What to do when your have defaulted on your federal student loans ?
Get your Student loans into the Loan Rehabilitation program , this helps to get your Federal student loans out of default, and will actually get your student loans back into good standings, please watch the video below for more details.
Delinquent Student Loans and what to do?
Stay out of default don’t let Student loans ruin your credit and blinten your future .One way to get out of default is to repay the defaulted loan in full, two main ways to get out of default are loan rehabilitation program. While loan rehabilitation takes several months to complete, you can also quickly apply for loan consolidation through your servicer. However the rehabilitation program provides certain benefits that are not available through loan consolidation, once enrolled for a loan rehabilitation you can stop and prevent garnishment which is a 5-6 months process and 9 months to get out of the defaulted status, once your out of default your loan will be back into good standings which will also reflect good standing on your credit report.
If you rehabilitate a defaulted loan, the record of the default will be removed from your credit history. However your credit history will still show late payments that were reported by your loan holder before the loan went into default. The reason for this is because you loan have been delinquent on payments over a period of 290 Days, meaning that your credit report as a derogatory reading.
You will need to provide documentation of your last three monthly income and expenses, depending on your individual circumstances, this alternative payment amount may be lower than the payment amount you were initially offered, unless you make three voluntary, on-time full monthly payments on a defaulted loan before you consolidate it, your choice of repayment plans for the new Direct Consolidation Loan will be limited to one of the income-driven repayment plans. If you make three voluntary, on-time, full monthly payments before getting back the loans into good standings, you can choose from any of the repayment plans available in the (IDR) Income Driven Repayment plan for loan borrowers.
When your loans are turned over to a collections agency after a default, all associated collections fees are added to your total balance,then your balance increases. In fact, “the entire unpaid balance of your loan and any interest you owe becomes immediately due,if the loan still isn’t paid, federal loan agencies can garnish a portion of your paycheck, typically up to 15 percent, after a 30-day warning. Your tax refund can also be withheld.
According to the U.S. Department of Education, a loan becomes delinquent the first day after you miss a payment and will remain delinquent until the past-due balance is repaid or your payment plan is adjusted. After 90 days past due, the delinquency is reported to the three major credit bureaus.
After 290 days, the loan goes into default,when a loan defaults it drastically damages your credit leaving a derogatory reading, affecting your ability to purchase a car or put a down payment on an home. The late payments and default will stay on your credit report for years,the only way you can get the default off your credit report is to complete a loan rehabilitation for your federal loans.
Also after default, you also lose eligibility for deferment, forbearance and loan forgiveness, as well as other benefits, like choosing your own repayment plan and eligibility for additional federal aid. Your school could also withhold your academic transcript, and you could lose the ability to purchase or sell assets such as real estate.