When federal student loans default, the Department of Education usually places the loan with a private collection agency. National Credit Services is one of those collection agencies.
Who is National Credit Services
National Credit Services (NCS) is a private debt collection agency handling accounts receivables for commerical, financial, and retail entities, and federal and state government agencies, including the Education Department.
⚡ Fair Debt Collection Practices Act (FDCPA)Because National Credit Services is a collection agency, they must comply with fair debt collection practices in collecting defaulted student loans. They cannot phone you after certain hours. They cannot harass you. They cannot threaten you with actions they cannot take. Contact a law firm that handles FDCPA cases if you believe they've
Why Does National Credit Services Have My Student Loans
National Credit Services has your student loans because you defaulted on your federal student loan debt.
When you first defaulted, your loan servicer sent your loans to the Department of Education’s Default Resolution Group/Debt Management and Collections System.
? National Credit Services Collects Federal Student Loan DebtNational Credit Services is not the original creditor for your student loans. Chances are that if they're contacting you about student loan debt, that debt is for a federal student loan. In my experience, I haven’t known them to collect on defaulted private student loans.
From there, the Default Resolution Group tried to collect on your loans. When that failed, your loans were sent to a private collection agency.
That collection agency happened to be National Credit Services. Exactly why that is, is unknown to me. And in truth, it doesn’t matter. Whether it was them or some other private collection agency, from my perspective, they’re all similar to work with.
What Are My Options for Getting My Student Loans Away from National Credit Services
The only option you have to get your student loans away from National Credit Services is to get your loans out of default.
You can get your loans out of default through the loan rehabilitation program or consolidation.
The loan rehabilitation program does not allow you to choose who your loans will go to. That decision will be made by the Department of Education.
A loan consolidation, on the other hand, does allow you to choose the new loan servicer.
So if you had a bad experience with your previous loan servicers before your loans were placed with National Credit Services, consolidation may be the right choice for you.
How to Stop a Wage Garnishment from National Credit Services
You have 5 options to stop an administrative wage garnishment from National Credit Services:
- Pay in full
- Negotiate a settlement
- Enter into the loan rehabilitation program
- Submit a consolidation application
- Set up a voluntary payment agreement
Let's go over each one.
#1 Pay in Full
Look, even if you can afford to pay your student loans in full, you shouldn’t do so. You’ll save more money by negotiating a settlement.
#2 Negotiate a Settlement
Being in default is the one-time you can settle federal student loan debt.
While a settlement sounds great, the reality is that many borrowers are unable to take advantage of a settlement offer.
Federal student loans do not settle for pennies on the dollar. Just the opposite.
With federal student loan settlements, you’ll need to have about 85% of the current balance less collection fees ready to pay in 30 to 90 days.
Does the government ever accept less than this for settlements? Occasionally. But those types of settlements have happened less frequently under the Department of Education Secretary Betsy DeVos.
#3 Loan Rehabilitation
The loan rehabilitation program is a one-time program that lets you stop a wage garnishment from starting by agreeing to make 9 monthly payments based on either your income or expenses.
The program also lets you stop a wage garnishment after it starts by agreeing to make 9 monthly payments.
Under the terms of the program, the garnishment will stop after your 5th monthly payment. You’ll still need to make the 4 remaining payments before your loans are out of default.
Because the rehabilitation program is a one-time program, if you default a second time on the same loan, you will need to choose another option to get out default.
⭐ Confirm Your Rehabilitation Program Paperwork is Approved ⭐If you choose the loan rehabilitation program, make sure you sign the loan rehabilitation agreement letter and that you send it back to National Credit Services with your proof of income (if they ask for it). After you submit it, call to confirm they have received it. And then call again, to make sure you have been successfully approved for the rehabilitation program. I’ve had clients who told me they thought they were in the program and made several payments, only to find out they were never approved because their paperwork was missing or had been denied.
One benefit of the loan rehabilitation program versus loan consolidation is that with the former, the government will waive the collection fees after your 9th payment.
Consolidating defaulted student loans causes the collection fees and unpaid interest to be capitalized.
A Direct Consolidation Loan allows you to combine your defaulted federal student loan with at least one other student loan.
You’re eligible for consolidation if you have eligible federal student loans (eg. a Direct Loan, Perkins Loan, Stafford Loan, etc.) and you’re not under an active wage garnishment for your defaulted loans.
If National Credit Services has sent the garnishment notice to your employer but your wages have yet to be garnished, you may still be considered to be under an active wage garnishment.
Having said that, I’ve helped borrowers who move quickly submit their consolidation application and have it successfully processed before the wage garnishment can start.
#5 Voluntary Repayment
Entering into a voluntary repayment plan before a garnishment starts will stop a garnishment from starting.
That voluntary student loan repayment plan, however, will not get your loans out of default.
It simply stops a wage garnishment from starting.
Because this plan does not get your loans out of default, choose this option only if (a) you need more time to come up with money to settle; or (b) you’ve already rehabilitated your loans once before and you cannot consolidate out of default.
When Will National Credit Services Stop Reporting Negatively on my Credit Report
National Credit Services will continue to report negatively to the credit bureaus until either your loans are out of default or the Education Department transfers your loans to another collection agency.
Once you’re out of default, assuming the payment history for the rest of your debt (credit card, medical, auto, etc.) is good, your credit score should increase pretty quickly.
How to Contact National Credit Services
National Credit Services representatives are available from 8am - 5pm PST Monday - Friday.
National Credit ServicesPO Box 580Bothell WA 98041-0580800-324-7564Fax: 423-398-6675ncscollect.comOnline Portal: ncscollect.com/Documents
Contact information accurate as of December 20, 2019.