How to Get a Second Chance When I Have Defaulted Student Loans

Defaulting on student loans results in severe consequences, including damage to your credit rating and an inability to obtain future loans. Receiving a second chance after default is possible, but you must take advantage of government programs that enable you to bring your loan out of default to qualify for new loans. Typically, a student loan enters default status 270 to 360 days after your first late payment, according to FinAid. Until you resolve the default with the lender, the lender can turn the debt over to a collection agency, sue you for payment, garnish her wages after receiving a court judgment and attach your tax refunds. You cannot qualify for new student loans until you resolve the default.

Instructions

1

Contact the United States Department of Education's Default Resolution Group at 800-433-3243 to obtain the name and contact information of the agency holding your loan if you do not know.

2

Call the lending agency and inform an agency representative you want to rehabilitate your loan. Rehabilitating your loan stops any garnishments and tax refund withholding. Successful rehabilitation entitles you to qualify for forbearance or deferment and enables you to qualify for future student loans.

3

Negotiate with the lender on your payment amount. By law, lenders do not have a minimum amount they are required to charge, as the rules of rehabilitation only specify that the amount must be fair to the lender and affordable for you.

4

Make at least nine payments. You must make the payments over a 10-month period and be no more than 20 days late on any.

5

Order your credit report after exiting rehabilitation to confirm that the lender removed the default status notation from the loan.