Getting Defaulted Studet Loans Rehabilitated
Posted on: August 28, 2008 by Matt
In addition to having a set of student loans in collections I also had several lenders holding my student loans in default. In order to start cleaning up the defaulted loans I contacted the lending institutions to work out payment plans. I discovered that several federal and state lenders offered rehabilitation programs. By making on time monthly payments for twelve months the loans would be placed back in good standing and the default removed from my credit report. This applied to the Federal Direct Loans as well as state based loans from VSAC (other states may have similar programs).
For the federal and state based loans that did not offer rehabilitation programs I looked for other options. I was able to secure a consolidation loan through Sallie Mae with some help from family cosigning that covered the other defaulted loans. The consolidation brought the loans into good standing and also reduced the monthly payment dramatically.
Finally, there were several items that could not be consolidated or rehabilitated and were privately held (similar to the larger loans in collections mentioned in previous posts). I was able to work out repayment agreements with most of the lenders. The remaining privately held loans were generally much smaller balances and I focused on repaying these items as quickly as possible. I paid the minimums for all items and began paying any extra cash available each month to the loan with the lowest balance. Shortly into this process I discovered The Total Money Makeover by Dave Ramsey. I read the book and began working with the suggestions he put forward. Within one year all of the smaller loans in collections were repaid.
At the end of the year my status had gone from defaulting with three lenders and having another three lenders in collections to having all the defaulted loans in good standing and only one lender remaining in collections. What had seemed like an impossible situation to climb out of was now becoming manageable.
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TagsCollections, Debt, Student Loans Filed Under: Debt, Debt Reduction, Student Loans
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