Dealing with Defaulted Student Loans

If you're a Doctor seeking financing to grow your practice, you may find your credit report riddled with defaulted student loans negatively affecting your credit score. That's one reason we have invested heavily in researching regulations, credit laws, and credit scoring models to assist you in optimizing your credit scores.

So although it may feel as though you're drowning in a sea of student loan debt, we may still be able to help you with strategies to optimize your credit scores.

Defaulted Student loans can be very difficult to deal with because they are not treated as ordinary debts when it comes to debt collection practices. Most student loans are not dischargeable in bankruptcy and can remain on a consumer's credit report indefinitely. Many Doctors are surprised to learn that prior to 2005, private student loans were actually dischargeable in bankruptcy. But The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 changed all of that. Now both government and private funded loans are generally not dischargeable in bankruptcy.

Also, Doctors like many consumers oftentimes are simply not aware of how to navigate the troubled waters of the student loan collections process. As a result, they often wind up in "Student Loan Default Hell". We know the last thing a busy Doctor wants to deal with is threatening collection calls from Lenders, Servicers, and even Private Collection Agencies collecting on behalf of the Government.

So a critical component of our credit consultation services includes strategies for helping Doctors to deal with defaulted and delinquent student loans on your credit reports. There's a lot to consider when dealing with defaulted student loans.

First of all, you should know that generally, student loans are divided into either Government Loans or Private Loans. Private loans are student loans provided from private lenders like banks or credit unions. Government loans are either Direct Student Loans funded by Government entities directly or guaranteed by the Government. In which case the Government will guarantee the payment of the loan and/or provide other benefits in the event of default or deferment.

The most popular type of Government guaranteed loan program is the Federal Family Education Loan Program (FFEL). However, as of June 2010 the FFEL program was completely cancelled.

The reason it's important to know the various types of student loans, is because there are various remedies available to you depending upon which type of student loan you may have. Generally, student loan remedies fall into one of these basic categories:

  • Student Loan Deferment/Forbearance
  • Student Loan Consolidation
  • Student Loan Rehabilitation
  • Student Loan Cancellation
  • Student Loan Compromise (Debt Settlement)

If you're not sure of what type of Government student loans you have, you can find out at the National Student Loan Data System (NSLDS) website.

Also, one of the little known credit optimization tips for dealing with defaulted student loans is the Student Loan Rehabilitation program. If you can qualify, after 9 to 10 months of timely payments, the negative defaulted student loan status is completely deleted from your credit reports. We have used this program to help many of our clients to legally improve their credit to qualify for financing.

So, if you're facing defaulted or delinquent student loans, schedule a Credit Check Up today.

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