If you have student loans that are in collection, you probably already know how difficult this can be. Unlike most loans, they cannot be included in a bankruptcy. In addition to this, the government is very likely to garnish your wages and siege any income tax refunds that you have coming due. For this reason, student loan default is not something that you can simply ignore.
Fortunately, the government has many plans in place to make it easier for you to pay them. Before your loan is in default, you may be able to defer the loan or apply to have the loan placed in forbearance. There are also income based repayment plans that are available.
Once your loan is already in default, the flexibility with some of these programs goes away. Luckily, you may still be eligible for student loan rehabilitation.
What is Student Loan Rehabilitation?
Student loan rehabilitation is an agreement that you enter into with your student loan provider. You agree to make 12 monthly payments of a set amount in a timely manner. In exchange for this, they agree to take the loan out of default and delete the negative credit history associated with the account. You want to make sure that you get everything in writing up front – some of the collection companies that purchase the accounts will try to avoid removing the negative credit history associated with the account. Obviously this is not what you want!
How Do You Get into the Program?
To begin the student loan rehabilitation process, you will need to call the lender or collection agency that currently owns you account. Once you do, let them know that you are interested in rehabilitating the loan. You may need to speak to someone that works at a level above the first person you speak with who understands the rehabilitation program. Once you are in communication with the right person, ask them to fax you an agreement in writing. Then, after 12 months you loan will be back in good standing and you will be well on your way through the credit restoration process.
