When it comes to repaying your student debts, there are many things you need to know about the process of negotiating a private student loan debt settlement. Many people find it very stressful and confusing, especially when they are not sure where to begin. Fortunately, there are many sources available that can help guide you through this process. Below we will discuss how to negotiate a private student loan debt settlement.
Federal Student Loans
Federal student loans are not the only ones subject to a private student loan settlement. Personal student loans are also an option when your other loans are in severe financial distress. Most federal loans consider private student loans in default when you have not made a single payment in over 360 days. The Department of Education has the authority to garnish your wages if you are in default, but this can be difficult and expensive.
Private Loan Debt Settlement
Many private student loan borrowers who opt for a personal loan debt settlement prefer to pursue this option alone and negotiate their payments with their lenders. Many lenders have collection departments that they will attempt to take the money owed from. In some cases, the federal government will even pursue the lender for the outstanding amount owed.
The Best Possible Terms for Repayment
This is where a debt settlement company can help. These companies will negotiate on your behalf and try to get the best possible repayment of the defaulted loans. These companies may also be able to negotiate lump-sum payoff settlements for the loans. These lump-sum payments could be for ten, twenty, or even fifty percent of the overall total.
You have several options if you are behind on your student loans. First, you could decide to defer your payments. A moratorium will allow you to continue making payments while you work out your financial difficulties. This can be a great benefit if you are unemployed or have short-term financial problems. However, if you do not have enough income to cover the defaulted loans, you could end up losing your home.
Future Lending Opportunities
Second, you could opt to have your federal loans consolidated into one payment. If you have reduced all of your accounts except payday loans, you should get started negotiations quickly. It is important to remember that this will lower your credit score, hindering future lending opportunities. You may want to consult an expert or enlist the help of a reputable consolidation company. Once you are familiar with the process, you can negotiate your payoff and set up your plan for getting caught up on payments.
Student Loan Payments
Third, you can also pursue forbearance. What is forbearance? As a part of federal financial aid, borrowers can apply for a “blocked deferment.” In other words, they can stop making private loans until they find work or another source of income. While most banks will not allow forbearance, some private lenders do. If you can prove that you have exhausted all means of repayment, your lender may be willing to give you a forbearance on your student loan payments.
Finally, you can settle for less than what you owe. You can do this by working with a private loan company to reduce the principal, interest rate, and any penalties that may be due at the time of the settled loan obligation. Private companies usually require borrowers to pay back a portion of the money they owe as quickly as possible. This means that they will settle for less than the full amount owed. Be sure to read all of the fine print when you are negotiating a student loan settlement; doing so will ensure that you have everything in your favor Read More…..