Finally out of default!

For the past year I have been working to get my student loans out of default and on their way to being paid off. Well, I finally accomplished one of my goals: They’re now out of default!

Many years ago, I took out the student loans to pay for some additional courses I felt would help my husband’s small business. It was the first time, ever, that I had access to the copious amounts of money Sallie Mae was allowing me to borrow. Big mistake! I knew deep down that it wasn’t a good idea, that it didn’t make sense to borrow money on such few courses. But, I did it anyway.

For the first few years, I paid only the interest, a measly $30 a month. However, after that two-year honeymoon ended, the principle was due and it was three times the interest payments. At the time, I didn’t know you could refinance student loans.  I soon fell behind and the loans went into default.

Early this year, I realized I had to get my student loans in order. Everything else on my credit report was in good standing; all my credit cards were paid in full with out any late payments, all old debts had vanished from my report because they were over 7 years old (and I worked to have them removed), even my one judgment had fallen off (yes, this one was painful-ouch!). The last negative item on my credit report were my student loans.

Making that call to DCS (the federal collection agency) was the hardest part of the whole process. I don’t know why I didn’t do it sooner. The account representative worked with me to make it affordable and even allowed me to choose the due date. We set up direct debits so I was never late on a payment. That was the one requirement to getting the personal loans out of default, I had to make nine on-time payments before it would be considered in good standing.

Last month, I made my ninth payment. My husband called DCS and they confirmed that I was now in good standing. My loans are being transferred to AES and the payments will remain the same, only my first payment isn’t until the middle of December. (I actually received a one in a half month furlough while the loan is being transferred. That money is going into my savings account!)

My goal is to pull my credit report at the end of this year, or beginning of next, and hopefully see a big jump in my credit score! One of the requirements of my original 3-step plan.