency paid a claim to the holder on the guaranty; (2) 7 years from the date the Secretary, guaranty agency,eligible lender, or subsequent holder first reported the account to the consumer reporting agency; or (3) in the case of a borrower who reenters repayment after defaulting on a loan and subsequently goes into default on such loan, 7 years from the date the loan entered default such subsequent time.
By signing up a debt counseling session, your provided details (Name, Email ID and Phone No.) will be forwarded to the company advertising on the DebtCC. However, you have no obligation to use their services.
Some creditors and collection agencies refuse to lower the payoff amount, interest rate, and fees owed by the consumer.
Creditors/collection agencies can make collection calls and file lawsuits against the consumers represented by the debt relief companies.
Debt relief services may have a negative impact on the consumer's creditworthiness and his overall debt amount may increase due to the accumulation of extra fees.
The amount which the consumer saves with the use of debt relief services can be regarded as taxable income.