Can You Settle Private Student Loan Debt?

Posted By Law Office of Simon Goldenberg, PLLC || 3-Jul-2018

Student loan debt is the second most abundant type of debt in the United States, behind only mortgage loans. In fact, 70 percent of all college seniors who graduate have some form of student loan debt, with the average indebted student carrying nearly $29,000 according to 2015 data. And to make matters even more difficult for many borrowers: most student loan debt is public, which means it’s almost impossible to reduce without qualifying for a forgiveness program or unique and exceedingly rare circumstances.

However, private student loan debt is an entirely separate story. Because these loans come from private lenders, consumers have a lot more options when it comes to debt relief that they can pursue. On this blog, we’ll offer a few tips on how to beast pursue a student loan settlement including giving you a few valuable negotiation tips to keep in mind.

Expect Pushback from Lenders

Lenders on student loans are likely going to be hesitant to negotiate on a student loan unless the loan is already in default. If you can avoid going into default, it’s strongly advised you do so in order to prevent possible damage to your credit rating. However, for some people, the benefit of being able to negotiate a better settlement and payoff plan could be more beneficial in the long run. But keep in mind “strategically defaulting” like this is risky—you could accrue fees and interest, and you could wind up being even worse-off after litigation is pursued against you.

However, lenders know that getting something back on a loan that’s in default is far better than getting nothing back at all, and many are more willing to negotiate on delinquent loans than you might think. It might seem intimidating to ask a lender for their settlement options, but you’ll be surprised just how willing to work with you they could be.

Know Your Rights

Private student loans are significantly different from public ones in that public lenders such as the U.S. Department of Education have the ability to go after things like tax returns, Social Security benefits, or other kinds of federal income in order to satisfy your debt. Private lenders have no such ability. If a private agency tells you this, they’re lying to you and you shouldn’t hesitate to lodge a complaint against them or the collection agency acting on their behalf. It is possible for them to garner your wages, but they must go to court in order to do so.

The other big difference with privately-funded student loans is that there is a statute of limitations attached to them. What this means is that an institution has up to a certain amount of time in order to begin litigation against you in order to collect the outstanding balance on your loans, which is six years in the state of New York. Once this six-year period passes, your lender can’t begin litigation against you, and generally lenders are going to be much more willing to negotiate and settle student loans with you.

Work With an Attorney

If you’re facing debt and need to find relief, it’s strongly advised you speak about your options with either one of our highly reputed student loan lawyers in New York or our New Jersey student loan lawyer. Having a legal representative on your side can help you make sure that your rights are protected and you aren’t victimized by illegal actions that violate your rights as a borrower.

Get help from a qualified representative by calling the Law Office of Simon Goldenberg, PLLC today at (347) 389-0245!

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