Last year I wrote a piece about how I finally faced the fact that my defaulted student loans weren’t going anywhere, and the surprisingly simple process I embarked upon to rehabilitate them. Now, 13 months after I made the first steps towards remedying my financial situation—mustering the courage to face my creditors, actually picking up the phone and asking for help, committing to slowly paying my debt back despite a not so lucrative salary—I am proud to say that my student loans have been successfully rehabilitated and I am no longer in default. I may be one of the only people in America to be thrilled that I owe Sallie Mae a large chunk of my hard earned cash. It’s amazing how perceptions can change when you finally owe semi-shady student loan overlords a boatload of money rather than completely ruthless and unrelenting run-of-the-mill debt collectors. It’s the little things that make me proud of how far I’ve come.
Getting out of default was much easier than I expected. After the initial phone calls negotiating my monthly payments and completing all of the paperwork required to participate in the rehabilitation program, my monthly payments to the debt collection agency were automatically deducted from my bank account. The amount was less than I had been paying when my wages were garnished so I even felt a little flush for the first time in years. After that, things were pretty quiet and I wasn’t contacted by the collection agency at all. Then, three months later, a letter from Sallie Mae arrived announcing that my loans had successfully been rehabilitated and my remaining balance had been sold back to Sallie Mae. I was required to contact them and provide them with my payment information, but because my payment plan was income based, my monthly loan payments would remain the same, as would my interest rate. And that was it.
So far, there has been no drama, no stress, no worry. It’s incredible to me that the hardest part about this entire process was making that first phone call and facing my poor financial decisions head-on. But everything after was a breeze. I still find it crazy that I let myself ignore my loans for years and years when fixing my debt problems ended up being so easy. Maybe I needed someone to tell me that this wouldn’t be as hard as I had imagined. Maybe I needed a hand to hold. Or maybe I just needed to hear about someone else’s situation, and their success in overcoming their past mistakes. I hope that my previous article, and this one, can show anyone in a similar situation that this whole process isn’t nearly as daunting as it seems, that things can be fixed, and that it really, really is worth the effort.
To be honest, I barely think about my student loans at all now (which, I must say, is quite an accomplishment). To go from not thinking about my debt because I was too scared to consider the implications of my poor financial choices to not thinking about my debt because it is such a stress-free, non-existent issue in my life is an amazing feeling. I have no problem picking up the phone if strangers call because I know it won’t be an irate debt collector. Now that my wages aren’t being garnished, I have the extra money to spend on silly things like straightening my hair, or on splurges that enrich my life, such as an upcoming trip to Vietnam. And now that I’ve fixed my student loan debt, I’ve begun to rehabilitate my credit entirely.
A few months after getting out of default, I received my first pre-approved credit card offer. Flash forward to a few months later and I seem to receive an offer almost every week. I know my credit is still pretty terrible, and the pre-approved cards have a $300 limit and are intended for people who need to fix their credit, but it’s a start. I’m ready to tackle my financial history and make smarter monetary choices. I don’t know what I’m doing yet, but I’ll figure it out as I go along, and if I make mistakes, that’s OK. Because at least I’m trying. All I need to do is start making those baby steps. To that end, I received my very first credit card in the mail yesterday. And yes, I’ve set up an auto-payment schedule for this bill as well. Because there is NO WAY I’m defaulting on this baby. New financial leaf, consider yourself turned.
Anna Moreno lives in New York and also contributes to Bad Date Great Story.
Photo: Geraint Rowland