Rehabilitate Defaulted Loans to Restore your credit rating
by Lisa Phillips
by Lisa Phillips
The borrower and lender must agree upon a reasonable payment plan and the borrower will
have to sign a loan rehabilitation agreement. In most cases, the loan will be rehabilitated after
9 or 12 consecutive payments have been made. The default status will be removed and the
credit bureaus will be notified that the loan is in good standing. Any negative entry will be
deleted.
Here is how it works for the various types of Loans:
Direct Loan:
To rehabilitate a Direct Loan, you must make at least nine (9) full payments of an agreed
amount within twenty (20) days of their monthly due dates over a ten (10) month period to the
U.S. Department of Education (Department). Payments secured from you on an involuntary
basis, such as through wage garnishment or litigation, cannot be counted toward your nine (9)
payments. Once you have made the required payments, your loan(s) will be returned to the
Direct Loan Servicing Center.
FFEL Loan:
To rehabilitate a FFEL, you must make at least nine (9) full payments of an agreed amount
within twenty (20) days of their monthly due dates over a ten (10) month period to the
Department. Payments secured from you on an involuntary basis, such as through wage
garnishment or litigation, cannot be counted toward your nine (9) payments. Once you have
made the required payments, your loan(s) may be purchased by an eligible lending institution.
Perkins Loan:
To rehabilitate a Perkins Loan, you must make twelve (12) on-time, monthly payments of an
agreed amount to the Department. Payments secured from you on an involuntary basis, such
as through wage garnishment or litigation, cannot be counted toward your twelve (12)
payments. Once you have made the required payments, your loan(s) will continue to be
serviced by the Department until the balance owed is paid in full.
For more information on Student Loan Rehab check the Department of Education's website
(www.ed.gov).
If for some reason you are told by your lender that you cannot rehabilitate your loans contact
the U.S. Department of Education's Ombudsman (www.ombudsman.ed.gov). The Ombudsman
office can help:
have to sign a loan rehabilitation agreement. In most cases, the loan will be rehabilitated after
9 or 12 consecutive payments have been made. The default status will be removed and the
credit bureaus will be notified that the loan is in good standing. Any negative entry will be
deleted.
Here is how it works for the various types of Loans:
Direct Loan:
To rehabilitate a Direct Loan, you must make at least nine (9) full payments of an agreed
amount within twenty (20) days of their monthly due dates over a ten (10) month period to the
U.S. Department of Education (Department). Payments secured from you on an involuntary
basis, such as through wage garnishment or litigation, cannot be counted toward your nine (9)
payments. Once you have made the required payments, your loan(s) will be returned to the
Direct Loan Servicing Center.
FFEL Loan:
To rehabilitate a FFEL, you must make at least nine (9) full payments of an agreed amount
within twenty (20) days of their monthly due dates over a ten (10) month period to the
Department. Payments secured from you on an involuntary basis, such as through wage
garnishment or litigation, cannot be counted toward your nine (9) payments. Once you have
made the required payments, your loan(s) may be purchased by an eligible lending institution.
Perkins Loan:
To rehabilitate a Perkins Loan, you must make twelve (12) on-time, monthly payments of an
agreed amount to the Department. Payments secured from you on an involuntary basis, such
as through wage garnishment or litigation, cannot be counted toward your twelve (12)
payments. Once you have made the required payments, your loan(s) will continue to be
serviced by the Department until the balance owed is paid in full.
For more information on Student Loan Rehab check the Department of Education's website
(www.ed.gov).
If for some reason you are told by your lender that you cannot rehabilitate your loans contact
the U.S. Department of Education's Ombudsman (www.ombudsman.ed.gov). The Ombudsman
office can help:
- Resolve discrepancies in loan balances and payments.
- Understand interest and collection charges.
- Rehabilitate loans by establishing satisfactory repayment plans.
- Defer or discharge loans.
- Resolve issues related to income tax refund offsets, default status, consolidations,
bankruptcies, service quality, and other customer concerns.
| Copyright RebuildCreditScores 2008. All Rights Reserved |
 |  |  |  |  |  |  |  |  |  |
There is a remedy, one that will not only
restore your credit rating but also stop any
wage garnishments or IRS income tax refund
withholding.
Rehabilitating your student loans means you
will no longer be in default and the default
status reported by your lender to the credit
bureaus will be deleted.
Your eligibility status will also be rehabilitated
and the same benefits available on the student
loans will return. Any and all attempts to
garnish your wages or withhold your income
tax refund will cease.
restore your credit rating but also stop any
wage garnishments or IRS income tax refund
withholding.
Rehabilitating your student loans means you
will no longer be in default and the default
status reported by your lender to the credit
bureaus will be deleted.
Your eligibility status will also be rehabilitated
and the same benefits available on the student
loans will return. Any and all attempts to
garnish your wages or withhold your income
tax refund will cease.
Rehabilitate your student loans. Student loans do not go away. Even if you are able to dispute
them on your credit report, they may be deleted, but it's only a matter of time until they find their
way back to you.
them on your credit report, they may be deleted, but it's only a matter of time until they find their
way back to you.
 | Apply for easy credit to Raise Scores | |
| Tips to Rebuild & Improve Credit Scores | |
| 10 Steps to Build Business Credit | |
| Rapid Re-Score Credit Files | |
Related Topics
More Resources
Student Loan Forgiveness. You may be eligible to get your entire student loans
forgiven and never have to pay back one dime.
Student Loan Consolidation. Learn the benefits of consolidating student loans.
Disputing information on your credit files
Tips for Disputing Negative information in your credit files.
Debt Validation
How to halt the collection process by requesting a collection agency to validate
your debt.
forgiven and never have to pay back one dime.
Student Loan Consolidation. Learn the benefits of consolidating student loans.
Disputing information on your credit files
Tips for Disputing Negative information in your credit files.
Debt Validation
How to halt the collection process by requesting a collection agency to validate
your debt.
