Student Loan Settlement – How to Proceed If You Have Defaulted on a Student Loan
What is a student loan settlement? A student loan settlement is an agreement that involves the settlement amount being paid in full to the lender, typically less than six months, in exchange for a lower payment. Be sure to get an income-driven repayment option and ask for loan rehabilitation if you need to reduce your monthly repayments. Here’s what you can expect when negotiating with the lender:
You are in good standing. The lender already has in place a repayment plan for you, and they will probably continue to offer you good standing financing through them even if you don’t choose to go this route. If your private loans have good standing status, then you’re on your way! If not, see if the lender can provide you with an alternative repayment plan that is still in effect under your existing lender’s policies. Good standing private student loans are especially useful if you have multiple private loans; in this situation, it’s best to try to negotiate a student loan settlement that will include all of your private loans into one.
Your lender can’t offer you a settlement options. You need to find someone who can help you. One of the easiest ways to find a good settlement attorney is to ask your friends and family for recommendations. Another option is to check the local telephone directory or look online for consumer advocates and legal professionals specializing in student loan settlement options. Use your Internet search engine to find local lawyers and the websites they may have established for each one.
The amount owed is too much. When you first start looking into student loan settlement options, the amount owed to your lender will likely be your biggest concern. In this case, your best option may be to simply negotiate the amount owed to your lender yourself before you apply for a settlement.
You’ve tried to pay your bill but the company just doesn’t want to settle. If this happens to you, it’s possible you have nonstandard compromise agreements in place. If so, your lender may not be willing to accept your settlement offer. Nonstandard arrangements usually include the lender retaining part of your payments, interest, or fees. Your goal should be to get as much of your debt discharged as possible, but if you have nonstandard agreements in place, talk to your debt collector settlement professional to see what options they have available to you. Your best bet may be to wipe out the bulk of your debt completely through this procedure.
Debt collectors aren’t going to go away. Your debt collector is likely attached to your private student loans like a lifeline. They will pursue you vigorously and if you file bankruptcy, they will use your bankruptcy as leverage against you. Even if they are unsuccessful at collection efforts, you could be hit with a garnishment. Wage garnishments are one of the most feared outcomes of a student loans bankruptcy.
You can work with your loan company to put together a repayment plan that you can afford. Repayment plans can include interest only payments that total the balance at a lower amount. Your repayment plan should not negatively impact your credit score. Your lawyer can negotiate the best repayment plan that gives you the least amount of risk.
Student loans are very common and most students have more than one type of loan. If a student loans is part of your financial plan, there is no need to worry about a loan settlement unless you have defaulted on the loan. To learn more about settling your loans or bankruptcy, contact a professional lawyer today.