Timothy J. Sierra, Attorney at Law Trusted Florida Bankruptcy Attorney Since 1987
Call Today For A Free Initial Consultation

Student Loan Law Series: Curing Default through Rehabilitation

In last week's blog in our series we discussed curing defaulted student loans through consolidation. However, consolidation is not always the best choice for someone facing default. Another solution to curing default is to rehabilitate defaulted loans. Thus giving that person renewed eligibility for new loans and grants.

Rehabilitation for loans for FFELs and Direct loans can be requested by a borrower after they have made 9 consecutive payments within 10 months. Borrowers still qualify for rehabilitation even if they miss one payment within the 10 month period, which can be made up in the 10th month. All payments have to be made separately; no two payments can be made on the same transaction. Along with the payments and rehabilitation application form, borrowers need to provide financial information to support "reasonable and affordable" payments amounts.

The "reasonable and affordable" payment amounts are based off of a document review of the borrower's financial circumstances: current income, current expenses, statement of unpaid balance of other student loans, etc. When deciding payment plans for rehabilitation the creditor must take into account the borrower's and the borrower's spouse's disposable income and their necessary expenses. From there an amount can be calculated and payment plans can be established.

Going through with rehabilitation does not mean that collection fees cease during this time. Collection fees will only stop if the rehabilitation agreement, signed by creditor and borrower, calls for a cessation. If there is not statement of cessation then the borrower will continue to pay collection fees; this can discourage borrowers from making payments when they still face collection fees throughout the rehabilitation process.

If a borrower goes through with rehabilitation they are only allowed to use this method once to cure default. A benefit to rehabilitation is the default notation will be removed from the credit report, which looks good to future creditors when seeking new loans, or applying for credit cards.

Along with determining if rehabilitation is the right option to curing default, a borrower needs to realize that there are limits to rehabilitation. We will further discuss the limits someone would face in the process of rehabilitating a defaulted loan in a later blog post.

Works Cited

Loonin, Deanne, and Geoff Walsh. Student Loan Law. Boston, MA: National Consumer Law

Center, 2010. Print.

Cohen, Joshua R.I. Student Loan Law Workshop. Law Office of Joshua R.I. Cohen, LLC, 20 Apr. 2013.

No Comments

Leave a comment
Comment Information
  • "When I first came to the decision to file for bankruptcy, I had no idea where to start. I began researching attorneys on the internet and came across the information for Tim Sierra. Since he specialized in bankruptcy and had a lot of experience......"
  • The process of going through bankruptcy could be very overwhelming but Tim made me feel at ease and I felt that my needs were being taken care of. I truly feel that he had my best interests in mind and the lines of communication were always open....
  • "I had to file a Chapter 7 bankruptcy. I didn't know anyone who could refer someone so I took a chance and just looked on the Internet. I don't remember exactly why I chose Mr. Sierra, but I am glad I did..."
  • He was honest, straightforward, and hard-working. In my case I ended up with some extenuating circumstances and he handled the matter professionally even though I'm sure the work probably exceeded what he originally felt it would be....
  • I don't ever write reviews, and I had no prior relationship with Mr. Sierra. This review is simply being written as a service to others that Mr. Sierra is an excellent attorney and should be considered for your needs if you need one....
  • "I'm very happy to have been referred to Tim for my Chapter 7 filing. He was knowledgeable in his field and very responsive in replying to any questions or concerns I had. Tim was also very accommodating with meeting times..."
  • " I recently was in need of Mr. Sierra's services and I found him to be very understanding and helpful in my particular circumstance. He met with me and explained everything in full detail and also answered every question that I had....."
  • " I recommend Timothy Sierra a loyal and dependable lawyer. When you talk to him you feel that you are with a friend or a member of your family. Timothy is able to lead you in every step of the process. Good job Timothy."
  • " Bankruptcy is a private and personally devastating life event. Timothy Sierra and his assistant, Nancy, made the process as painless as possible. They kept in close contact via phone and email so I always knew what was happening in my case...."
More Testimonials
Email Us Today

Schedule A Free Initial Consultation To talk to an experienced Tampa bankruptcy attorney, call 877-492-7449 or fill out the form. All calls are returned within 24 hours.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

We Have Offices in Tampa, Riverview and Brandon For Your Convenience.

Tampa Office
118 South Rome Avenue
Tampa, FL 33606

Toll Free: 877-492-7449
Toll Free: 877-492-7449
Phone: 813-463-2256
Phone: 813-463-2256
Fax: 813-258-4746
Tampa Law Office Map

Riverview Office
6314 U.S. Highway 301 South
Riverview, FL 33578

Toll Free: 877-492-7449
Toll Free: 877-492-7449
Phone: 813-463-2256
Phone: 813-463-2256
Fax: 813-258-4746
Map & Directions

Brandon Office
305 North Parsons Avenue
Brandon, FL 33510

Toll Free: 877-492-7449
Toll Free: 877-492-7449
Phone: 813-463-2256
Phone: 813-463-2256
Fax: 813-258-4746
Map & Directions