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Posts Tagged ‘collection accounts’

I filed for bankruptcy in 2001. What do I need to do to get my finances back on track?

Q: I Filed a Chapter 7 in 2001. I Have a Couple of Other Things on My Credit. Where Do I Need to Start to Get My Credit On the Right Road?

A: A Chapter 7 Bankruptcy filing from 9 years ago is still on your credit records and thus impacts your credit rating. But frankly, it should have a limited overall impact on your credit ranking, given the long-ago time frame of your bankruptcy. Fortunately in another year or so, that bankruptcy will be dropped from your credit reports. In the meantime, the best thing you can do is to focus on paying all your bills on time and trying to clean up those other things on your credit you mentioned. If you have fairly recently collection accounts or late payments (i.e. within the past two years), try to bring them up to date. Reduce your credit card debt (if any) because that will almost certainly boost your credit score. Also consider getting a secured credit card, if you’re not able to get a regular credit card. That secured card is a good way to rebuild credit after you’ve had credit problems in the past.

Can I remove a medical dispute from my credit report?

Author: The Money Coach

Q: My Credit Report Has Three Medical and Hospital Delinquencies that are Being Reported as of 2006 – 2011. However, These Alleged Charges for Which I Have Always Disputed Were From the Years 2002 and 2003. Can These Charges and Reporting Be Removed From My Current Credit Report?

A: In a word: yes, those old, alleged medical and hospital delinquencies can be removed from your credit report, but it will likely take some focused work on your part to get them eliminated. Sometimes, medical collection accounts show up on a credit report even after 7 years if a person has paid monthly payments on the debt or has somehow “reactivated” the account by giving lump sum payments, partial payments on settlement payments to get rid of creditors. In your case, you may not have done this, since you said you’ve always disputed the debts. Nevertheless, be aware that a medical bill alleged to be past due might take a year or so (could be more time; could be less) before it’s reported as a collection account. If you had a hospital bill they claimed you owed, from 2003, and it wasn’t reported to the credit bureaus until 2004, that information would remain on your credit report until at least 2011.

Here’s what to do: if the debts are, in fact, more than 7 years old, simply dispute them online at Equifax, Experian and TransUnion. When you specify a reason for your disputes, state that the debts are outdated. If you get nowhere with the credit bureaus, write to the hospital or medical institutions in question directly. Let them know that they are violating the Fair Credit Reporting Act by reporting a debt that is more than 7 years old, and issue a firmly-worded letter insisting that they cease and desist all such reporting to the credit bureaus.

My Student Loan is In Collection. What Steps Can I Take To Remedy This Situation?

Author: The Money Coach

Q: My Student Loan is In Collection. What Steps Can I Take To Remedy This Situation?

A: You did not state whether you are struggling with federal student loans or private loans. Whatever the case, I believe the article I’ve written below answers your question about how to handle student loans in collection. Essentially, you have four options:
•           Consolidate the loan(s)
•           Enter a loan rehabilitation program;
•           Pay the loan(s) off completely
•           Get the loan(s) totally discharged or canceled
Read on for more details about each of these alternatives, and to discover how to fix other common problems associated with having delinquent/defaulted student loans.

How to Fix Defaulted Student Loans and Wage Garnishments

In this tough economy, an increasing number of college graduates (and college drop-outs) are falling behind on their student loans. According to the Department of Education, federal student loan defaults were up to 6.9% in 2009, well above their 2008 of 5.2%. For those carrying private loans, defaults hit 3.37% in 2008 versus 1.47% in 2006, according to Sallie Mae, one of America’s largest providers of private loans.

As you probably already know, defaulting on a student loan is a very serious matter. A federal college loan falls into default status if you are supposed to make monthly payments, but have not done so for 270 days. For those whose student loan payments are less frequent, a default occurs once you haven’t made payments for 330 days. In either case, the government has the right to take your federal tax refund check or garnish up to 15% of your disposable pay in order to collect on a defaulted federal student loan. Defaulted student loans also negatively impact your credit.
Appealing a Wage Garnishment

The good news is that you can appeal a wage garnishment and request a hearing on the matter in order to demonstrate why it is that you can’t afford that the payments and wage garnishment your lender or guaranty agency is seeking. The U.S. Department of Education Debt Collection Services Office (DCS) holds the hearing after you fill out a “Request for Hearing” form regarding your wage garnishment, and send it to the Department of Education. Find the document online at: http://www.ed.gov/offices/OSFAP/DCS/forms/Request.For.Hearing.pdf
Your hearing can be done in-person, over the telephone, or in writing; the choice is up to you.

IMPORTANT NOTE: When you submit your Request for Hearing, make sure you also send another EXTREMELY IMPORTANT document. It is the “Financial Disclosure Statement,” a 3-page document in which you must document your income and itemize all your expenses. Here is a link to the document online: http://www.ed.gov/offices/OSFAP/DCS/forms/fs.pdf. This “Financial Disclosure Statement” form will be critical in the hearing/appeal process, and will be closely evaluated, so take the time to carefully list all your bills, and provide copies of those bills as requested. On page 3 of the Financial Disclosure Statement, you will notice a line that says:
“Based on this Statement, I think I can afford to pay $               per month.” This is where you have an opportunity to essentially offer a counter-proposal to the Department of Education about your student loans. Regardless of what you’ve been asked to pay in the past, here is where you should realistically evaluate your budget and come up with a number that you can undoubtedly pay (without a huge financial strain) month after month.
The Department of Education will make a decision about your case within 60 days after your hearing. But in the meantime, any wage garnishment that has already started will continue to be in force.
Four Options to Cure a Defaulted Student Loan
Now, in order to get your student loan(s) out of default, you have four options:
•           Consolidate the loan(s)
•           Enter a loan rehabilitation program;
•           Pay the loan(s) off completely
•           Get the loan(s) totally discharged or canceled
The last two are probably not realistic options. I know you don’t have the money to pay off the loan(s). That’s why you’re in this predicament; and loan cancellations are rare (though they can be obtained). You’ll likely have to “rehabilitate” your loan(s) or consolidate.
Should You “Rehabilitate” Your Loans or Consolidate?

Before you can consolidate, you have to bring your loan(s) out of default status. You do this by making just three monthly payments — on time, and in any amount that you and your lender agree upon. To find out if you qualify for loan consolidation, contact the Federal Direct Consolidation Loan Info Center at 800-557-7392 or go online to http://loanconsolidation.ed.gov.

If you call, the staff there should be able to tell you what your monthly payment will need to be for those three months while your loan is in repayment. The one drawback to consolidation is that your credit remains tarnished. Even though your loan will be paid off and listed as “paid in full” on your credit report, you’ll get a new loan through consolidation and that previous default still shows on your credit report for seven years.

An alternative, to fix your credit, and have all past negative information about your student loans completely deleted from your credit file is to go through loan rehabilitation:

In a nutshell with rehabilitation you make 9 or 12 on-time payments on your student loans in an amount you can afford. You make nine monthly payments on Direct Loans and Federal Family Education Loans, or 12 monthly payments on Perkins Loans. This, in my opinion, is the preferred route as it will help you restore your credit in a big way, so your past default won’t haunt you for years to come.
For more details about various alternatives to cure your student loan delinquency, check out the Department of Education’s guidebook called “Options for Financially-Challenged Borrowers in Default.” Here is a link to the guide online: http://www.ed.gov/offices/OSFAP/DCS/forms/2004.Borrower.Options.pdf

Get Help From an Ombudsman

Additionally, you should know that if you ever have a dispute with your lender or loan services about anything related to your federal student loans, there is a government agency that may be of assistance in resolving that dispute. It’s called the Federal Student Aid Office of the Ombudsman (http://www.ombudsman.ed.gov). Always try to work things out first with your lender by using this online “Self Resolution Checklist” from the Ombudsman’s office: http://ombudsman.ed.gov/resources/toolschecklists/selfresolution-checklist.html. But let’s say you think your loan was mistakenly placed in default by your lender – maybe you were in school at least half-time, you had a loan deferment or forbearance, or you actually made payments on your loan – and you can’t get a satisfactory resolution of the issue, then it’s time to reach out to the Ombudsman’s office.

Here is a link to the section of the Ombudsman’s website that gives you more information about handling defaulted student loans: http://ombudsman.ed.gov/loandefault.html. Also, this link gives you more info about wage garnishments: http://ombudsman.ed.gov/garnishment.html.

No matter what economic challenges you’re facing, you don’t have to live with wage garnishments and blemishes on your credit report because of defaulted student loans. Reach out for help today, and start the process of turning that college debt problem around.

Ask The Money Coach

Posts Tagged ‘collection accounts’

I filed for bankruptcy in 2001. What do I need to do to get my finances back on track?

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Can I remove a medical dispute from my credit report?

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My Student Loan is In Collection. What Steps Can I Take To Remedy This Situation?

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