Defaulting vs Charge-off
Date: Wed, 01/14/2009 - 12:30
Defaulting vs Charge-off
I currently have 2 private student loans that I haven't paid in some time. The creditor has not made any type of collection attempts beside mailing a monthly letter. The loans are listed on my credit report as "charged-off". My question is which is better a "charge off" or "defaulted" loans? Is there a difference? Also, I am hoping to go back to school and will a charged off loan affect my ability to get new student loans?
Neither one is "better" per se. A chargeoff is an accounting te
Neither one is "better" per se. A chargeoff is an accounting term which, in its simplest definition, means they deem it as bad debt. "Defaulted" just means that you have not fulfilled your obligations under the contract. Either way they can still try to collect, and may ultimately sue for the balance.
It can and will certainly affect your chances of getting another new student loans. If a potential lender looks at your credit and sees you didn't pay back your other student loans, they might be inclined to ask themselves "why should we think s/he'll pay us back?"
you wont have problems getting federal aid, but you wont get ano
you wont have problems getting federal aid, but you wont get another private loan.
Hope you are aware that private loans do sue as a course of business.
