If you’re student loans are in collections, you possibly ended up there because you didn’t make payments on your loan on time or stopped making them all together. Student loan collections could be daunting and complicated. The good news is that you will find some ways to get out of that situation and stay out. Some of these include rehabilitation, student loan consolidation or catching up on payments quickly.
Getting Out of the Collections
Is your loan already in collections? Well, you need to do something about that. You are aware that your debt won’t just vanish, and student loan collections associations will not stop calling only because you snub them. You need to keep in mind that it takes some effort on your part. Nevertheless, you can get that loans out of collections as well as default status.
Step #1. Consolidating Your Student Loans
Did you know that consolidating the federal student loans is the simplest and fastest way to get out of default? It will also stop your student collection agencies from calling you. You see, consolidation lumps all of the federal loans, and that includes your defaulted federal loans into one bigger loan.
The loans are beyond default at the time you consolidate them. That’s a federal program made to offer individuals another chance. The good thing about it is that it won’t cost you anything and, normally, it takes one to three months from beginning to end depending on how you apply, either online or by paper.
Take note that a federal consolidation is an excellent option. However, it’s not an option for you when you:
- You’re in active wage garnishment and
- You have a Direct Consolidation
What if you’re not able to consolidate the loads for either of these reasons? There’s only one solution. You must opt for student loan rehabilitation.
Step #2. Calling your lender
Keeping open communication along with your student loans collections agencies or lender will make the whole process stress-free for you. You must learn to determine your current student loan balance as well as your servicer. In this process, you need to search for information regarding the federal student loan history and the existing local holder.
You must get in touch with your loan holder and request some information about your options. You can also look for the contact details for the collection’s agency.
If dealing directly with your lender has caused you numerous headaches already, contact the Student Loan Advisory Group to help aid you in the process of getting your student loans out of default.
Step #3. Catching up on your payments
If you catch up on your payments quickly, there are more chances that you will get out of your default status. Start by resuming your monhly payments and including additional payments to cover what you owe. Your lender or the Student Loan Advisory Group can help you with this.
Are you still having a difficult time to make payments under the old repayment plan? Why don’t you take into consideration shifting to another federal student loan repayment plan?
Step #4. Rehabilitating the Student Loans
In case you didn’t know yet, student loan rehabilitation is composed of setting up a payment plan together with the Department of Education. The objective here is to come up with an equally agreed upon plan which is cost-efficient for the borrower.
When you make nine on-time voluntary monthly payments in ten months, that’s the time you could rehabilitate your loan. That would take it out of the default status and prevent the collection calls.
Under this category, your payment could be as less as $5 every month. Nonetheless, you might need to spend some more than that on your loan every month. That’s because involuntary payments gathered by tax offset might continue throughout your ten months rehabilitation time. When this takes place, they’ll take a break on collection actions after you make some of your voluntary payments.
Typically, you must resort to student loan rehabilitation when your federal student loan consolidation isn’t a viable option. You see, rehabilitation is considered a one-time deal as well. You can’t rehabilitate a defaulted loan for a second time.
Why and How Did You End Up in Collections?
You might be asking yourself now how your student loans ended up in collections. Well, student loans could end up in collections right after you default on them. Take note, every loan in a collection is in default. However, not every loan in default is in the collection. Meaning? You could get yourself out of default before the loans get delivered to collections.
Furthermore, the student loans tend to end up in default when you didn’t make payments for a very long time. It could be between 180 and 270. But you will find some loans that enter default after single or two missed payments.
If you’re currently on the default status, your whole loan balance might be raised and all due at once. There’s no more monthly payment loan or plan term.
The defaulted loans come into collections after you didn’t make the lump sum payment or make an arrangement along with your lender.