Credit Adjustments Inc. is a private debt collection agency hired by the U.S. Department of Education to handle defaulted federal student loan debt.
Most student loan borrowers get out of default using the loan rehabilitation program. This program requires you make 9 monthly payments and submit certain documents to bring your loans out of default and back into good standing.
Here's what you need to know.
Who is Credit Adjustments Inc. (CAI)?
As I shared above, Credit Adjustments is a private company that offers debt collection services for several companies, including the U.S. Department of Education.
Your student loans were not sold to them. They did not buy your student loans for pennies.
Instead, the Department of Education's Default Resolution Group sent your defaulted loans to Credit Adjustments to handle the student loan collections while they're in default.
So is Credit Adjustments a scam? No, they're legit.
As a debt collector, Credit Adjustments has to follow the Fair Debt Collection Practices Act (FDCPA). This Act prohibits them from harassing you with phone calls to collect defaulted loans.
They also have to comply with the Fair Credit Reporting Act, which controls what information can appear on your credit report.
If you want to file a complaint against Credit Adjustments, you have three options:
- contact the Dept of Education
- file a complaint with the Consumer Financial Protection Bureau (CFPB)
- file a complaint with the Better Business Bureau
Once you're in default with federal loans, Credit Adjustments has the power to:
- send a wage garnishment to your job,
- offset your tax refund, and
- garnish your Social Security Benefits.
(In case you're wondering, they can do all three things
But before they do any of those things, they have to send you written notice that (a) your loans are in default and (b) you have 30 days to set up payment arrangements.
Options to Get Out of Default
Most student loans borrowers have 3 options to get federal loans out of default:
- federal student loan settlement
- student loan consolidation and
- student loan rehabilitation
In my experience, most people can't afford federal student loan settlements.
The settlement terms are simply too expensive. They'll demand 90% of the loan balance payable in 90 days. Depending on your loan balance, that means you'll need to come up with tens of thousands of dollars in just a few short days to settle your loans.
Student loan consolidation, on the other hand, is much more feasible.
So long as you have loans to consolidate and you're not under an active student loan wage garnishment, you can consolidate out of default.
The consolidation process is fast. It takes about 2 to 3 months to complete. But it doesn't remove the default status from your credit report. Plus, it adds the collection fees to your loan balance and lets you choose your new loan servicer.
So if you want to try and improve your credit score and get your collection fees waived, student loan rehabilitation may be the way to go.
- How to Consolidate Defaulted Federal Student Loans
- How Do I Rehabilitate a Defaulted Federal Student Loan?
- Is it Better to Consolidate or Rehabilitate a Defaulted Student Loan
How to Enter Student Loan Rehabilitation with Credit Adjustments
You can enter into the student loan rehabilitation program with Credit Adjustments so long as you're eligible.
You're eligible for the program if this is your first time getting the loans with CAI out of default using rehabilitation.
Said differently, student loan rehabilitation is a one-time thing. You can't rehabilitate a student loan twice.
Assuming you're eligible, the representative will ask you if you've filed taxes in the past 2 years. If you have, they'll use the adjusted gross income and number of dependents from your most recent income tax return to calculate your monthly payment amount.
The rep will ask if you can afford that payment amount.
If you can't, they'll then ask you about your current income and monthly expenses.
They'll use that information to complete the Loan Rehabilitation Income and Expense Form.
Depending on the result of this form, your monthly payment can be as low as $5.
Once your payment has been calculated, CAI will ask you to send in your income information (tax return or the Income and Expense Form and 2 recent pay stubs).
With that information in hand, they'll review the documents to finalize your monthly payment under the rehab repayment plan.
After that happens, they'll send you the Rehabilitation Agreement Letter to review, sign, and return to CAI.
They'll also ask you to make your first payment and to schedule your future payments. (Technically, you don't have to make any payments until after September 30, 2020, due to the Coronavirus/COVID pandemic.)
Credit Adjustments Contact Information
Credit Adjustments Inc (CAI)
PO Box 5640
Manchester, NH 03108
Phone Number: 1-800-347-9623
(Don't use the Defiance Ohio address. That's the address for other debts in the receivables management portfolio.)