If you are feeling overwhelmed with your student loan debt, you are not alone. According to Student Loan Hero, Americans now owe nearly $1.3 trillion in student loans spread out over 43 million borrowers. If you find that you can’t make regular, timely payments on your student loan, then your loan will go into default and your lender will most likely sue you. At this point, your best option might be a debt settlement. Below is a guide to the student loan debt settlement process.
Make sure the private student loan debt is valid: With some loans, the company attempting to collect may not be the actual owner of the account. Some bad debts are sold and resold over time, so it can be difficult to determine who has control over the loan. Therefore, you should never admit to owing any amount; rather, request –in writing – that the company prove the debt is valid. There’s a possibility that the company cannot even provide the proper documentation necessary to collect on the loan.
Look into hardship options: The lender on your private student loan may consider settling with you if you’re able to prove that a certain hardship is the cause of your inability to pay. Options such as forbearance, postponements, payment reduction or interest rate reduction may be available to you, depending on your situation. You’ll be required to provide documentation and other evidence to support your claim.
Let the lenders take the lead: When you do decide to approach the lender of your private student loan, don’t mention a certain dollar amount you want to pay. Request that the company make the first offer to settle your loan. Then, you can counter it with a lower amount that’s suitable for your financial condition. Eventually, you should be able to meet in the middle to resolve the debt.
Insist upon a written agreement: If you are able to reach a settlement for your private student loan debt, you must obtain a “Paid In Full” statement from the lender or collection company. The paperwork must establish that your fulfillment of the agreement will cause the debt to be considered fully paid. You can use the writing later if the debt should reappear for some reason.
Consider the statute of limitations: This term refers to the amount of time a creditor has to sue you over a bad debt; in California, this time period is four years. If the statute has expired, the lender or collector cannot legally bring a lawsuit against you – but they still may threaten to do so. Keep in mind, there are certain events that may suspend the statute of limitations, as well.
Can I Get Help From a Debt Settlement Attorney?
While you can settle your student loan debt on your own, consulting with an experienced debt relief attorney could wind up saving you thousands of dollars. Most attorneys will consult with you about your situation for free.