If you are contemplating whether or not to settle the private student loan debts, it is obvious that you are in some sort of a financial crisis and having problems in repaying the private student loans. You must, first of all, examine the situation and get a clear picture so that you could take the right decision.
You need to assess the debt you are having. Determine carefully if you are having federal or private student loan debts. In this context, you must realize that private student loans are quite different from federal student loans in several ways such as the repayment options that you could be using. In case of private student loans, you would certainly not be qualified for several income repayment plans, deferment, and forbearance. Your precise options would be depending on your loan terms and how readily the lender agrees to work with you.
Know the Difference between Federal & Private Student Loans
Once you have stopped making regular payments on the private student loans, your private lender would be calling you and sending letters to you requesting payment. Your private lender could ask any third-party debt collector to keep contacting you over the phone and persuade you to pay up the loan through patient polite requests and if necessary through threats to cause some distress.
Remember private lenders are not entitled to pursue any other payment avenue like wage garnishment. The private lender would have to at first sue you to be able to take some concrete steps apart from calling you or writing letters. This is certainly different from federal student loans as the federal government would not be requiring a judgment passed against you for taking further action. Browse through debt settlement reviews for more information.
Determine Carefully the Amount You Could Pay
Consider reviewing your budget, get rid of excess expenditures and accurately find out the amount you could divert towards the private student loan payment. You need to think logically. You would not at all like stretching the loan payment process too much.
Get In Touch With the Collection Agency for Debt Settlement
The loan repayment notices that you have received online via email regarding your delinquent debt, must be having a telephone number for you to contact. Start calling and ask for lump sum settlement. You may also request them to reduce the financing charges and the fees. If you are not in a position to pay up all your debts at once, you require careful planning and smart dealing. You must come up with an effective payment plan and present it to the creditors.
How Does Settlement Work in Case of Private Student Loans?
- A debt settlement offer would be given to the private lender.
- If you want the debt settlement offer to be considered and accepted then the offer must be at least, 50 percent of the amount you actually owe.
- The lender would be looking for a lump-sum as payment.
- If your settlement offer has been approved you must have it written down as a safety measure.
- You would be paying the agreed lump sum and then the creditor would be discharging your remaining balance.
- This would be actually reported to the credit bureau and that may have a negative influence on your credit rating. This negative entry would be showing for the next 7 years from the discharge date, in your credit report.
Are you wondering if private student loan debt settlement actually works? Well, this would be depending on the lender concerned, the actual amount you owe, and your debt status. Many lenders have no issues in accepting debt settlement while there are others who would not be entertaining debt settlement talks at all. In many cases, it would be more effective if you employed the services of a professional debt settlement company as they would be having highly-skilled negotiators.