So if your student loans have been sent to a debt collection agency, here are five things you can do to get back on track.
- Dispute the debt. First, ensure that the information the debt collection agency has is accurate.
- Settle your debt.
- Pay the amount owed.
- Consolidate your loans.
- Declare bankruptcy.
What happens when your student loan goes to collections?
If your student loans end up in collection, it’s because you’ve defaulted on them. Student loans go into default if you haven’t made payments on your loans for 270 to 360 days. Once this happens, the balance of your loan is due immediately. This is commonly known as “acceleration.”
How do I get out of defaulted student loans?
You have three options for getting out of default: loan rehabilitation, loan consolidation, or repayment in full.
- Loan Rehabilitation.
- Loan Consolidation.
- Repayment in full.
- Enroll in an income-driven repayment plan.
- Consider setting up automatic payments.
- Track your loans online.
- Keep good records.
Do student loans go away after 7 years?
Normally, a defaulted debt will fall off a report after 7.5 years from the date of the first missed payment. A defaulted federal student loan, older than 7 years may not appear on a credit report. However, because there is no Statute of Limitations, collections can and will continue.
What is DMCS FSA collections?
The Debt Management and Collection System (DMCS) is the largest component of collections within Federal Student Aid. It provides a vehicle for the storage, retrieval, and editing of debtor information. Payments on defaulted accounts are processed through the National Payment Center (NPC) as part of this system.