Private Student Loan Default Help

Defaulting on Private Student Loans

In 2017, defaulting on private student loans remains a very bad idea, as there are major financial and legal repercussions to having your loans moved to default status, none of which you will want to face if you have any other possible option.

Unfortunately, the Federal Government still hasn’t quite woken up to the fact that millions of Americans are teetering on the brink of financial disaster, living paycheck to paycheck, and literally having to choose whether to keep the lights on or make their monthly private student loan payments.

The risk of defaulting on private student loans remains extremely high, and if I can only stress one thing to you, it’s that this is no laughing matter.

Why? Because private student loan defaults are likely to not only destroy your credit, making it literally impossible to pass a credit check of any sort, but they’ll also hurt your ability to get a mortgage, qualify for a great job, rent a home or apartment, and they’ll open you up to all sorts of collection activities from debt collectors, who are basically guaranteed to be much more aggressive (and obnoxious) than your current student loan servicer.

While I was previously confidant that President Trump’s Student Loan Reform Plan would include some sort of assistance for private student loan holders, I’ve lost my faith in the new President’s resolve to tackle the student loan crisis, and I no longer think this is a realistic hope.

But Before We Go Through Those Details…

If you’re worried about defaulting on your loans, I recommend immediately calling the Private Student Loan Relief Helpline.

When you call the Helpline, they’ll take down your information and let you know your options for dealing with your private debt.

If you choose to utilize one of their paid services, then you can pay them to pursue a student loan bankruptcy discharge, a discharge on legal grounds (via the Defense Against Repayment Provision), or some other option like debt consolidation to reduce your monthly payments.

The important thing to note is that you can call the Helpline for free, get some advice about what you should do, then decide whether or not you want to pay them to take care of it for you.

To reach the Private Student Loan Relief Helpline, call 1-866-530-9946.

What Happens When You Default?

Unlike Federal student loans, which offer a 9 month delinquency period of failing to make payments before being placed into default status, private student loans default at the moment you miss a single payment.

And as soon as your private student loans go into default, you will face a serious array of major financial consequences, from having your account sent to collections, getting your credit score destroyed or even having your wages garnished.

The rest of this article explains what you can do to avoid a default, and how you can come up with an effective long-term solution if you’re approaching defaulting on your student debt.

What Are Defaulted Private Student Loans?

Defaulted private student loans are any student loan you took out from another source other than the Federal Government, and which you failed to pay back on time.

Missing just a single payment will lead to your private student loan going into default, so it’s incredibly important that you make every single payment throughout the course of your repayment period, on time, and in full.

And it doesn’t matter why you miss a payment, whether you didn’t receive the paper bill that month, or your check was lost in the mail, your loan will go into default at the moment your lender notices that they haven’t received their monthly payment on time.

What Are The Consequences of Default?

Default is a big deal, no matter how you look at it.

As of 2017, private student loan debt is still considered a “special” form of unsecured debt in one important way; defaulting on them opens you up to some major legal consequences.

When your private student loan defaults, it gives your creditor (lender) something called “a cause of action” that allows them to sue you for breach of contract, since you’ve failed to live up to the agreement of your original loan contract.

Lenders can use their cause of action to take you to court and sue you for damages, leading to all sorts of major financial problems, from having your wages garnished, to getting a levy placed on your bank accounts or even a lien attached to your property.

What Could Happen if I Default?

Let’s face it, even with the election of President Trump, the economy isn’t all that great, and we may be looking at a long-term sag, or even a return to the great recession, so lenders are looking to raise revenue in any way they can, including by attacking their own borrowers.

Here’s a breakdown of the steps that your lender is likely to take should you default on your private student loans:

  • Direct Collection – First, the lender will try to collect the money themselves.
  • External Collection Agencies – Next, they’ll submit your account to an external collections agency.
  • Credit Reporting Agencies – You’ll be reported to the Credit Reporting Agencies, and your credit score will be crushed.
  • Sued in Court – If you still haven’t responded, you’re likely to be taken to court and sued for breach of contract.
  • Wage Garnishment – If you lose in court, you might end up having your wages garnished, losing 10-25% per paycheck.
  • Financial Levies – If you lose in court, your bank accounts could be taken over by the lender, who will be allowed to remove any money you owe them automatically.
  • Property Liens – If you lose in court, a lien could be attached to your property, allowing the lender to take their percentage of the revenue you create by selling or refinancing your house or other property.

As soon as you miss a payment, your lender will probably contact you immediately to let you know that you have defaulted on your loan and that you’ll need to issue a payment immediately to get your loan back into compliance.

You should be happy that they’re giving you a chance to avoid the default status, and immediately make whatever arrangements you need to get that payment out, because going into default is not a good idea.

If you don’t respond to their initial attempt at saving yourself, or if you decide to outright refuse to issue payments to get your loan back on track, then it’s likely that your lender will hire an outside collection agency to start harassing you for repayments.

You’ll start getting phone calls, letters, emails, and perhaps even social media messages reminding you about the money you owe, and the collections agent may even start contacting you daily, or multiple times per day, to demand the money that you owe.

If that process doesn’t work, then your lender or the collections agency may take things a step further by summoning you to court, where you’ll be sued for breach of contract, and likely forced to repay your debt, plus penalties, fees, and legal and court costs.

Should you lose in court, the lender will have three main options for getting their money back from you. Those are:

  • Garnishing Your Wages
  • Placing a Levy on Financial Accounts
  • Attaching a Lien to Your Property

These are serious legal and financial repercussions that will end up causing you a major hassle, a ton of stress, and probably a lot more money than you would have owed from simply paying back your loan.

Default Consequences Explained in Detail

They might not sound all that bad at the outset, but having your wages garnished, getting a levy attached to your bank accounts and having a lien put on your property are horrific consequences that you should try avoid at all costs.

Default on your private student loans and you’re likely to face one of these three major financial disasters:

  • Wage Garnishments – When your wages are garnished, your employer is forced to deduct a certain portion of your wages from each pay check so that it can be sent to your creditor, instead of to you. Not only does this reduce the amount of money you take home with each paycheck, but it also lets your employer know that you’re facing serious financial problems. Some states don’t allow wage garnishing at all, while others allow between 10-25% of your wages to be removed from each paycheck. Defaulting on private student loans and ignoring the problem, refusing to work with your lender, and pretending like things will just work out is not the solution. If your private loans go into default, it’s time to get busy and work out an agreement with your lender before your wages start being garnished.
  • Bank Account Levies – When a levy is attached to your bank account, that means that your lender will be able to take the money you owe them directly from your financial accounts and apply it to the amount of money that you owe them. Think you can get away with defaulting on your student loans and just pretending like the debt doesn’t exist? Think again. Lenders can, and will, pursue a levy on your accounts. To prevent this from happening, be sure to contact your lender at the first sign of trouble. If you think you might miss the next monthly payment on your private student loan debt, it’s better to let them know in advance and see if you can get an extension, consolidation, refinance, or some other form of assistance to prevent going into default.
  • Property Liens – When a lien is attached to your property, that means your lender has an “encumbrance”, or a claim, on that property. If you own a home and go into private student loan default, your lender could sue you in court to win a judgment allowing for a lien to be placed on your home, meaning that if you sell or try to refinance your house, your lender will automatically get whatever money you owe them out of the sale or refinance before you can pocket any of it yourself. If you’ve got a lien on your property for more than the equity you’ve built up in the property, the lien is likely to prevent you from being able to sell or refinance at all. Each state has different rules on how liens work, but suffice it to say, you don’t want one of these, and should do everything that you can to avoid allowing one to be created.

What Should I Do if I Think I’m Going to Default?

If it looks like you’re going to miss a payment, or if you even think there’s any potential for missing your next payment, then the first thing you should do is contact your lender immediately.

Lenders aren’t evil people, and many are willing to work with their borrowers to avoid the disaster that a default entails.

Default is extremely stressful for you, but it’s also stressful (and expensive) for your lender too.

They don’t want to chase you around with letters and phone calls, hire outside collections agencies to harass you, or pay for lawyers to sue you in court, so they’re often willing to make deals with borrowers who let them know that there’s a problem, especially when they’re alerted to that issue in advance.

As soon as you think you’re going to have a problem, contact your lender and let them know. You’ll likely be offered some form of forgiveness, perhaps with a payment extension, some sort of debt consolidation or loan modification, or something else that will give you the time you need to scrape up the money for your monthly payments.

Should I Hire a Student Loan Relief Company?

Honestly, it depends.

If you’re the type of person who enjoys performing complicated research, handling detailed financial matters, and arguing with loan servicers, debt collectors and attorneys, then you won’t need to hire anyone to help deal with your debt.

However, if you’re like most people, and you don’t like researching, arguing, negotiating, playing financial hardball and basically battling it out with loan servicers, then you’ll probably want to pay a company to handle the complicated parts of the process for you.

If you do decide to hire some outside help, then I recommend you call the Private Student Loan Relief Helpline, which is a paid service that will take on the task of dealing with legal issues, paperwork, and repayment processes for you.

Basically, these guys are the debt repayment gurus, and they’ll be able to figure out whether or not you need to actually pay back your loan, or whether you could pursue some kind of legal action of your own (like challenging the validity of the loan, pushing for a bankruptcy discharge, or filing a Borrowers Defense Against Repayment letter).

To reach the Private Student Loan Relief Helpline, call 1-866-530-9946. You can talk to them for free, so I recommend calling to get some basic advice, find out what they think will work best, get a quote, then decide whether or not you’ll pay them to handle the work for you, or tackle it on your own.

Benefits of Paying for Help

The advantages of bringing in a company to do the work for you is that they’ll work to prevent wage garnishments, prevent calls from collections agents, lower your monthly payments, work toward getting some of your debt written down, reducing your interest rate and improving your credit score.

What’s the downside to outsourcing this work? It has a price attached to it – because no one is going to do this for you for free.

Fortunately, there are lots of companies that offer this sort of assistance, but there’s only a few who specialize (and do a good job!) in handling private student loans. Once again, if you do decide to hire on a company to assist you with the process, I recommend you contact the Private Student Loan Relief Helpline.

This organization is staffed by absolute experts in private student debt, people who know the laws, know the industry, and know the tricks. They will be able to help you improve your financial situation, and they don’t cost all that much for assistance.

Plus, you can talk to them over the phone for free to get an idea of what they’ll be able to do for you, before you have to pay them anything. To reach them, call: 1-866-530-9946.

Doing It On Your Own

On the flip-side, if you’re the type of go-getter person who likes mixing it up, arguing, negotiating, etc., then remember that you can also all of this stuff yourself! And entirely for free!

Yes, the companies that offer to help you through private student loan default do have expertise in the process, and yes, they’ll probably be able to negotiate a better solution for you much faster than you could do it yourself, but it is possible to go it alone.

Everyone is different, and you’ll have to make the decision for yourself on whether or not it’d be worth trying to sort it all out yourself, or outsource it to an expert.

What To Do If You’re Already in Default?

If you’re already in default, then you’re probably sick of the phone calls letters, and threats by now.

You should know by now too, though, that there are only a couple of effective solutions for getting out of your defaulted private student loans:

  • Debt Rehabiliation & Debt Repayment Programs
  • Filing for Bankruptcy and pursuing a Debt Discharge

Every case is different, and your specific situation will determine which course of action you should pursue.

Don’t be tricked into thinking that there’s a one-size-fits-all solution to private student loan defaults, because your specific circumstances should be dictating your strategy here.

One thing to keep in mind is that you do have rights, under the Fair Debt Collection Practices Act, and that if your rights are being violated, then you should file a complaint with the Consumer Financial Protection Bureau.

Speaking with them, talking to a lawyer, or again, calling a company like the Private Student Loan Relief Helpline, are going to be your best bets for figuring out what you should do next.

Default Rehabilitation & Repayment Programs

The first option is to sign up for some kind of debt rehabilitation or debt repayment program, which will require working with your lender to come up with a solution for paying them off, though likely on different terms than you initially agreed to.

Don’t get confused about this part though – there are official student loan default rehabilitation programs for those with Federal student loans, but those same programs won’t be available to you.

Since you’ve defaulted on private student loan debt, the only rehabilitation process you’ll have available is whatever your lender decides to offer you. It could be something amazing, or it could be no help at all.

And you might just want to consult with a bankruptcy attorney before agreeing to anything, because sometimes lenders go nuts with penalties and added fees that do nothing but inflate your debt, making it harder for you to pay it off, and trapping you in a cycle of paying off ever-increasing interest and fees, but never reducing the principal on your loan.

How Long Does Default Last?

One handy tool in your arsenal will be that, unlike federally funded loans, your defaulted private student loan only remains in default for a certain amount of time.

The rule is different in each state, but when your loan goes into default, your lender will only have a certain amount of time to sue you and get a judgment passed to let them collect the money you owe them.

If you can somehow delay them for long enough, avoiding having that judgment passed on you, then you just might be able to escape any serious legal or financial consequences from defaulting on your debt, other than having your credit score completely ruined.

Unfortunately, this isn’t a very reliable, or intelligent tactic for dealing with a private student loan default, since things can go very badly for you if it doesn’t work out according to plan.

Private Student Loan Bankruptcy & Debt Discharges

Another option to get out of default, which also comes with some risk, is to declare bankruptcy and attempt to get your debt discharged, reduced, or otherwise modified to make it more affordable.

Borrowers who face enormous financial problems due to their private student loan debt have the chance of qualifying for full debt forgiveness via bankruptcy discharges, but it’s relatively rare, thus not a particularly reliable strategy.

In certain cases though, simply contacting your lender to let them know that you’re considering filing for bankruptcy and requesting a discharge can be enough to get them to loosen the reigns, open their proverbial pocket-book, and help you out of your bind.

Remember, lenders don’t want to deal with a bankruptcy case, lawyers, and all the added time, hassle and cost of attempting to collect a debt that you’ve given up attempting to repay, and begun to actively fight against.

Going on the offensive early, before your private student loan debt has defaulted, could give you the upper-hand in the struggle and allow you to get some of your debt written off, get your interest rate reduced, or get your loan term extended.

Threatening to file for bankruptcy is definitely a better idea than going into default without putting up a fight, but remember that actually filing for bankruptcy leads to some pretty serious negative financial consequences as well.

Whatever you decide to do, be sure to read up on the intricacies of Private Student Loan Bankruptcy before bringing it up with your lender.

Talk To a Lawyer

You probably don’t want to hear it, but the best thing you could possibly do to avoid major financial consequences from defaulting on private student loan debt is to speak to a lawyer who specializes in the subject.

It’s important to keep in mind that you’re not the only person to go through this process, and that you can leverage the knowledge of an experienced lawyer to help you get out of your debt obligation, or at the very lease, reduce the severity of the consequences you’ll face from defaulting on your loan.

A lawyer will review the particular details of your situation, let you know what your options are, and guide you toward picking the best strategy that will get you the most bang for your buck.

If you’ve got a defaulted private student loan, the worst thing you could possibly do is ignore the problem, hoping that it will either go away, or get better in time.

Before things get worse, get on the horn and start making some moves.

You could save yourself tens of thousands of dollars just by picking up that phone.

For Additional Information

There aren’t a lot of good free, widely available resources for getting help with defaults on private student loans, since most of the websites you’ll find from a Google search focus on federal student loans.

It may be a good idea to speak with the experts from the Private Student Loan Relief Helpline before you decide what to do next, so consider giving them a call at 1-866-530-9946.

And if you’ve got additional questions about private student loan defaults, feel free to ask me in the comments section below. I’ll do my best to get you a response within 24 hours.

Please Help!

If this page helped you, please consider helping me by posting a link to it on your blog, or by sharing it with your friends on Facebook, Twitter or Google+

Thank you for visiting, thanks for your consideration, and please do be sure to stop by again soon!

Disclaimer: This post is NOT sponsored content as I don't accept any form of sponsored posts, advertorials, native advertising, influencer marketing or incentivized, paid or promoted content. However, this post may contain affiliate links. If you purchase a product or service linked to from this post, I will receive some form of compensation.


Tim's experience struggling with crushing student loan debt led him to create the website Forget Student Loan Debt, where he offers advice on paying off student loans as quickly, and cheaply, as possible. His new website Forget Tax Debt, offers similar advice to people with back tax problems.

    Find me on:
  • googleplus
  • facebook
  • linkedin


  1. Hello,
    Struggling with a wells Fargo debt of around 22K. Wells Fargo bought my loan from another company. They started after me in Feb of 2013. I did not graduate until May of 2013. However after looking at my contract I noticed that my deferment period has a maximum of 5 1/2 years on it while in school. If this was the case they were trying to get me to pay during my deferment period. I paid what I could but since I am a school teacher, I did not get my job until October of 2013. Did they break the contract by coming after me during the deferment period? I just want to go back to the original payment schedule of 285/month.

    • Hi Chloe,

      Are your loans Private or Federal? I can’t tell for sure based on what you said, but it sounds like they’re Private.

      I would contact the Private Student Loan Relief Helpline to ask them if you’ll be able to challenge the validity of this debt using the Borrowers Defense Against Repayment Program. In my opinion, it sounds like Wells Fargo may have violated the terms of your contract, and that may make you eligible for a complete discharge.

      Call the Private Student Loan Relief Helpline at: 1-866-530-9946. You will need to pay them if you want them to help with the document processing and such for your Borrowers Defense Against Repayment letter, but I think you should be able to get the first answer (whether or not you qualify for a discharge) for free.

      Also, it’s worth it to spend some money with them if it gets you out of $22,000 in debt, as using a consultant like them makes it much more likely that your Borrowers Defense Against Repayment petition is approved.

      Let me know if you have any other questions, and good luck!

  2. Hi Tim,
    First of all, thank you for your helpful advice. You’re clearing up a very murky situation for so many people. I truly appreciate it!
    I have a question that I know you’ve been asked in one way or another thru this forum, but wanted to see if you could help me with some questions specific to my situation. I took out 3 student loans in undergrad and have been working on paying them off ever since I graduated 10 years ago. I have occasionally fallen behind over the years, but manged to continue paying in some way or another, and got pretty steady with it in 2015-2016, chipping away as much as I could possibly afford. Towards the end of 2016 I started getting calls from another lender saying that they had taken over the account. Citibank customer service told me that they no longer had any information about my account to discuss. Citibank didn’t notify me that this was happening, so I was afraid this was a scam, and therefore didn’t respond to this new company (stupid, I know). Anyway, long story short, Firstmark sent me a letter in March stating that the account was being turned over to collections. Now I have received letters from a collection agency. I went into full panic. I am absolutely terrified. I immediately made arrangements to downsize my monthly expenses (I’m moving and I’ve sold a ton of my personal items to try and accumulate a large sum to pay). So far, I have about $3,000 put aside from selling my stuff. In my new home, I’ll have significantly lower rent and would like to pay large monthly sums, after the lump sum, in order to pay off the loans as quickly as possible.
    I tried contacting Firstmark and they basically told me that there was nothing they could do to get my account back from the collections agency and that they wouldn’t be able to work with me at all. They told me I would have to make arrangements with the collections company and that’s it.
    Here’s my question. First of all, IS it possible for Firstmark to take the account back from collections, or do I absolutely have to deal with the collections company directly? They told me it wasn’t an option, but I’ve read responses here that seem to suggest otherwise. Should I just continue to call them and ask them to consider taking it out of collections? I don’t have a lot of time to waste (30 days) so I’m panicking.
    Next question, if I contact the collections company that now has my loans and discuss the same payment plan with them, ($3,000 lump sum + $600 per month thereafter) can they then get it out of default and send it back to Firstmark or am I just beholden to them regardless? My goal first and foremost is to get this out of collections and do everything I can to mitigate a negative impact on my credit score. At this point, now that its in collections, is that written in stone or is there any way to get it back out of collections thru working with the collections agency? I’m in desperate need of some advice.
    Please help.
    Thank you!

    • Hi Lindsay,

      Good question here, and I may not be the right person to ask because I’m not an expert on Debt Collections. I know a little bit about it from answering questions (and dealing with debt collectors for some medical debt that’s entirely ridiculous), but this is more like a legal matter that I’m kind of afraid to comment on, since giving bad advice could send you the wrong direction.

      First thing to do is look into the Fair Debt Collection Practices Act so that you understand your rights as a debtor, and you can determine what they are allowed to do, as well as not allowed to do. If you can catch them violating this, you may have legal recourse to sue, or perhaps even get your debt discharged (depends on how bad they violate the act).

      Next, I think you’d probably need to consult with an attorney or a financial expert to find out about getting the loan handed back over from debt collectors to your original servicer, but I do not think that’s going to be possible. The good news is that the debt collectors are a little crazy, but are more likely to settle on the debt for less than the original lender, since they probably only paid the lender a small percentage of your loan in order to buy up the debt and then try to get it back from you.

      I don’t think the Debt Collectors will be able to get the loan out of default and sent back to Firstmark, but what I think they can do is that if you settle with them, they will simply mark the loan as having been paid off, which will fix your credit. You’re basically stuck with them now, and need to negotiate for a settlement with them.

      One other thing you may want to consider is hiring an outside agency to help you with these negotiations, or to examine the outstanding debt to see if it can be attacked in other ways. The group I’m always recommending people call – the Student Loan Relief Helpline, and the Private Student Loan Relief Helpline, does just that. They look at the original loan, investigate the school, and see if it’s possible to simply wipe out the debt through legal filings, instead of having to pay it all off.

      If I were you, I’d probably start by having a conversation with the Helplines to see if they think you’ve got a chance at getting the loan erased, or if they have advice on how to proceed in negotiating with the debt collection agency. You can call these guys and talk to them for free… they don’t cost any money until you’ve decided to actually let them do the work for you, and you officially hand things over to them.

      You can reach the Helplines here:

      Federal Student Loan Relief Helpline: 1-888-906-3065
      Private Student Loan Relief Helpline: 1-866-530-9946

  3. Kira Petersen says:

    Hello Tim!
    I have a private student loan for about 17,000 USD and federal loans for 10,000 which are currently in forbearance.

    I have been living permanently in Denmark the last 8 years and have no plan on moving back to the US.

    My mother has been recently released as my co-signer on Private student loan.

    If I end up defaulting on the private student loan – can they garnish my wages from Denmark and what is the likelihood of it happening? And 2: when are debt collectors likely to agree to a settlement? I.e. 50% of the amount? Is this something that can be offered as soon as it goes in to default?

    Thank you in advance!

    • Hi Kira,

      I think the odds are quite low that you’d have your wages garnished in Denmark. I’ve heard of people heading overseas and simply ignoring their student loans forever, and never had anyone report that they had their overseas income garnished. I think if you’re serious about never coming back to the U.S., then you can probably just ignore this forever.

      I’m not sure on the status of Denmark though, so you’ll probably want to consult with a local attorney who has experience in this area, just to make sure. Also – Debt Collectors are hit and miss. Sometimes they’ll settle for 50%, sometimes for 10%, sometimes they won’t even accept 90%. You never really know with them until you start negotiations.

  4. Hi,

    I have 3 defaulted loans originally through Sallie Mae, but now under Navient (pretty much the same company, different legal name). I was enrolled in one of there interest only payment programs. This did not help me at all and never once touched the principle balance, which is no good to me being that interest continues to build up on it. Each loan has a rate of 9% or higher, This is a killer and is pretty much the reason why my loans have doubled in size. I had to drop out of the payment program as I was going into maternity leave and wouldn’t be able to afford the payments with less than half of an income. What would you suggest I do to get these loans in order or under a more affordable plan where my payments are actual touching the principle? I already have a garnishment on my pay check and that had brought my income down tremendously with having to pay for daycare services, car loan, insurance, and just monthly responsibilities. My credit is shot due to the consistent reporting of the delinquency each month. What would be my best bet… I do not want to file for bankruptcy but feel I have little to no other options, Any help is greatly appreciated.

  5. Hi John,

    I have 80k in private student loans with citizens bank, the account was serviced by AES. I had been paying regularly but I had to move for work which was going to cost me most of the expendable money and savings. I contacted AES and they were unwilling to offer a deferment/forbearance on the loan. the servicer wrote the 80k off and it was sent back to the lender (citizens bank). Citizens bank however allowed me to $500/month on each the 3 accounts ($1500/month). I really want to not have these loans in default and had over 5 years of solid payments. Citizens bank told me that the accounts will stay in defeult until they are paid, which would not be anytime soon given the amount. What are my options now? also are you aware of any banks or lenders that consolidate defaulted student loans? Thanks


    • Just to clarify, I can just barely afford $1500/month as my original payment was $1000/month. my question is mainly about getting the private student loan moved out of default, which Citizens Bank said they do not do. I was informed that there is no interest placed on any of the accounts, I am in the process of getting everything they told me verbally in paper, but is there any way I can compel them to move the accounts out of default?

      • Hi Malcom,

        There’s not much that you can do when your loans are in default… most lenders won’t pick them up after they’ve defaulted because you’re basically a flight risk… they know you’re not a good faith borrower who will pay back the bills, so it’s much riskier for them to offer you some kind of consolidation/refinancing package.

        I’m not saying that the way they think about this is a good idea, or accurate in any way, especially since it seems like you really want to get back in good standing, but you’re probably stuck at this point and will need to work with the lender to get them to move your loans back out of default.

        Wish I had better news for you, but that’s just kind of how it works in the industry.

  6. I have approximately $80,000 in student loan debt, all payable to My Fed Loan I think it means all government loans because I never took out any private loans). Recently they wanted to increase my payment from $20 a month to $200 a month, right about the same time my mortgage payment went up by $100 a month. This scenario is one in which either I will will default on my mortgage or I will default on my federal loans. I have been in the house about a year, so I don’t have the equity available to sell the house and even break even in doing so. Right now the loans are in a 3 month forbearance. I am signed up for the public service student loan forgiveness program, but have another 8 years to go on that. I have recently read about a law student in Oregon that successfully got his federal loans discharged through bankruptcy because he could not find employment in the field despite repeated attempts to do so and I feel like I am in the same boat: I pursued a master’s degree with the hope of attaining a higher paying upper management job. However, I lack the requisite 5+ years of supervisory experience to qualify to interview for those jobs. I am not working in my field at all, and every day that goes by that I don’t work in my field makes it harder to try to get into the field. My current field doesn’t pay well without 10-15 years plus of experience.

    I am considering declaring bankruptcy to see if I can discharge my student loan debts due to inability to find work in the field. Do you have any recommendations?

    • Hi John,

      I would take a look at my page regarding Private Student Loan Bankruptcy Discharges, and pay careful attention to the financial “tests” you have to pass in order to receive approval for a discharge. If you feel that you could pass one of the tests, then it’s worth making the attempt, especially if you’re choosing between defaulting on one or the other. The thing is, I’d try to do this proactively (don’t wait until you default on your loan… as that will make things worse). In addition, another thing to consider would be consulting with a local attorney and getting their opinion on your chances. Every local market has different rules, regulations, precedent, and judges who determine the validity of the claim, and yours may be open, or totally opposed, to allowing people to get their loans forgiven. Try contacting the attorney who represented the person you mentioned, as I’m sure they’d be able to share some insight with you (maybe for a nominal fee?). Good luck out there, and don’t give up!

  7. if you have a defaulted private loan with a company, and that same company is the servicer for your IBR FEderal loan, can they deny servicing your fed loan if you default on the private? setting up a payment plan soon with my provider on my private as they said they can settle for 70%, so just curious if they can do that. also could i.negotiate for another percentage, say 50 or 60%?

    • Hi Gennifer,

      I don’t think they’re allowed to do that, but you can find out for sure by contacting the Student Loan Ombudsman Group. This is a team of lawyers who work for the Federal Government, and who offer free legal consulting services related to student loans.

      After you get the answer to your question, please come back and let the rest of us know. I’ve run into this a couple times now and no one ever came back to update me and the rest of the community.

  8. Hi. I have a private college loan that went into default after a missed payment, and I can not find anyone to pay. The loan servicer says the loan goes back to the debt holder. I have called the number that the servicer provided, and they say they have no record of my debt. I’ve keep getting passed around to various agencies, National Collegiate Trusts being the most recent one. I don’t owe much and I’d like to just pay it off. Any tips?

    • Hi Nadine,

      This is the first time anyone’s asked me that… and to tell you the truth, I’m not sure how to find out who you owe. I would keep calling these people and giving them your name, address, maybe social security number, and being very demanding about them finding your debt. It must be somewhere…

      If it isn’t, then you need them to write you a legal letter that says it no longer exists, which you could then take to the credit bureaus to fix your credit.

      If you can’t get any headway from the lenders, then I think you’ll want to hire an attorney to have them pursue this for you. Sometimes a letter from a lawyer can get the ball rolling whereas all your phone calls and emails will do absolutely nothing.

  9. I live in Ventura, California and am considering legal advice and wondering how to pursue someone reputable? I too co-signed on a Sallie Mae loan that I can no longer afford. My son has never paid anything and is now permanently disabled but so far not willing to help out an file for forgiveness since he can’t work. I was told that if I pay something each month, there is nothing they can do but does this rule vary from state to state? Appreciate any advice you might have

    • Hey Niki,

      If your son is permanently disabled then you should be able to pursue a Total and Permanent Disability Discharge for him. It’s possible that ALL the debt will be forgiven. You need to look at this page for details. After you’ve checked that out, call whoever services the loans and tell them that you want to apply for the Total and Permanent Disability Discharge program. You should be able to sort this out relatively quickly.

  10. I was wondering if you knew of any lenders that would refinance or consolidate a DEFAULTED private student loan held by Higher Education Student Assistance Authority (NJCLASS loan)? They defaulted my son’s loan and we had no recourse or any way to dispute the default. They placed the loans with their collection attorney (who are retained–the loan is NOT sold). The collection attorney filed suit because we refused to pay anything to the collection attorney. The collection attorney then underhandedly in the midst of interrogatories obtained a default judgment. Naturally, my son filed a Chapter 13 to stay the default judgment and to make payments to his student loan. Since then, my son received numerous promotions at work and is now making double his salary. He wants out of the bankruptcy and would love to refinance his loans and get his credit back on track–do you have any recommendations. If necessary, we do have a cosigner with an excellent credit score. Thanks.

    • Hi Deb,

      I would try contacting all the large lenders and see what they say. You’re going to have a tough time though, unless you can convince the original lender to remove the loan from default status. Why not try to work it out with them? I’m sure they’re pissed you both off, but unfortunately they have all the power in a situation like this.

  11. My student loans date back to anywhere between 1993 and 2007.
    I lost my job on June 8th, 2007, and that was the last income I had.
    I had been paying at least $100 over each time I made a student loan payment.
    This eventually led to my divorce in 2009.
    All student loans are in default now, I have no savings, no property, I keep applying for jobs and not getting them. There are many issues this raises:
    1) my mother is getting older and would like to sign her house over to me, but can’t because of these student loans
    2) I would love to find a job, but the second they find the default on my record they skip over my applications
    3) someday soon I would like to remarry but cannot do so without them taking my new spouses earnings to pay off my loans
    Any advice would be much appreciated, thank you

    • Hi Michele,

      Yes, you’re in a tight spot, that’s for sure. You need to get a job and get back on track toward paying off your loans. If you could get them out of Default, that would certainly help. Keep applying, get working again, repair the loans, and get back on track.

      Talk a financial advisor or a lawyer about handling the inheritance from your Mother. It’s possible you could use a trust or some other complicated financial construction to basically protect the wealth from being taken away from you.

      And on the marriage front, I’m not sure if the company’s you owe money to will be able to garnish your spouse’s earnings. I don’t think it works that way…

  12. I have 3 private loans set up on payment plans now but they are costing me $ 450 a month plus my federal loans. I have been paying on them for 11 years already. The privates loans were defaulted on. Is there anyway to have them all discharged? I was reading about the Congresses Student loan forgiveness programs but it does not say how to apply. Does anyone know anything?

  13. Hello. My name is Matthew. I am sending this email to you and to a few others in whom I can find to try to find some answers, and possibly some help. I am now 30 years old currently working on and off trying to save money to further my career and maybe go back to school, but I find it impossible. I graduated high school in 2004 and soon after decided to attend college because I was told if I attend college I would be able to get a better job and have a better life. Growing up I was always a hard worker and I always paid my own way. Financially I never asked my parents for much help when it came to finances, but did take it when it was offered. When I bought a car at 18 years old I financed it myself, college I was also going to finance myself (no co-signer). I am from Massachusetts so when I chose school I chose to stay close to home (The New England Institute of Art Brookline MA). When I decided to go and was accepted it was supposed to be a 2 year course and all finances where to be talked about and gone over on my arrival date. I was young and foolish I guess, because it took me up until a few years ago to realize that I was totally taken advantage of in many ways and quite possibly maybe even ripped off. Even tho it was quite a while ago I can remember the first day I arrived because when it came to the finance part of it they knew I was by myself when they “Explained” things to me, but I remember them rushing me through the process fast as possible not explaining anything to me in detail and just telling me to sign this, sign this, sign this, and we will take care of the details. They knew it was the only school I was accepted to and they also knew I was first in my family to go to college so I was only happy to be accepted and eager to start class. On my 3rd week of class I was called down to pick out my classes for the following semester, I chose them and not until a week later when I found out from a fellow student that they had switched the Digital Media Production from a 2 year course to a 4 year course. I was never told this until I had to go ask myself. This made a huge difference in my thoughts of school because in doing the math if I had stayed the whole 4 years it would have cost me over $150k for college. This frightens me to the point where I met with my aunt who recently passed who was the person who helped me when I needed guidance and my mother and decided I didn’t want to be in this program for 4 years and owe that type of money when I graduated. I did decide to finish the basic study classes I had already started, but after that I was to leave and consider other options. I spent a total of maybe 2 months at school at the most and decided it would be better to leave and get a job and figure out other community college options. Not long after I got home I then received my first bill in the mail from Sallie Mae which was OVER $23,000.00. Today it is over $30,000.00. I am disgusted. It has ruined my credit, my life, my career options(being denied for CDL training, HVAC training, and community college). I tried calling them for answers and all they did was give me a huge run around and I did ask for a detailed print out of everything they billed me for which they mailed me a few pieces of paper (which I didn’t receive for months and was definitely not complete) where I was double and triple billed for meal plans and damages done to dormitories which I have no clue where these charges would even come from. I was double and triple billed for books, lab time which I never used seeing as I didn’t even make it to the point where I could use the video labs. I was definitely robbed. I don’t know what to do, to me it does not seem right or legal I cant imagine how many other people they have done it to. I do not know why it has taken me this long to try to find help I had just figured since then that it was pointless and they would win because they took advantage of me. I basically paid over $30,000.00 to go to college for 2 months (1 Semester). I don’t know what to do, I am sending this email to a few people including you (pretty much going to google lawyers and people who help people with these types of problems. If you feel you can help please email me back or give me a number where I can reach you or anyone who can help. Thank you so very much for your time.

    • Hi Matthew,

      You DEFINITELY need to speak to a lawyer! First off, you may be able to qualify for complete student loan forgiveness via the Defense Against Repayment Provision, which essentially says that if you were lied to, mislead, or if the school violated some state law, then your debt should be forgiven.

      Second, even if you end up owing something, if you truly were double and triple billed, then the lawyer should be able to dramatically reduce the amount you end up owing to whoever you borrowed the money from. To me, it sounds like you’ve got a pretty good chance at getting some relief via the legal system, but you DEFINITELY need to speak with a local attorney about this.

      Use Google and Yelp to find someone in the area that the school was located in, then schedule some free phone consultations to let the attorneys know what happened and what you are hoping to accomplish.

      Good luck!

  14. Hi Tim,

    I have two federal loans that have been consolidated into an affordable monthly payment and at a reasonable interest rate. I pay these religiously every month.

    I also have two private loans with very high interest rates that I was never able to consolidate. The loans are now in default status and have been placed with a collection agency.

    The problem I am facing is that there is no way I will ever be able to pay off these loans. One loan was originally for 8K and is now at 36K+ including interest and fees. The other loan was originally 12k and is now at 58K+ including interest and fees. With a grand total of almost 100K I have asked for options to get this loan out of default and the collection agency won’t assist.

    They claim that they have dropped the interest rate to 1% with my agreement to pay them monthly via ACH. I have done so religiously for the past 6 months and they still won’t work with me. The only thing they will accept is a lump sum settlement. I don’t have that kind of cash & my credit is still being impacted.

    When I call Navient for help they transfer me to the collection agency every time. No one at Navient will talk to me or assist me even though I see the payments that I make every month to the collection agency show up on my account on the Navient site.

    What advice do you have for me kind sir?

    • Hi Ray,

      Good to hear you’re taking care of the Federal debt, and sorry to hear about the struggle with the private loans. You’re not alone man… your situation is very similar to basically everyone else who comments here, even if it really sucks.

      Navient probably sold your loan to the collection agency, which is why they won’t help you with this. If I were you, I’d speak to a local attorney and see what you can do about trying to get these wiped out by filing for bankruptcy (especially if you’re not making a lot of money, or have a lot of expenses because of dependents, etc.).

      The bankruptcy discharge is a huge long-shot though, and you may have a better chance of getting rid of this stuff by settling on a smaller lump sum than they’re asking for. I might consider threatening them with refusing to pay another cent, telling them you’re going to file for bankruptcy and try to get all the loans discharged, and demanding that they settle with you for substantially less than they’re asking.

      Again… a local attorney is really your best bet here. If you’re already in collections though, and having your credit impacted, I don’t see why you should keep lighting money on fire with them. It’s POSSIBLE that they could get a wage garnishment on you, or put a lien on your property, if you start refusing to pay altogether, but those are costly things for them to do. You may be able to just start ignoring them entirely.

      Now – that won’t won’t be good for your credit… but who cares if you’re not planning on paying this loan off, ever, anyway, right? Good luck Ray!

  15. Hi Tim,

    I have a student loan that has been defaulted. I’m a single mother of two and I only make 21,000 before taxes which is more or less 1,500 monthly. With my Rent being 900 and the rest of the bills adding up to nearly 200 a month that leaves me with 300. That’s not including clothing and food expenses.

    My question is how do I get my loan out of default? Is there any way i can apply for a hardship or some kind of low income payment plan? I understand that I borrowed the money so I have to pay it back but I did not get a job in the field I went to school for. I’m just an average single mother trying to get by.

    I called my caseworker and he stated that I have to pay 2500 and then make 9 payments in order to get my loan out of default. I’m willing to set up a payment plan that can not exceed 50$ monthly. He told me it would not be enough, I only borrowed 15,000.

  16. Michelle Brown says:

    I defaulted on my private student loans in 2012 and didn’t hear from anyone until the end of 2014. The law firm that contacted me was initially a debt collector then turned counsel in the lawsuit against me without notifying me that they were the counsel for plaintiff. They received a summary judgment against me for the full amount of the lawsuit. Everything I have read says that the guarantor owes the loan and is the only one who can legally sue due to them paying off the loans. How can the “original” creditor sue me if the loans have already been paid?

    • Hi Michelle,

      If the loans have already been paid, then I don’t think anyone could sue you. You’re going to need to speak to an attorney of your own though. The legal system is confusing, and I am not authorized to author legal advice. Sorry that I can’t help, but your question is really about law, not student loans.

  17. Is there a way to refinance a defaulted private student loan with another loan company? Are there any suggestions if I’m able to get a cosigner on this? I defaulted on a Chase private loan. It’s at 17,500. They are willing to take 13, 500, but I can’t come up with that without another loan. I have the means to pay for monthly payments, but they are not willing! It’s been two years in default and I want to do everything I can to avoid garnishments!

    • Hi Brian,

      Your question is more of a legal issue than a student loans one, so I have to say “Maybe” as my answer, as I’m not an attorney and cannot offer legal advice. I think you may be able to find another lender who will be able to offer you a loan, but you’ll probably need to shop around.

  18. Hi

    I recently went into default with navient as I have been unemployed for a few months. Up until my contract termination I made all my private loan payments for two years- my federal loans are in ibr status. I will continue working soon as i found a new job, and can have about 5k saved by October. The private loans went into default this month.

    I am not concerned with their threats as I haven’t lived in the USA since 2009 nor have any asset or cosigners. I just feel sorry for my relatives who have to deal with the annoying phone calls!

    My loan is about 18k. By October it might be out of navients control and with a collection agency. Would it be best to tell them I would settle for 10k? Pay the collections 5k then and 1k over the course of 5 months? Or something like that? I know the agency would have bought my loan for pennies on the dollar, so I won’t pay them the full 18k.

    I will first tell the agency that I want the agreement in writing and sent to my family’s address in florida. Do you think they might agree to this? I make no income in the USA, nor pay taxes as I make less than the 100k foreign income requirement. Basically I will tell them take it or leave it as I have no ties to the USA.

    • Hi Genny,

      Why pay the loan at all if you don’t live here, don’t make income here, don’t file taxes here, and don’t plan on coming back to the USA? If you truly have cut ties with the country entirely, what’s the point of taking care of this debt?

      I do think you could get them to approve your offer, but they may feel like you’re playing super hard ball and end up trying to get a judgment against you anyway. If you have any assets at all in the states, it’s possible they could get a lien against them, or get a judgment that says any future wages you earn here will be garnished.

      However, I’m not an attorney and really not qualified to offer legal advice, so take this as you may. If I were you, and if I totally understand your situation, I would tell them to go fly a kite and simply forget about the debt.

      • thank you for the reply! the only reason i will someday pay the debt is because once i officially renounce my usa citizenship i need to make sure i don’t have any financial obligations out there. but that won’t be for another 10 years or so. but i have no assets or anything tying me to the usa, except these freakin’ loans! i regret the day i chose to attend university in that country!

        my other concern is this, my private loans and federal are held by the same company. will they deny me my ibr next year if i am in default with the private ones? basically i am saving to pay off, but some medical issues crept up so i probably won’t settle until next year. just curious if they would deny my ibr request? but since the dept of ed is in charge of the loan and they just service it, will it matter?

  19. I hope someone can help me with my situation. In short, I was declared disabled in July of 2013 (I broke my back, and I will never work again) by the government and collect SSI. At the time, I had about $200,000 in student loan debt. Once I was declared disabled, I applied to Nelnet to have my student loans dischared, and in December of 2014 ALL of my FEDERAL LOANS were approved to be discharged. However, I did not realize that I still had a private loan until I received a letter yesterday from my original lender discussing a settlement on the private loan, which is currently $90,000 and growing (any missed payment is capitalized to the principal.

    I contacted Nelnet and they informed me that only the federal loans were discharged. The person I spoke to at Nelnet said that the majority of the time that once the federal loans you have are discharged from Nelnet then the lender will go ahead and discharge the private loan, but some of the smaller lenders will not discharge the private loans.

    Therefore, I contacted the lender, explained to them that Nelnet discharged my federal loans, and that there is a 0% chance that I would ever work again in my life. The first question they asked me was if I could use any of my SSI money to make some type of payment. I said no, that all of my SSI money goes to monthly medical expenses and I could provide proof through both bank account records and letters from my doctors breaking down the costs of their visits (I already have this information because I buy nutritional supplements directly from the doctor, and are deductible for taxes. My mom declares me as a dependent, therefore any medial expenses incurred by me are deductible). There are completely unwilling to work with me.

    I took out multiple private loan through Citibank during both undergrad and grad school. After I finished Grad School in 2007, I consolidated the private loan to the lender of my other student loans so it would all be with one company. As far as I know, the private loans have never been turned over to a collection agency.

    I understand that I can file for the private loans to be discharged under a special provision under Chapter 7 called an adversary proceeding. Private student loans aren’t dischargeable as part of the standard petition. Instead, you or your attorney must file an adversary proceeding. Essentially, you’re filing a lawsuit against the private student loan creditor to get the debt discharged. This puts your lender on notice that you’re seeking a discharge. In most cases, they will respond to the court that your debt should not be discharged and will fight it.

    I understand you have to prove “Undue Hardship”, and I live with my mom in a condo, she works 2 jobs, and we literally live paycheck to paycheck. However, her income is well above the federal poverty levels. Does the “Undue Hardship” only apply to me or my mom as well since I live with her? Even though I literally have $0 in assets (My car is in my mom’s name, and even then it is 15 years old), the only asset my mom does have a 401k. My point is if I go through the special provision route of Chapter 7 does the court just look at me as a “household”, or is my mom included within the “household”.

    Also, I was reading about being able to use Chapter 7 if the private loans were not used for “qualified education expenses”. I can prove that while in undergrad, each semester roughly $5,000 was given to me as an “overage” chec. kI lived off campus for 4 years, and used this money to pay rent, food, ulity bills (I went to undergrad for 5 years, and completed 153 credits. Then during Grad School I started at School A, finished the 2005 Fall semester and started the Spring, but had to take a medial leave about 1 month before the semester ended. In July of 2006 I had a spinal fusion, and transferred to Grad School B to be closer to family and started Spring of 2007 and finished Fall 2007). . I used the same bank for all of my private loans, Citi Bank, then once I finished Grad School, I transferred the debt to the lender I used for my Federal Loans. Below is the link to how the US Code defines Qualified Education Expenses, located at the very bottom

    Finally, besides bankruptcy and S.O.L. there any other options? The lender has a statue of limitation to collect the debt, and it begins on the last day of your last payment. However, does the lender have to turn the loan over to a collection agency for the S.O.L time period to begin, or does it begin the date you miss your first payment to the original lender? Furthermore, I never once made a single payment to any of my student loan companies. Therefore, how would the the S.O.L. work in my situation.

    Any help would be very much appreciated.

    • Hi J,

      I think that of all the people who’ve come here asking questions about qualifying for a bankruptcy discharge, you have the best chance at getting it through the court system. You have no income, you’re totally and permanently disabled (right? If so, then you DEFINITELY have a case), and really no prospect at ever being able to pay down the private loan that you owe, since you can’t go back to work.

      You need to hire a local attorney who has experience working with student loan debt bankruptcies though, because you won’t be able to get this done on your own. I cannot offer legal advice (regarding the Statute of Limitations) because I’m not an attorney, and I’m sure you’d rather hear almost anything other than what I am advising, but you’re going to have to talk to a lawyer to get your situation resolved.

      The good news is that I do have a very positive outlook for your chances on getting the debt discharged, completely, especially if you have been qualified as being Totally and Permanently Disabled. President Obama recently announced new support for people rated TPD, and I believe that you’ll have very little trouble dealing with this situation if you hire an attorney to help!

  20. Hi. I am in the middle of a settlement with one of my old student loans. Everything I read says to try to get them to put paid in full on the credit report, first time I talk to them they said yes, now they will not agree to it. If I settle it with them can I push to have something other then “settled less then owed” put on my credit report?

    • Hi Reannon,

      It’s possible, but you’ll need to negotiate for it. You might want to try telling them that you’re not going to pay unless they agree to say paid in full, but that’d be pretty risky. If you’re getting a good deal from them, it may be worth paying off the loan, then taking a minor credit ding to get away from the trouble.

      You may also want to consider contacting the Student Loan Relief Helpline, who can help you reduce payments or qualify for a loan forgiveness program. It’s may be worth speaking to them for a second opinion about how best to proceed. If you’re interested, the Student Loan Relief Helpline’s number is 1-888-694-8235.

  21. Diana Sitarski says:

    I am have defaulted private student loans through Nelnet. I have tried speaking with the collection agency they gave the loans too and I told him that I have about $400 extra money every month before food. They told me their hardship payment plan was $350 a month…leaving me with nothing to live on. I don’t believe the collection agency owns my loans because the gentlemen i was talking to stated I need a reason you cannot pay so I can tell Nelnet. Can I make payments directly to Nelnet, since I am still given that option on their website, and have it still count towards my loan balance? I want to work on paying but what they are asking me to pay is not possible for me. Also I do not trust this company, I spoke with someone and updated all my information and they still had all the wrong info (such as my address) in their system. They also called my boyfriend’s family looking for me and I haven’t received any recent phone calls from them on my number. I told them that my number is the only number they can reach me at and to not call any other number. His response was well that number isn’t on your account, well then how did they call it?I just don’t trust them at all. Can I go with the original lender or do I have to deal with the collectors, NCO?

    • Hi Diana,

      Stop issuing payments to both companies and sort this out. You already defaulted… you’re already in trouble. You need to speak to a local attorney, or, at the very least, get in touch with the Student Debt Relief Helpline by calling 1-888-694-8235. They may be able to offer you assistance in the for of a loan refinance or consolidation that pulls your debt back out of default status, and into repayment.

  22. Hi Tim,

    my husband’s federal and private loans are in default due to him not paying for some years now. Now that we are married, we are interested in paying off some of this debt. I don’t have a lot of knowledge in student loans and just figured out what the difference in between a federal loan and a private loan. I think! He’s tax refund has been garnished since 2010 and he never gets any of it back. I believe the federal loans are taking this money correct? are the private loans such as Sallie May or Navient now allowed to garnish his tax refund? I know they can do a wage garnishment but I have not seen anything while trying to research if they can garnish his refund. I know he only has a $700.00 amount that he owes the federal loan but has $29,000 on private loans. If we do a student loan consolidation for private loans will that stop any garnishment of wages and or tax refund garnishment?

    • sorry I forgot to ask one more question, if he does a consolidation for federal loans does this stop his tax refund money from being taken? we are planning of filing this years taxes together but we are afraid of them keeping everything due to his student loans. I only worked very little last year due to being ill and I doubt I can do “injured spouse.” what can we do ?

    • Yes, if he’s in default then his tax refunds could definitely get garnished. As I said in my other post, you should speak to a CPA.

      Do NOT combine his Federal Loans with Private Loans. Pay off the Federal Loan (get it over with), then focus on the Private Loan.

  23. I have fed loans and private loans, I just got my fed loans with a doable payment plan. My private loans are in default and with a collection agencies and has been with them for a while due to two years ago I didn’t have a job for that length of time.

    Even in my jobless state I was paying what I had and it still was not good enough to the point where I just couldn’t do it anymore.

    I’m slowly getting back on my feet and I don’t want the effects of the defaulted private loans to block any of my futures.
    What should be my next move?

    • Hi David,

      You’re going to have to figure out how to get back on top of your Private Loans. If you can’t get them out of default and back into repayment, then your credit will definitely remain impacted.

  24. Dennis Gardner says:

    I was working on a PhD in 2002. The VA put me on a 100% total and permanent disability. I had to stop my schooling. I spoke with an attorney on the phone who specializes in helping vets. He told that I was “untouchable” and to forget the need of paying the loan. After getting many calls over a period of maybe 3 yrs, and seeing my credit score suffer, the creditor took my case to court. The judge ordered me to repay at 12.1% interest. I began paying $150 per month. After a year I raised it to $300. For about the last 3+ years I’ve been paying $500 a month without fail. I’ve hardly made a dent in the $24000.00 (approx.) loan. I’ve got the payments set up on auto withdrawal. In total I think the loan has been in default for 8+ years. I could be off on that.
    I’m trying to find some way to refinance the loan and get an interest rate reduction. I tried SOFI, but then they balked when they saw the default. The last credit score I saw was 720. The court action on the credit report was fortunately removed.
    I spoke with attorneys about representation to go before the judge and get the interest rate lowered. They wouldn’t even consider it, because the judge had set the rate.
    I have my house on the market in Kansas. I’ll be lucky to clear a profit of $1000. I have no stocks or bonds or other investments.
    I moved to the Philippines in Oct. 2015, and married a lovely lady. I’m here on a temporary visa and will apply for a permanent resident visa within the year.
    I appreciate any help you can provide for my case. Thanks.
    Dennis Gardnr

    • Hi Dennis,

      If you really are totally and permanently disabled, then you qualify for a Total and Permanent Disability Discharge. President Obama just recently (within the last couple weeks) announced that they are ramping up support for the program, and they will literally be mailing everyone who qualifies directly to tell them that they are eligible for the benefit.

      You should be able to get your loan FULLY discharged, and easily, if you are still totally and permanently disabled. Visit this page for details on the program.

  25. Hi Tim,

    Thank you so much for the informative website. As for my scenario, I have 3 chase private loans. Long story short, one of these loans has been accelerated and the other 2 loans are in the process of being charged off and accelerated as well within the next 2 weeks. For the first loan, I have been offered a discounted settlement with a down and monthly payment but however cannot afford this at the moment. The other 2 loans are still pending.

    My father co-signed on these loans and am scared to death of they will go after him. Both of my parents live out of the country and own 1 home which is located also out of country. They only receive social security as income.

    My questions are:
    – Can the banks with private loans go after my parents’ social security income they receive here in the states but live over seas?
    – Can they put a lien on my father’s house that is located out of the country?
    – With my situation, what would you recommend?
    – Would consulting with a lawyer be worth it for me at this point before it goes to court and escalates?
    – If I don’t have a copy of the contract or note, would chase still provide me with a copy?

    My main concern is protecting my parents out of harms way and hopefully negotiating a reasonable monthly payment through a lawyer.


    • Hi Francis,

      I believe that the banks CAN go after your parents Social Security because it’s being generated in the US, but you need to speak to an attorney to find out for sure.

      I don’t think they can do anything about property’s located outside of the country.

      Yes – you need to speak with an attorney.

      Chase should have to provide you with all the details.

  26. I have a private student loan of $21,000 that is already in default for 18 months. I got a call from collection agency demanding that i pay in full. As of right now, my finances are still small and cannot afford to pay what they are asking for. They wanted me to pay in full and i told them i don’t have any such money. They insist i find loans or get help from family. I told them i don’t have any family with such money. I asked them i can be able to make payment on what i can afford as i am not financially able. I have family and kids and what and keep asking if i can afford $700 a month for 10 months and pay off the rest after 10 months and told them i still can’t afford. I told them i can afford $150 a month if they are willing to giv3 me a monthly agreement. They seem to keep asking about paying money now and it keep going back and forth. I am willing to pay monthly payments but they are not listening. Their client is national collegiate trust student loan. I know there is a way to make it work, but should i do? I have been living paycheck to paycheck and it stresses me out. Any suggestions will help me out. Thanks.

    • Hi Andy,

      These people are out to get as much money from you as possible. They want a big lump sum, initial payment, because they think you won’t live up to the contract of a set monthly payment amount (you didn’t the first time around… why would you now?). Keep that in mind as you’re negotiating with them. Don’t take it personally, but clearly and calmly explain your situation to them.

      Tell them also that you’re considering filing for bankruptcy and pursuing a Bankruptcy Discharge. IF your finances TRULY ARE absolutely terrible, then you MIGHT have a shot at getting the loan discharged in bankruptcy, but because it’s only $21,000 (not $75,000, or over $100,000), the odds of that occurring are quite slim.

      HOWEVER, sometimes just threatening that is enough to get them working with you and considering a better deal.

  27. In 2006, I attended a semester of dental school as an international student. The terms set forth by my private lender stated that I would have to re-apply each yr to renew the loan for that year and I would be granted funds based on my credit without cosigner or collateral. I was denied the loan in 2008 (took a year’s break from school). The reason they stated was that they no longer lend to international students. My fate had been sealed. I could no longer complete my education. I decided not to go back to the US and started working odd jobs in my home country. I struggled to pay back for 3 years hardly making a dent in the balance I owed which was 30k now down to 28.6K USD. In late 2009, lost my job and could no longer make payments. My relatives started getting letters in early 2012 from the collection agencies. When I called they refused to allow me to settle the loan and tried to make me go into forbearance. I have not contacted them since.

    I recently checked my credit and it was still good. It showed the loan balance as outstanding but nothing about any default. I am not sure what to do as my financial situation has not improved. My life has been ruined due to my decision to go into professional school with this private lender. The only saving grace was that I only attended one semester and my year’s break saved me more heartbreak had I actually completed 1.5 yrs.

    If I ever decide to go back to the US to study further, to visit family or to immigrate through family sponsorship, will this loan cause a hindrance?

    The loan originated in DE but the debt collection is being done from CA. Which state’s statute of limitations applies to this loan. At the time of e-signature I may have been in TX or overseas, not sure.

    I am deeply ashamed of the way things turned out with my life. Is there any way to still resolve this? I can in no way afford to pay back the entire amount. My parents worry about my future and whether the collection agencies can hunt me down in my home country.

    • Hi Sophie,

      I think you will need to speak with an attorney to find out how the debt could impact your immigration status. I’m not familiar enough with the implications that US debt has on foreign nationals.

      There may still be a way to resolve this, and an attorney will be your best bet at determining which steps to take next. Don’t give up yet!

      • Hi Tim, Can you advice me as to how to locate a lawyer who can help me? In what state would I need to find out if I have been sued? I cant really afford their fees

  28. I have my student loans with Navient I own them more them 75k, they agreed to lower my interest for 1 year for 1%, that year is over and now I am back to my regular Interest 12% and I my monthly fee is for almost $800, I talk to them and I ask them to lower my payment that I can not afford to pay this kind of money every month due to economical situation. But they are calling me telling me that serious actions will be done if I don’t paid. I haven’t paid them since February this year (2015). What should I do? I don’t own a house, my car is lease and I don’t have no money in the bank. I live paycheck to paycheck. Can they take my paycheck if I don’t paid

  29. I have signed with an attorney’s office to help settle and reduce my private student loans with Navient of 36K. They tell me I will pay 388 a month for four years instead of the 465 for nine years. Is this legitt or do I need to get out of this

    • Hi Mark,

      If your attorney negotiated this for you, and all the paperwork is in order, then this sounds like a very good deal. Sounds like he or she was able to save you some significant cash, and I would definitely go for it if everything seems legitimate.

      Make sure you have EVERYTHING in writing though, from Navient (not just from your attorney).

  30. With navient/Sallie Mae..I never once used their money. It just sat there unused, I had no use for it and I feel stupid for actually getting it now.

    I can’t sign in to pay.

  31. Hello,
    I received loans through a company called Tuition Options to go to a for profit school in California in Jan 2014. Aug 2014 that school filed bankruptcy and closed down. The Department of Private Post Secondary Education (DPPE) spoke to the students at that school and advised us to quit making our tuition payments to Tuition Options on account of the school closing. I finished my education at another school so I don’t qualify for closed-school debt forgiveness. Around Feb 2015 I had to contact Tuition Options for some tax information and they advised me that my loan was deliquient. I explained what DPPE told myself and my classmates and the woman simply said ok I see well I get this taken care of. Now, I recently received an email from Tuition Options stating, again, that I was deliquent. I’m now completely confused because the DPPE explained that this debt would not be forced on me as the school failed in its contract to provide me with my education and this portion (but not my federal loans) will be forgiven. What are my options?

    • Hi Chris,

      Hopefully you have something from DPPE in writing stating that you should stop paying Tuition Options? You’re going to need to provide them with something that clearly indicates why you don’t owe them any money.

      If you have something in writing from DPPE, then that should work. If not, you may need to consult with an attorney to get help drafting legal papers/documents to prove that you really don’t owe these people any money.

      You could also attempt to deal with it yourself by calling them up or sending them letters clearly outlining why you don’t owe them any money, but they may simply ignore that.

      I would not pay them anything, but try to get something from DPPE in writing and then send that to Tuition Options.

  32. Hi,

    I have a private student loan that has been defaulted since June 2008, I checked my credit report this year and it was removed from all three credit bureaus. The last time that I spoke to one of the collection agencies they wanted to settle but when I asked for the original agreement they could not located. What do you think could have made them remove the debt from the credit report. Could they be looking to take legal action against me ?

    • Hi Angelica,

      It’s possible that they’re considering taking legal action, but since this is from a default that occurred such a long time ago, it’s also possible that they simply wrote off your debt and have moved on.

      How much do you owe them? Do you have a lot of assets or make a lot of money? If they don’t think it’s worth the time and cost to chase you down, they’ve probably simply moved on.

      I would not call them or bring this up, because you may be one of the lucky ones who they’ve simply forgotten about. It seems like you weren’t planning on paying them back anyway, so why re-open that can of worms?

  33. Hi Tim,

    I have around 200,000 in student loan debt, 90,000 of it private Navient loans. The federal loans are being paid, they have me in an income based payment program, but the private loans are in default as Navient would not work with me to get a monthly payment that matches my income.

    The loans have been sold to a collections agency, and are gaining 700/month in interest. The collections agency’s lowest monthly payment option is $250/month which is more than what I could be garnished for based on my states laws. If I agree to this payment plan they will lower the interest rate, and the $250 will only go towards interest.

    I have spoken with a bankruptcy lawyer and was informed that the court in this state almost never allows bankruptcy out of student loans.

    My spouse owns the house we live in (my name is not on it), has a good credit rating, and makes the bulk of the income. We do not share bank accounts. Is there any reason not to just let them garnish my wages, as it will be less per month than what they insist I should pay?

    Thanks for your time.

    • Hi Sandy,

      Strategically, I like your idea of allowing them to garnish your wages, but just realize that you’ll be paying that $250 per month essentially forever.

      Also, you’d better speak with that attorney again to make sure that your husband’s wages and assets can’t be attacked. If you live in a community property state, then he may be on the hook for your debt.

      Don’t do anything without consulting with an attorney. I definitely don’t want to steer you the wrong direction, and this is a major decision that will impact your finances for the rest of your life, so be cautious here. Good luck!

  34. Keish Williams says:


    In 2006 I took out a 30,000 dollar loan from Sallie Mae. When I graduated in2008 they tried to collect 500 dollars a month. I didn’t have it so my loan went into discharged after a couple years. I now owed 73,000 dollars. I just settled with central credit services and navient for 12,000 dollars to settle my account. The collector kept saying “to settle tour account in full” but the letter to me would say “paying as agreed for less than the balance owed” then,the final letter would say settled and paid for the amount less than balance owed”. He said that it means the same thing and that by state law settled is settled and when it is reported to,the beaurau it goes in as settled. Is this true?should I call navient and ask them? What type of impact does this have on my credit can it get worse? Do I have to worry about my statute being reset? Do they have the ability to delete it from my account after its paid.?? I already agreed to payments that start friday. Is it too late to make these requests??? Any immediate help would be great. Thank you

    • Hi Keish,

      You may need to consult with an attorney or some kind of financial advisor for a solid answer to this question. I am not sure what legal or financial ramifications you might experience from this different terminology, if any, but I wouldn’t let it sit.

  35. I also have federal loans that I would like to take care of through the obama plan but most agencies need a $500 payment to do the paper work and then lower my payments. Is there a government agency that doesn’t charge a large fee to consolidate these loans?

    • Hi Debra,

      You actually don’t need to pay a single cent to consolidate Federal student loans! This is a FREE process and something that you can take care of without the help of an outside agency.

      To start the process of applying for a Direct Consolidation Loan, go here.

  36. I have defaulted on my signature student loan with navient. Today I called to see what I can do to stop this from going to court and hurting my cosigner or garnishing her wages. I was told by two different customer service agents that I need to make a payment of $1500 with the next 3 days or it will be sent to collections and prepare for wage garnishment on my cosigner. I only have over $10,000 in signature loans. The will then accept payments of $60 for the next 20 year. My problem is I can’t come up with $1500 in three days and my co signer is in worse debt thank i am. Are they just trying to scare me into payment this huge down payment? Do you think I can negotiate them down to just accepting monthly payments made by my co signor? They will accept any payments I make of course but will not stop proceeding to collections if I don’t pay the $1500.


    • Hi Debra,

      The bad news is that they may not just be trying to scare you, and the good news is that this may be an empty threat. Since you really don’t owe all that much money, I have a sneaking suspicion that they’ve got bigger fish to fry, and that they’d be far more likely to go after borrowers who owe something like $20,000, $50,000 or even $100,000+ debts.

      I wish I could tell you with certainty that you will not need to respond to this, but unfortunately all of the power is in their hands, and they may have legal grounds to come after you with a wage garnishment.

      I don’t want to give you bad advice, because financial repercussions here could be huge, so I would recommend that you speak to a lawyer about this matter and ask them what you should do.

  37. Hi there, I had 3 private Sallie Mae loans that I took out in 2002. The interests rates grew like wildfire on these loans due to several mistakes on my end and on Sallie Mae’s end. In any case, by 2008 my minimum payment was 1,100 dollars a month and would double by the next year. There was no possibility for consolidation and my minimum monthly payments were only covering the accrued interest.

    In 2012, Integrity Financial Partners Inc contacted me to settle on the 122,000 dollars (3 separate loans with high interest rates.) They offered me 50,000 dollars to settle and then, later the lowered it to 35,000. I didn’t think I would be able to get the money, but with help from my family I was able to get that amount in full. We wrote up a contract and paid Sallie Mae the 35,000. We sent them an email stating that upon depositing the 35,000 they would be legally help to settle all 3 accounts in full and to never contact us again.

    Sallie Mae deposited the checks and sent us receipts.

    Three years later I looked at my credit report to see one of the loans (the 60,000 dollar one) was active and open on my report. It was no with Navient. They bought out Sallie Mae.

    I called them and they told me to contact Sallie Mae and if I was incorrect and I did owe the money to call him back and we could set up a payment plan. I tried to call the number he gave me and it directed me back to Navient.

    What should I do? This has impacted my credit score and has caused so much stress and confusion.

    Thank you,


    • Hi Leighan,

      I think your’e going to need the assistance of an attorney to deal with this. I would contact a local lawyer and ask for a free consultation – see how much it would cost to have them investigate and assist. Alternatively, try contacting the FREE Student Loan Ombudsman Group and asking them for advice on how to proceed. They should be able to steer you in the right direction.

  38. Hi Tim, I feel like I’m drowning, with no way out. My private student loan debt is in default for about 97,000. A career that I no longer even work in because of the health problems it was giving me. I was making 1,000 payments for years and I fell behind a bit and they went into default. My credit score is destroyed as the accounts have all been reported separately as each loan was disbursed.

    My question is, how can I agree to some sort of settlement with these people (A collection agency)? Should I ask them what amount they would settle on first and see if I can do that? What if I even imply that I could borrow some money would they attack me for it? I only want to borrow if I can pay the amount in full and put it behind me and owe someone else the money, but to be honest I am not sure if that is even an option. Is it possible they would settle on half the amount I owe? What is realistic?

    And, once this is paid off, will it ever disappear from my credit report?

    Also, I wanted to note that I am paying them a few hundred dollars a month, which is not even touching the principle just to keep them from harassing me.

    Because of this, I have been turned down for a home, a business loan, a car, an apartment, you name it. I am stuck in financial hell with no way out.

    Please help.

    Thank you

    • Hi Sofia,

      Sorry to hear about your situation. Facing unbearable debt is probably the most difficult thing to deal with because of all the stress and uncertainty that it causes, but you seem to be thinking about things properly and looking for a real solution, which is a great step in the right direction to resolving your problem.

      I would speak to an attorney before proceeding to contact any collection agencies. You need to find out what your legal rights are here, so that you can start requesting, or even demanding, certain things. Settlements occur in too-wide a spectrum for me to give you a specific number (like half, a quarter, etc.) for what you’ll be able to work out with them.

      In some cases, the collection agencies simply give up and write the debt off after they can’t get any concessions out of the borrower, while in others, they push the pedal to the metal and start going after them with wage garnishments, liens on the property, etc. There’s no real way to tell what they’ll do in your case, until you open up that dialogue and start the negotiations.

      If you get everything paid off, then yes, it would disappear from your credit report.

      Paying a few hundred a month to avoid harassment is only going to prolong the problem and make things worse. You’re wasting money doing it this way, so you should start working toward a real resolution as quickly as possible.

      Remember, they can find out how much you make and they can probably figure out how much you should be able to afford paying them. Don’t lie about anything, but be honest, open and willing to settle, and you may be able to reach a reasonable agreement.

      But don’t do anything without first consulting with an attorney, because these will be important decisions and you will want to make sure you’re handling this appropriately.

  39. Hi my husband got a student loan through sally mae which is now navent. He never got to finish school and now owes 96000. We are a family of five with one on the way and he only makes 45000 a year. They want us to pay almost $2000 a month and with a family this big and only one income its not possible. Is there any help? We can pay maybe $100 or two a month but not nearly what they want. I am really scared because we are about to move to another state and i dont know what to do.

    • Hi Jackie,

      You may be able to negotiate with Navient for a better repayment rate, or look into consolidation options that would allow you to extend the term of the loan and perhaps reduce monthly payments, but at some point, you guys will have to pay back this loan.

      It doesn’t matter that he didn’t graduate either – unless the school shut down before he could finish, there’s no “I didn’t finish” type clause in student loan debt law.

  40. Hi, Tim

    Thanks for your insights.

    My wife and I are in our mid sixties and received MBAs from Corinthian’s Everest University (online) in April of 2012. Of course, these degrees have since proved totally worthless, to us at least, though not to the lenders. My loan is with Great Lakes and hers Stafford.

    It is simply outrageous that most Corinthian brick and mortar students with Fed loans will have their debt forgiven, literally at the stroke of a pen, while we with equally bogus online degrees and beholden to private lenders retain little, if any hope for relief, DOE’s recent announcement of an eventual application process notwithstanding.

    It would appear our only choice may be a grassroots rebellion against repayment. As we are hundreds of thousands of 1,000 lb gorillas in the room, what in your opinion, might be the effect if enough of us stood simply stood up and said “no”?

    I am already considering a website and/or blog as a rallying point.

    Your thoughts?



  41. Don’t be scared. You can control your money from bank levy in many ways including banking with banks that exist online in a different state. Splitting your checking accounts into different banks, because serving each one of the banks (if they ever find them) is quite expensive to them. You can also work for yourself, very easy to do, in fact, you can make more money working on your own then for someone else. By the way, don’t open up a shop. Come out of your own basement or home office if you plan to work on your own.

  42. I want to ask if you can provide any Law Firms or Lawyers that I can talk to? My situation is that I co-signed on a Private Student Loan to help my younger brother go to so. At the time, I had just completed college and was getting into my career and the school he attended, told him, in order to remain in school, he had to take out a Private School Loan. Early in my repayment on this loan, I spoke to a rep that worked for the Lender about the School my Brother attempted (For Profit College) and it appears, this was very common at the time regarding students and the push from College Advisors to have students take out a Private Student Loan to attend/continue. My brother also shared this point with me, with he asked me to co-sign.

    Anyway, years later, as I was about to purchase my 1st Home at 30 yrs old, I found out (after my brother graduated), the loan went into repayment and they went after me to pay. My brother at the time, was not in a position to pay the monthly payments, so everything fell on me. This was in 2002 and I have been paying every since and to date, I have given over 60K in repayment. I already went down the path of trying to get removed off the loan, but that was a no win situation because of the stipulations that the Borrower needed to have 650-700 Credit Score and Income to pay back the loan and my brother again was not in a position. Fast forward, I make monthly auto payments, but they have shared, I have 22 Years left to pay on this loan and there is nothing I can do to get removed off the loan. I am married, have a family, 2 kids. I no longer have contact with my brother and right now, there just seems like (A.) There should be something Legally that can be done and (B.) Should I start writing my Legislators and other politicians on this. There are 1,000s of people (Co-Signers, Parents, etc.) who are in the same position of making payments and will be endless (22 more years for me and I am 42).. This doesn’t make sense for me, consumers, other than the Lenders. Please advise.. This entire area is a bigger issue for people vs. just everyone’s one off cases. Thank You but, please advise.

    • Hi Allen,

      I’m sorry, but I don’t have any specific attorneys to advise you to. I would advise that you guys look into the Defense Against Repayment Provision – this might give you a good argument for having your brother’s loans discharged.

      The way it works is that you have to be able to prove that the school knowingly mislead you to take on too much debt, or debt that you wouldn’t be able to pay off, because of exaggerated claims, lies, etc.

      I do think you may have a shot at this since they told him he HAD to take out a private loan, but you will definitely need to speak to a lawyer to get this sorted out.

      Look into the Corinthian 15 and the Debt Strikers movement. You can probably find some free legal assistance through one of these groups.

  43. I have about 34k in private student loan debt. I took the loan out to help my sibling finish college. Once she defaulted on payments it fell on me obviously since i took the loan out. I have been trying to find a way to get rid of it. we have been making payments set up and lightly negotiated with the in house collection agency for three years now. every three months i ask if they will or can pull it off my report if i can try to find a way to come up with a lump sum payment. They always tell me that its impossible to do so, but they keep asking me when or if i can make larger payments any time soon and i continue to tell them that since they won’t help me that i can’t do anything more than what is already negotiated.

    Im ready for this to be gone and i don’t know what to do really. Part of me wants to take out a personal loan and pay that off and just pay off the personal loan, unless there is any kind of consolidation program for private loans in default or collections 🙁

    • Hi Liz,

      Sorry to hear about your situation. Unfortunately, I’m not aware of any consolidation programs for loans in default or collections – typically, new lenders won’t be able to work with you once you’ve already defaulted, and you end up pretty much screwed at that point.

      Be careful what you say to the lender because they will definitely use anything you say against you, and if they think you have more money available, they’ll try to increase your monthly payments.

      You could consider taking out a personal loan, but I would only advise doing that if you can get one that has a lower interest rate than your current student loan debt, because obviously you don’t want to cost yourself more money in the long run.

      It’s a stressful situation, but it sounds like you’ve got a pretty good handle on things. How many more years do you have before this loan is paid off with monthly payments? It might be best to just hang in there and slog it out, even if that means having bad credit for a while longer.

  44. Hi,
    I am looking for some help. I have about 8000 left in private student loan debt. Unfortunately due to medical reasons for myself and with my oldest child dying of brain cancer I had to file for bankruptcy last year; I spoke with an attorney when I filed and he told me that I could not include my student loan debt into my bankruptcy. I am in default currently. My life is now back on track and I am back to work and I really want to try to make some payments on this so that I am not sued…any other programs or advice I can try to get this back on track? Thanks so much!

    • Hi Lindsay,

      Sorry to hear about the negative things that happened, but I’m glad to see that you’re getting everything back on track now.

      You could have included your loans in your bankruptcy filings, but the attorney probably advised against it because he or she didn’t think that you would pass the undue hardship test.

      To get your loans out of default and get back into repayment, you’re going to need to contact whoever services your loan.

      This is not going to be an easy phone call – they might make threats, say mean things, and basically try to make you feel worthless, but just let them know what you went through, that you are ready to try and make things right again, and give them an idea of what you’re able to pay each month.

      Tell them you want to get back on track and ask them what you need to do that. Make sure you get whatever offer they provide in writing, and that you have a written record of whatever deal you end up agreeing to.

      Consider consulting with a lawyer before proceeding, and during the negotiations with the loan servicer as well, because these are legal arrangements, and it may be worth spending a few hundred bucks to ensure that you don’t get screwed out of thousands down the line.

      Good luck!

  45. Tim – I think you’re exactly the person I’ve been looking for! I need advice. In a nutshell, my situation is this — I went to law school at a very expensive private school and walked away with $215K in debt. I have multiple loans, and didn’t make more than 60K/year (living in NYC) for my first 6 years post-graduation due to the fact that I graduated in 2008 and the economy tanked. I ended up defaulting on 2 private loans, totaling approximately $110,000 (so half my debt), and they went to a collections agency who I negotiated with to pay $5K up front (I had just gotten a new job and that was my bonus) and have been paying $850 per month the last 15 months. So I’m down to $93k (owed to the collections agency) but I feel like this is never going to end. (Note: I’m paying almost $1000/month to other student loan providers, so right now I’m paying over $1800/mo towards student loans, which is way more than my rent… in NYC!!). So here are my two questions:

    1) Am I doing the right thing here? Is there anything I can or should be doing with regards to the collections debt? When my case worker said that the $110,000 was being paid off with no interest, I felt like I sort of won the lottery, although my credit score is now TERRIBLE.

    2) Speaking of, I’m working to build up my credit in other ways — I’ve got my sh*t together now that I make decent money and am paying all my bills on time, etc. and I’ve got a low balance credit card and using it and paying it off every month. But since I’m still $93K away from breaking up with the collections agency, is there anything else I can be doing to keep my credit from being damaged further? I hear the damage is done, but if this goes on for a number of years, won’t it be reported over and over?

    Thanks in advance your help / advice!

    • Hi Lesley,

      You’ve got a tough situation going here. It’s not easy for anybody to get out from under $200,000+ in student loan, but it sounds like you are on the right track.

      With private loans you basically have two options:

      1. Pay it off
      2. Default and discharge via bankruptcy

      I do not believe that you’d qualify for a bankruptcy discharge because you are making too much money, and you’re a young lawyer, so the court would argue that you have plenty of time and plenty of income potential to eventually pay off this debt.

      What you could do though is try to negotiate with the collections agency for a better deal. If you’re really not having to pay interest, then you DID basically win the lottery, but there’s always room for improvement…

      The collections agency holds all the power at this point, because if you don’t pay them back, they can sue you, get a wage garnishment, put a lien on your property, etc., so you’re really at their mercy.

      BUT, on the other hand, they want as much money as they can get out of you, and they know that you could end up disappearing, so they may be willing to negotiate for a much smaller total repayment if you can pay it all up front.

      I would try to head that direction, especially if you’re feeling flush with cash now.

      Just be careful that you don’t overplay your hand, because if they know you have more money, then sometimes they will try to renegotiate the other way and tell you that the previous deal is off and you now need to pay more.

      You’re a lawyer, so I’m assuming that you will be less prone to falling for their tricks, and I’m hoping that you’re getting everything from them in writing (make sure that you have a written, signed contract showing your repayment stipulations).

      On your credit issue, I’m not an expert on that and don’t want to steer you the wrong direction, but I think the damage is done. You’re already sent to collections. As far as the credit reporting goes, that basically means you defaulted on a loan, and I don’t think it gets worse than that (other than bankruptcy).

      You might be able to talk to the collections agency about having them remove your loan from default status and placing it back into re-payment status or whatever they call it when the load is still actively being paid off though, especially since you’re making regular payments on the debt.

      I am not sure if they can help with that or not, but if they can, I think that would improve your credit status.

      Hope this helped, and good luck!

  46. Hello, I like many on here made uninformed choices in taking money out. I have $185,000 in private loans alone. I took out initially 100k in private loans. My loans are days from defaulting. They’ve offered me a payment plan, but its still sitting at $630/month. And mind you, that’s with just my private loans, and that rate isn’t guaranteed for the life of the loan. I’ve stopped paying in the past because they jumped 300 dollars a month.

    I’m a healthy young adult who can’t find a job that pays over 32k/year. They offered me a settlement of 150k, but if I had that I’d never be in this situation. I’ve looked into attempting bankruptcy, working 24/hours a day, etc to try to recover from this. I know I took the money out, but I was told lenders would work with me based on my income.

    I guess my question is…. What seems like my best option? Is bankruptcy even possible for a healthy adult with. 185k in private student loan debt. They are through Navient. Thanks for your response. I’m feeling desperate.

    • Hi Britt,

      Bankruptcy MIGHT be possible in your situation, since you owe so much, and are making so little. The thing is – some judges make it relatively easy, and others are entirely against allowing it.

      The only way to get any idea of the odds of having a Bankruptcy Discharge approved will be to speak with a local attorney who has experience in this specific type of law.

      You need to talk to a local lawyer, give them the facts about your situation, and see what they think. Don’t give up if the first one you speak to turns you down, because they just may not be up to date on the latest bankruptcy cases.

      Speak to 2-3 lawyers, and spend a little bit of money getting their expert opinions if you have to. It could end up saving from a lifetime of financial distress.

      Good luck, and hang in there!

  47. Hello,

    I was irresponsible with the amount of money people loaned me when I turned 18, and as a result of that declared bankruptcy about a year ago. (I am currently 26 years old.) While declaring bankruptcy, I had every intention of continuing to pay my student loans as agreed after the proceedings.

    Unfortunately, one of my private student loans defaulted as a result of my bankruptcy. I have spoke with the lender, and they told me that I could just pay them what I can for that loan, as I can, and keep paying on the other two loans I have within their company that are still good standing.

    My loan is at 11,000, and paying it off all at once is not reasonable, so I have been sending $100 a month for that loan specifically. However, will keeping making these minimal payments cause the default to stay on my credit rating for over 7 years? I would like to think that eventually I will have okay credit again, and I understand it takes awhile, but is making these minimal payments each month prolonging the amount of time the default remains on my credit? I’ve looked into refinancing, however, with my bad credit, no one wants to give me that option.

    • Hi Bonnie,

      Yes, that loan remain on your credit rating for as long as it’s in default status. You’re not pre-longing anything by making minimal payments though. If you paid nothing, then it would remain on your rating for at least that long.

      One thing to watch out for – if you’re only paying $100 a month, that probably isn’t covering new interest accumulating, which means your loan may be getting bigger each year, even though you’re paying money towards it.

      You need to speak with the lender and find out how much you have to pay each month to cover the principal and interest payments, otherwise you may be paying this loan off for the rest of your life.

      I would not keep sending $100 a month and hoping that this takes care of itself. You need to get involved and come up with a solid plan for getting rid of this debt. Only the lender can help you with that.

      Also – whatever you agree to with them, make sure that you get it in writing. Have them email or fax you the deal that you agree to, otherwise they can change their mind, take you to court, and start taking money with a wage garnishment, put a lien on your property, or come after your other assets.

  48. Hello,

    I have 5 private student loans through Sallie Mae (or now Navient). I got them back in 2009 to 2012 while I was in undergraduate school. I was making monthly payments of $95 during school because I couldn’t get them completely deferred even with a cosigner. After December 2012, my father died and he didn’t have life insurance and my mother was my cosigner. I was not able to go back to school to finish the few remaining credits I have left because I moved home to help her with the bills to her house. In July 2013 (6 months after I took a break from school) I received letters telling me how much I will be paying them now. For all 5 of the student loans it was beginning at about $750/month. At the time I had a close to minimum wage job and had just started making payments on my federal student loans which were around $250/month. paying $1000/month for student loans is just absurd. I called Sallie Mae at the time and explained my situation how I was working a part time job and how my cosigner (my mother) couldn’t afford to help because of my father passing away and not having life insurance and she was struggling to pay her mortgage, car payments, etc. I have been a loyal customer then, having made on time payments for well over 3 years by then. They still refused to work with me on getting my payments of $750/month lowered. They kept telling me that if I couldn’t pay it then it was up to my cosigner to pay it. I spoke to both a caseworker and a manager. It got to a point where both my mother and I were yelling at them to try to get them to understand.

    Since they refused to help me and I couldn’t afford to make those kind of payments I decided that I was just not going to pay them (stupid I know). I looked into consolidation programs through other banks but they all told me I had to have a bachelor’s degree in order to join there repayment plans and I knew I wasn’t going to be able to go back to school anytime soon. I had no idea what to do so I just continued helping my mother out with her bills and did not pay on my private student loans. It is now a year and a half later and they are sending final notices about how they will send my loans to collection agencies or seek possible legal solutions. They have bumped up the monthly payments to ridiculous amounts now ( >$1000/month) I really don’t want to get sued and my situation is a little better now where I could make some kind of payments (still not $750/month). My cosigner is getting bothered by calls, letters, and threats too and its not fair to her considering her situation. I am at loss as what to do but when I call them they refuse to work with me. Any advice??

    • Sorry to hear about your situation, it sounds quite stressful. If you can’t convince them to work with you, then you’re kind of stuck here in limbo until they decide what to do about it.

      Usually, these companies don’t want to have to send your debt to collections, and they don’t want to have to come after you with any lawsuits or legal proceedings, because those processes cost them money.

      I would try to get hold of a superior on their end, and let them know that you’re able to make some small payments, but be honest about how much you can afford.

      If they aren’t willing to negotiate, then I would speak with a local attorney and ask them for advice on how to proceed.

  49. Hi, I am currently 5 months past due on my private student loan. I contacted my lender(Navient) and we came to a reasonable payment amount each month that I could afford, $338.00. After making the first payment, I received a call saying that they had reviewed my financials(bank statement and pay stub) and the original payments that were agreed to were too low and I will have to pay $120 extra per month, 452.00.

    I told them this price was not possible for me and I cannot pay anymore than the original agreements. They told me either pay the new price or you will be sued. After a lot of back and forth they told me I would need to show that I have more monthly bills that we currently do not see.

    The next day I faxed them over all of my monthly bills showing that there was not an extra $120 a month possible. For some reason, my case had been transferred to another account manager, my original AMs extension no longer works and they’ve assigned me to a new one.

    The new AM now tells me that after reviewing the new bills and going over everything with a “fine tooth comb” that the payment needed per month will now be $736.00. She tells me I’ve brought this on myself by making them go through every bill and every purchase. The 452.00 offer is no longer available and 736.00 is now my only option.

    So now my payment went from 338 to 452 to 736 and they will not budge. Do I have any recourse here? 736 is really really not feasible and this AM will not allow me to even get a word in. Please advise.

    • Hi Jay,

      It sounds like someone over there made a deal with you that their supervisors did not like. Did you get anything in writing about the $338.00 payment? If so, you don’t have to budge at all and should tell the new AM to go fly a kite.

      If you did not get anything in writing, then I would ask the new AM to allow you to speak to her supervisor until she does. Tell her that you already agreed to the $338.00 and that this is all you can afford each month.

      You may need to make the threat that they will be getting the $338, or NOTHING, and that you will be pursuing a bankruptcy and attempting to have the debt discharged instead of paying it off at such an unreasonable rate.

      Do not give in to this new AM – she is probably the expert on staff, and was brought in to try and swindle as much cash out of you as possible. She will be a tough nut to crack, but you should be able to make headway if you can hold strong to your original position (and if you have it in writing, she can’t change the agreement).

      Again, I’d push for speaking with a supervisor, then make the threat of paying nothing back, then perhaps threaten to report them to the Better Business Bureau, your local Congressional Representative, Yelp, any other review sites you can find, the local news, etc.

      Do not give up and don’t make payments that you don’t have to!

      • Thank you for your response. I can show that I already paid the first payment of 338.00. And they also sent me a document showing that I’ve authorized the 338.00 payments from my bank account until May 2016. It shows every date of the month the 338.00 will come out of my account.

        The last rep I talked to was supposedly the supervisor and she told me that she and the senior VP, a guy named Joe, have gone line by line through my account and if I do not pay the 736.00 it will go to collections. I believe I am being singled out and bullied because I pushed back on the 452 and would not agree to it. There needs to be protection from this. Both sides agreed to 338 and now they can unilaterally renege and ruin my credit with no real recourse on my end.

        I will continue to holdfast but judging from my last conversation. With them I do not think it will do me much good.

  50. Hi!

    I’ve been having trouble with my loans for as long as I can remember. I had no choice but to apply for loans in order to pay my way through school, and now I’m struggling to get out of debt…

    I originally had my godmother as my cosigner through AES and Chase for the four and a half years of school, and was able to make payments on the loans for a while after I graduated. Sadly, last year her attorney called me to notify me that my godmother could no longer make payments due to her diagnosis of Alzheimer’s disease. For a while, I was unable to make full payments due to being out of work for a while until November of last year. Unfortunately, the job I ended up landing was only part-time and not enough to make full payments as well. I resigned from my position only last week and am now looking for full-time work in something other than retail. As of today, the private loans through AES are on the verge of going into default, and I’ve exhausted every possible option.

    I was physically, mentally, and emotionally abused within my family throughout my life, and now have major depression, PTSD, and an anxiety disorder. These along with my recent unemployment have made it very difficult to make payments on time. I asked AES about loan forgiveness programs, but was told they did not offer it at all. I’m very stressed, terrified, and upset that I was unable to make payments due to being out of work and suffering with these disabilities. I’m also trying to get back into school in the fall for my master’s degree, so failure is not an option at this point.

    Is there anything else I can do that I don’t know about, or is there no hope for me?

    • Hi Lanita,

      There’s always hope! If you really are having so much trouble landing employment, then I would seek a Total and Permanent Disability Discharge. That may be your best bet to having your existing student loan debt wiped out.

      This would require NOT going back to school for your Master’s Degree though, and it would require not working, but I think it’s the only way you’re going to qualify for totally getting rid of the debt that you already have.

      You may be able to qualify for a bankruptcy discharge too, but if I were you, I’d speak to a local attorney about it before pursuing that option.

      And… please do not go back to school. Getting that Master’s Degree is not going to be a golden ticket to better employment. If you’re already struggling to find good work now, having another degree, but no actual experience, isn’t going to make you a more attractive job candidate.

      Instead, it’s likely to make you even less employable, because everyone will assume you’re overqualified for entry-level positions, or under-experienced for management type roles. Master’s Degrees are not the answer when the problem is that Undergraduate Degrees lead to too much debt.

      Don’t make your already bad situation even worse!

  51. Hello,
    I have made several attempts to lower the monthly payments required by chase collection agency($700 per month).
    The reps have been rude & disconnected many of my calls. I cannot afford the $700 & $5000 deposit.
    I was planning on sending $50 monthly payment until I complete school & then increase the payments to at least $200 per month. This in hopes of not having to go to court.
    I was considering filing bankruptcy.
    Please advise.
    Thanks, Alex

    • Hi Alex,

      Tell them that you’re going to start paying them $0 per month, file bankruptcy on the debt and get is discharged if they don’t agree to work with you on a more reasonable monthly payment.

      Don’t send them anything until they agree to work with you on this, then make sure to get whatever agreement you make with them in writing, and you’ll be all set.

      Remember that these people do this all day, every day. It’s their job to fleece you for as much money as they can get out of you, and they may even be getting paid a commission on it (the more they take from you, the more they earn).

      Don’t give up!

  52. Hi, I currently have a private student loan which originally was deferred due to my co-signer filing for bankruptcy then it was discharged and the first I hear about repaying the loan is through a debt collector calling me to settle. I don’t have the means to settle on a lump sum, do you know if it is possible to consolidate? or if the debt collector will settle for payments? just trying to get options.

    Thanks for your time

    • Hi Stacy,

      The Debt Collector is trying to shake you down for as much as they can get out of you. I’m not a lawyer, but if the loan was discharged via bankruptcy, then I don’t think you owe anything on it any more. I’m not sure about this one though, perhaps just your co-signer isn’t responsible for it anymore?

      I would advise you to speak with a local attorney about this right away. Do not make any payments to this debt collections agency, as they may have no legal authority to collect anything from you.

      If you don’t have the money to talk to an attorney, at least post your story and ask what you should do on Reddit’s Legal Advice forum here.

  53. Michele greaney says:

    Hi Tim,
    I just went into default with Navient. I have the collection agency calling saying that they are going after my co-signer. I got the private education loan in 2001 and became disabled in 2003. I called Naivient and was told my loan was charged off and given the collections number. My questions are: If its charged off, can I still get into a loan rehab program to protect my future? if not, can I offer them less money than they are asking for? If I pay them off, is it still going to say default?
    Thanks for all your information and time,

    • Hi Michele

      Are you COMPLETELY disabled? If so, then the loan should have been discharged. I don’t know what the legal implications are for your cosigner, however. They may still be on the hook to repay the debt…

      Your questions are legal in nature, and can only be answered by an attorney.

      I would first look into the Total and Permanent Disability Discharge Program (to find out if you qualify for complete discharge of the loan), then talk to Student Loan Ombudsman Group to find out if your cosigner will also be off the hook for the loan as well.

      They, or a local attorney, are the only people who can give you a good answer on these questions. I don’t want to steer you the wrong direction because your future really does ride on the outcome of this situation.

      Be careful! Don’t agree to any payments or deals until you’ve received legal advice!

  54. Elizabeth says:

    Yes, I am in a buckle and am still in the middle of court stuff. I am a single mom (newly) of 2. I am right at the medium for government assistance for living expenses. I can afford my $30,000 I took on in private loans with my tax check every year. About $300.00 a month. I was young and dumb with uneducated parents when it came to student loans. As with many. My ex and I took private loans out to live on for years. I requested him take one loan which is now at $30,000 as well. So we basically split the private loan debt 50/50. I have been holding up to my half of the bargain making my payments on time. I have two legal documents stating even tho he is the cosigner on all of these loans that he is paying the one loan. I am working with my attorney, bc he is not paying on his part, to see if I can get a letter of him stating he is not going to hold up to his part of the agreements. I can not afford $650 a month in these loans. It is impossible. I would not be able to pay for my house or car. Let alone food for my kids. If they take my tax check every year I wont be able to even pay my half every month. My question is is it possible to take him to judgment court and have my name removed so it is solely now his debt. (his half)

    • Hi Elizabeth,

      Please speak to your attorney about the possibility of modifying the loan so that it’s split between the two of you.

      I believe that something like this should be possible (I have heard of similar things happening during divorce proceedings), but I can’t give you legal advice because I’m not a lawyer, and I don’t want to steer you the wrong direction!

      If you could, I would really appreciate an update when you find out if it’s possible to split the loan up. I definitely want to be able to offer better information about this complicated, but important topic.

      I hope everything works out!

  55. I currently have a private student loan through KeyBank that has been serviced through American Education Services the past several years. I had been paying monthly payments up until 8/2014 which was an oversight on my part. I pay in total almost $1,200/month in student loans with my federal loans. I always received monthly notices for private loan payments from AES; however, I realized I hadn’t received any notices since Aug. 2014. When I went online in 1/2015 to make a payment, I was denied access and informed loan was in default. I never received any written notifications, unsure why monthly statements stop coming in mail and didn’t receive any phone calls, When advised through e-mail once I contacted AES that stated loan had been charged off to KeyBank collections company. With my initial call to KeyBank collections I was informed my case manager was unavailable, I explained situation of not receiving any notices or phone calls, but individual dismissed any of that information and informed me total balance would be due in full of $8,579 and would need to speak with my case manager. Upon calling a couple of days later, since I hadn’t received any calls from them, I was given a different case managers name and informed the manager again wasn’t available. I have been contacting them; however, they apparently operate through an overseas call center because I have called at 1pm, 2pm 3pm and informed offices were closed on 3 different occasions even though their hours of operation are from 9am-9pm EST. And because my husband received a call on his cell phone from an overseas # stating they were with KeyBank even though I have yet to receive any calls on cell or home # I have given them. I finally spoke with my apparent case manager today who advised I had the option to pay $238/month until full amount paid off or pay settlement amount of $6,864. I would rather use my income tax refund I am receiving to pay in full $4,500 but unsure if they will be willing to settle for that amount? Also I would prefer to send check, instead of letting them gain access to my banking card/account information. What documentation should I request in writing if they agree to settlement amount prior to sending any payments?

    • Hi Denise,

      I wouldn’t do anything here without speaking to a lawyer. I’m concerned that you may be getting scammed by someone who is NOT KeyBank. I’m not familiar with them, but this situation does not add up to me – how could there be so many different case managers, hours of operation that are so inconsistent, overseas calls to the wrong cell phone number and all these other things?

      Do not send these people any money until you’ve spoken with an attorney and verified that you’re working with the actual company who owns your debt. You could be sending $4,500 to Nigeria for all we know, and still end up owing the full $8,579 to the real KeyBank.

      Please be very, very cautious here! A local attorney will be able to advise you on exactly how to proceed to ensure that you aren’t being scammed, and that whatever payment you make settles this debt for good.

      Please let me know how it goes after you’ve gotten it all worked out, and good luck!

  56. Hi. I think my story is a little bit different, but it still all revolves around private student loan debt. I took out some loans to pay for school with Sallie Mae or Navient now. I had always had trouble paying them each month, but I was able to make it each month. I’ve since moved up to Canada to live closer to my wife’s family and with the exchange rate I’m having to pay about an extra $300 to $400 a month to compensate. I’ve tried to talk with them and explain my situation, but no one seems to give me the time of day. I’ve tried to get them to sell the debt to a Canadian collection agency and I’ll take the hit on my american credit since I won’t be using it for a while. I’ve been emailing them back in forth for about a week now trying to get them to sell the debt or settle, but they don’t budge. Do you know of the legal consequences that I could suffer if I stop paying and let it default if I’m in another country. I’ve tried to ask several people and no one seems to know anything about it.

    • Hi David,

      I’m sorry to hear about your situation – it’s definitely unique.

      If I were you, I’d speak to a lawyer to find out what your legal obligations/repercussions would be. You may need to speak to both a Canadian and an American lawyer about this though, as there could be different implications on either side of the border.

      Make sure you keep those payments up until you’ve sorted out what your best option will be, as defaulting is certainly not something you want to go into without ensuring that there won’t be disastrous consequences.

      It’s VERY hard to get a loan back out of default as well, so don’t slip thinking that you’ll be able to skip a couple payments, then start again, and make everything right with the world. It definitely does not work that way!

  57. Hi. I am in a private student loan jam myself and need some kind of feedback on how to possibly address this situation. I have 3 private student loans which totals about 22k with added fees interest, etc. I was summoned for lawsuit in 2013. I immediately went to Legal services to assist me in the matter. All things proceeded and the representative told me I didn’t have to appear for court, she would do so on my behalf. Well the result ended in a judgment against me and my cosigner. At that time I was a single mother of one , living with my my mother and receiving govt assistance (food stamps wic medicaid). I feel as if I was not able to properly defend myself as I was advised not to go to court. I have been making payments as I could but the minimum payment of 2 of the loans are about $2k a piece. I just delivered my 2nd child in September via c section and returned to work in November. I have made payments through Navient websiteof what iI could afford. I sent a letter to the lawyer who sued me explaining my circumstances but have not heard anything. I’m a single mother of 2 ( 3 yes and 5 months) and still receive government assistance. Research revealed that garnishment is the next step. What can I do? Navient is taking my money although a lawyer collection agency sued me. I wanted to see if the suit can be dropped or something to be worked out. I just don’t know which way to go. Thanks

    • Hi Adena,

      You need to speak to a lawyer. I can’t offer legal advice.

      It’s possible that you might qualify for a Student Loan Bankruptcy Discharge, so let the lawyer know that you want to find out if he or she thinks you have a good shot at getting the loans expunged, and if you do, then start the legal motions to heading that direction.

  58. Hello! We recently fell behind on private student loans that were with AeS. Got a call from NES and they don’t seem wiling to help much. We have $82,000 in loans. Income of $95,000 with family of five. I have no problems with trying to pay back, but they don’t seem to want to help much. I don’t think we could get it discharged. We just want help on getting it caught up. Is this company legit and ok to send money to? Please help

    • Hi There,

      I’m not sure what company you’re talking about, but I would not be sending any money to anyone who is not the group that owns and services your loan.

      Don’t try to consolidate elsewhere, sign up for debt reduction packages, etc., because many of those are scams, and you’ll need to be extremely cautious about working with third parties.

      Contact whoever officially owns your loan (whoever you are supposed to make payments to) and try to negotiate a deal with them. Unfortunately, they’ve pretty much got all the power and get to call the shots.

      If you don’t agree to do what they want, they can pursue you with legal action (wage garnishments, property liens, etc.), but typically they won’t go to those lengths as long as you’re willing to negotiate because it costs them time and money.

      Remember – they know how much you make and they are aware of what they think you should be able to afford. They want to get paid the full amount of money and the person you’re speaking with is probably receiving a commission based on how much they’re able to collect, so they have a financial incentive to rake you over the coals.

      Keep all that in mind when negotiating with them, try not to get too upset or take anything personally, be nice and be honest about what you can really afford, and you should be able to get yourself some sort of a deal.

      Thank you for being one of the responsible people and trying to get back on track with your loans. If enough people did what you’re doing, things would be easier for the rest of the population when they fall behind too!

      • Thanks for the response. The company that it was sent to is national enterprise systems. They are telling me that loans have been charged off and they have been trying to settle for a lesser amount. I have been trying to talk to them about making monthly payments. They don’t want to refer me to the actual holder of loans. The original was thru GMAC. I asked them to send me the promissory note because we haven’t been able to locate our original. This was last week. I haven’t heard back since. I want to make payments. They told me they won’t garnish or freeze bank account. But what should we do if they do try that? Do I have any options? If I make payments shouldn’t they try to work with me? Thanks again for any help!!

        • Thanks for the response. The company that it was sent to is national enterprise systems. They are telling me that loans have been charged off and they have been trying to settle for a lesser amount. I have been trying to talk to them about making monthly payments. They don’t want to refer me to the actual holder of loans. The original was thru GMAC. I asked them to send me the promissory note because we haven’t been able to locate our original. This was last week. I haven’t heard back since. I want to make payments. They told me they won’t garnish or freeze bank account. But what should we do if they do try that? Do I have any options? If I make payments shouldn’t they try to work with me? Thanks again for any help!!

  59. I have recently received a letter from National Collegiate Trust for defaulted private student loans. They are for $117,000. I also have another private student loan and federal loans but those are in deferment because I am in school trying to obtain a better job. I currently work part time and have three children. I don’t make enough to afford this loan. I was told that I qualify for a hardship and that my payments would be $50 a month which is great but the catch is that I have to pay $8200 up front before I can do the monthly payments. I can’t afford this and told the representative that and he told me that I should get a line of credit elsewhere to pay this. That would not be smart or an option because then I wouldn’t be able to pay that line of credit either. My total loan debt for private loans is $150,000 and my federal is 50,000. Would the private loans be easy to discharge in bankruptcy with this amount of debt? Do I need to pay the $8200 before I can pay the $50? I am just at a loss here and this is really ruining my marriage as well as it being hard on all aspects of my life. Any help or advice would be appreciated.

    • Hi Nicole,

      This sounds like a scam to me. Having to pay $8,200 up front, then $50 per month? That company is just trying to get as much money from you as they possibly can, knowing that you aren’t really capable of paying back the loan.

      The reason he told you to go get a line of credit is because he gets paid based on the amount of money he’s able to get out of you, and he doesn’t care about ruining your life by creating more debt on top of what you already owe.

      Do not listen to these people! They are scam artists trying to ruin your life just to make a few extra dollars in their own monthly paycheck!

      I would recommend that you speak with a local attorney who specializes in bankruptcy cases, and who has experience with Discharging Student Loans via Bankruptcy.

      It sounds like your debt is high enough that you may be able to get the loan discharged, especially if your husband isn’t making very much money either, but only a lawyer will be able to give you good advice on how to proceed here.

  60. Good Morning!

    Like most of the people here, I’m pretty deep in the student loan debt hole. I have well over $100k in student loan debt, both private and federal. As I started college when I was 17, my mother cosigned for my first loan. The lender went out of business because they had an illegal agreement with my university as their preferred lender, so all of our loans were sold to ACS. This loan required an $800 payment after my grace period ended but they allowed me a hardship forbearance since there was no way I could afford it in addition to my other loan payments, even with a new job.

    In that same year, my mother was diagnosed with cancer and had to leave work for an extended period of time. I thought this loan was in deferment/forbearance, but when I called to make a payment in September 2013 (when it should have been due), they informed me that I was in default and had to pay $6000 to rehabilitate the loan. Naturally, I didn’t have the money, but I picked up another job and had family members scrounging up change to help me gather the funds. I fell short, so I called back for another rehabilitation quote (which they told me I could do) and the representative informed me that I never even had an option to rehabilitate because my loan had been bought by a new lender that August!

    My only option since that point has been to settle the loan for somewhere around $80k. Some of the people have been rude, telling me that I could join the armed forces and keep my payments since they don’t matter. My mother has considered refinancing/selling her house or cleaning out her retirement to pay them — I can’t let her do that. I continue to pay my monthly payment of $1100 on this loan in a last ditch effort to show them that I’m trying but it’s just going to interest every month.

    Altogether, I pay $1700/month in student loans and can barely afford to live, let alone make major purchases. Pretty sure my life is ruined, but my mother is suffering with me and I have a younger brother who will start college in 2016. Please let me know if there is anything else that I can do. Thank you!

    • Hi Jasmine,

      You definitely made some major mistakes in taking out that much money for college, but you’re not alone. Hundreds of thousands of Americans are in the same boat as you are, and like you said, your situation has reached a critical point where it’s basically impossible for you to ever get back out of debt.

      Do not let your mother pay off the rest of that loan, and do not keep paying these people what they’re demanding each month. RIGHT NOW, call a local bankruptcy attorney and set an appointment to go in and speak to them about getting these loans discharged by filing for bankruptcy (go here for details).

      That won’t work for your Federal loans, but for private loans, you may be able to get yourself out of having to pay this back since it’s such a high debt level, especially if your income is low.

      Be careful about who you speak to and make sure that the lawyer has actual experience in bankruptcy proceedings and that they are sure you have a shot at having this debt erased, otherwise it’ll be a total waste of time and money, but this is definitely going to be your best shot at getting out of debt for good.

      For your Federal loans, see my page about Federal Student Loan Debt Relief Programs, where you’ll find all sorts of opportunities for financial assistance.

      Good luck!

  61. Hi there,
    I am just coming out of a chapter 13 bankruptcy and have a chase private student loan that I haven’t paid on in 5 years. (stupid I know) but about 2 years into the bankruptcy I divorced my husband, and have been scraping by. I’m excited to have the Bankruptcy discharged but dreading the Student loan issue. I did try to contact them at the beginning of bankruptcy and they were extremely unhelpful,would barely talk to me about it, wouldn’t even send me a bill. So I’m thinking after reading your article that I should call them right away and explain the situation and set up a payment plan. any other suggestions?

    • Hi Jennifer,

      Please speak to a lawyer before deciding how to proceed here, because there are massive financial (and legal) repercussions based on what you choose to do.

      My thinking is that if you’ve gotten away with not paying for that loan for 5 years, and haven’t faced any legal repercussions, then why start making payments now?

      There is definitely some sort of statute of limitations for collecting debt from defaulted loans, and if Chase hasn’t been pursuing you to make you pay the debt, then it’s possible that they have already run out of time to collect.

      Again though, you’ll want to speak to a lawyer to find out about the laws in your state, and to be sure that you’re making a good decision.

      Good luck!

  62. Hi Tim,
    I have private student loans that went into default probably 7 years ago. I set up a payment plan with the servicer (Conserve) and have made my payment, on time, every single month since. Several times they have called offering settlement deals, the lowest being 50%. My husband and I have been saving money for the last year to settle on the debt (despite all the years of payments, my principle was still 32k from the original 40k). I called Conserve a couple weeks ago to negotiate the settlement and was told that the account had been pulled from their office and I should be contacted soon by a new servicer. They told me I could also call the Guarantor, Goal Structure Solutions, to get the info. It had been First Marblehead but must have changed these folks within the last year. I did call Goal Structure Solutions and they left me a message back stating that the new servicer was National Enterprise Systems and left me their number.

    I received the call today from NES and they were horrible. I explained I had been offered a 50% settlement recently and she said they would only settle at 80% for 27k. Then she said the only way they would agree to a payment agreement was $6,800 down and $240/mo for 24 months, to be renegotiated at that time. The kicker is that now, all of the sudden, my principle has gone up over 2k to 34k! I asked how my principle could raise 2k in a months time, and she claimed it’s a “penalty” and all sorts of other things that I don’t believe are true. She also said that Goal Structure Solutions aren’t involved anymore either, that it was “sent back to the trust”, being National Collegiate Trust.

    I’m not sure what to do here. There is no way I’m going to settle for twice as much as I was offered recently (and I don’t have that much anyway). I can’t figure out WHO is the one who offered the original settlement…the servicer? The guarantor? The trust? Do you know who actually approves or makes those decisions? I left a message for Goal Structure Solutions because I don’t believe that they suddenly aren’t involved anymore when I received a message from them a couple of days ago. I’m not sure if I can negotiate with anyone other than NES? I don’t understand all the players here and who does what and who I can actually talk to.

    I don’t trust a word NES says, and I’m wondering if they would come around to a settlement…they say they “aren’t allowed to settle for less than …..” but that can’t be true because the other servicer just offered it! Also, I don’t know how long I should hold out…I don’t want to be sued but I also am not going to let them walk all over me and try and bleed me for every cent I have.

    I finally thought I was getting out of this mess and now it’s starting all over again and it’s a nightmare. This loan has plagued my life for 14 years and it seems to only be getting worse.

    I’d appreciate any advice,

    • Hi Jennifer,

      It sounds like your loan may have been sold to a debt collections company, and that these guys are playing hardball.

      I don’t want to steer you the wrong direction because this is a stressful situation that has legal and major financial repercussions, and I would advise that you speak with a lawyer on how you should proceed.

      My thinking would be to play hardball back, tell them that if they want 80% of the payment you’re going to send them payments of $.01 per month, and that they will never get their money back.

      You don’t have a whole lot of power here, which is the bad thing, but if your loan is already in default then it’s not like paying them the money they want will improve your credit score anyway, so why play ball?

      These can be nightmarish situations, but just remember that you do have options, and that your best bet is speaking with a lawyer who can provide you with actual legal advice about how best to proceed.

      I hope you’re able to come up with a great solution and I will keep my fingers crossed for you! Good luck!

  63. I had a bankruptcy (credit card debt only)that started 8/2014 and discharge on1/12/15. My private student loan defaulted on 12/31/14 & now it’s in collections. The lender is refusing to deal with me because I didn’t alert them that I was in a bankruptcy. I’m scare to deal with a collection agency because of all the scams, is there anyway I can fight to get out of default status?

    • Hi Sonya,

      When it comes to taking a loan out of default, it’s entirely up to the lender.

      The only way to get a loan out of default status is by working with whoever is servicing it.

      Yes, the collections agency are well-known for being scam artists, offering deals that they then reneg on, etc., but you don’t have a lot of options here now.

      You definitely should have alerted the lender that you were involved in bankruptcy proceedings, but to tell you the truth, they probably wouldn’t have wanted to work with you anyway, so don’t beat yourself up over it.

      Lenders are notoriously difficult when facing a situation like yours – they basically have all the power, but also none of it (since it’s up to you to actually pay them back), so don’t forget that you do have a say in how this plays out.

      I would recommend consulting with an attorney for legal advice, then proceeding however they advise you to act, as I don’t want to send you the wrong direction.

      Good luck!

  64. Hi, I recently and stupidly, signed up for student loan consolidation with Fedloan and they kept assuring me that my Sallie Mae loan would be included. However, once it all went through the private Sallie Mae loan was left out. When I asked them why it was left out, only then did they tell me that they don’t include private student loans. This of course was after I paid them $600.00 (that was stupid on my part and I should have known better). Although, I have to admit that I am somewhat relieved that by consolidating through them I can now postpone any repayments for all of my federal loans for a year and it is supposed to then be lower payments. I am now still left having to deal with the private loan which is now under Navient. I have been a student for a while and I am planning to return to school again in the fall (Sept 2015) to get a PhD. Navient has told me that I have no remaining options but to pay the payment they want of $96.00 a month. I do not currently have a job and I told them I could pay at the most $30.00 using my credit card but they want the full amount. I don’t know what to do. I have 15 days grace period before the payment is considered late. I see now that there are numerous complaints for Sallie Mae, Navient, and Fedloans on the Consumer Affairs and Consumer Financial Protection Bureau websites against these companies. I let them know I was planning to launch a complaint of my own and they did not care at all. I am not a person who does not want to pay my student loan debt but I thought I was protected for when I might be having a financial hardship as in not having an income. Do you have any suggestions as to what I can do to get Navient to lower my monthly payments until I have some income?


    • Hi Lesia,

      Of course they don’t include Private Loans in a Direct Consolidation Loan.

      Did you research this process before you agreed to go through with it? I’m constantly shocked by the stories I hear from people like you who have no idea what the repercussions are going to be – we’re talking about life-altering financial decisions and yet you went into it without doing any real research?

      You should not have had to pay anyone anything to get help with your Federal loans, and if you think that they have helped you to postpone your payments for a year then you are entirely wrong, because you could have gotten that deal on your own (through one of the many Deferment or Forbearance Programs).

      For someone who is going to be getting a PhD, it doesn’t sound like you’re spending enough time researching your options and figuring out what you should be doing about your student loan debt. Please stop making poor decisions and wasting money.

      You’re going to need to come up with that $96.00 per month. That’s a few hours of part-time work, even on minimum wage payments. I have people coming to this site daily who are being told to make payments of $1,000+ dollars, who are nowhere near your level of education, and who are in serious, life-threatening financial distress.

      What you should have done months ago is sign up for one of the income-based Federal Student Loan Repayment Plans, like the Income-Based Repayment Plan, the Income-Contingent Repayment Plan, or the Pay As You Earn Plan, which sets your monthly payments based on your annual income.

      If you truly have $0 income, then your payments might have been set at $0 monthly.

      I’m shocked that you’re considering going for a PhD when you already can’t handle a payment of less than $100 per month. Please reconsider your decision, because if you can’t handle this tiny amount of debt, then you’re going to be facing a major disaster when you start having to make real payments on the large levels of debt incurred by PhD level educational programs.

  65. Hi Tim!
    Thanks for your article. Like many that posted above, I am in some serious private student loan debt. In your article, you wrote ” your defaulted private student loan only remains in default for a certain amount of time.” What exactly does this mean? Does have to do with statute of limitations?

    • Hi Shannan,

      Yes! It’s like a statute of limitations which restricts their ability to sue you years down the line. The law is different in each state, so you’ll have to do some research of your own to figure out if this will work, but it may be possible for you to avoid paying off the loan if you can wait them out.

      • Darnell Foster says:

        I have student loan debt of $425,000.00. I never took out this much money. This is almost a half million dollars. This has made me sick . If has effected my health. The doctor told me that my blood pressure is too high. I ‘m a teacher who can’t afford this on my salary. they wants thousands a month. if I pay half of what they want that would be my entire salary. I was told I could not file bankruptcy on private loans. Half is private loans and the other half is federal. I just went into default. on 3 loans about 3 weeks ago, $75,000. worth. I really need direction.

        • Hi Darnell,

          If you really have that much debt, then you should be able to qualify for a Private Student Loan Bankruptcy Discharge.

          The first thing you should do is contact a local attorney who specializes in bankruptcy, student loan debt, or some similar field, and ask them for legal advice.

          Just remember – you could owe $100,000 or $500,000 – it doesn’t matter if you can’t pay it back.

          The fact that you owe SO MUCH will only increase the chances that you’ll be eligible for a bankruptcy discharge, so keep your hopes up and your fingers crossed.

          Good luck!

          • Forgive me for questioning your advice, however, I believe there is a student loan forgiveness program solely for Teachers.

            On another note, maybe you could help me with something…?
            I have a Florida private student loan dating back to Aug 1998. It was discovered as I tried to reenroll after divorce. The loan is only $560.00 but would still hurt the pocket book.
            My question is: Can the college refuse to enroll me in classes, based on this debt from almost 17 years ago? The statute of limitations is 5 years in Florida. Not sure if the statute just prevents further attempts to collect or if the debt is considered obsolete once the limit is reached. I should also mention, the debt is still with the original creditor (I think that matters…?).

          • Hi Wendie,

            You’re right – and I’ve got a few pages about Teacher Student Loan Forgiveness Programs (there are a couple of them).

            The one you’re referring to – Teacher Loan Cancellation, is also referred to as Perkins Loan Forgiveness.

            Teachers should also look into the Stafford Loan Forgiveness Program, which offers similar benefits (but which is for people with Stafford Loans, as opposed to Perkins Loans).

            I wrote that there are no teacher loan forgiveness programs available for those with PRIVATE student loan debt. The program you mentioned only applies to those with FEDERAL student loans.

            Hope that clears up the confusion.

            On your question… I wish I could give you a better answer, but this is a legal question that you will need to direct to a lawyer. Are you trying to enroll at a public or private school? If it’s private, they can do whatever they want.

            If it’s public, they can also do whatever they want (for the most part). If the rules say that you can’t enroll if you have Defaulted Private Student Loans, then you probably won’t be able to enroll.

  66. Bounthavy Sananikone says:

    Hi Anita,

    I’m in serious private student loan debt. I tried a couple times to set up something with them to pay them back but I fell off and did not pay because I couldn’t afford it and keep up with the payments. Now, my private loans have defaulted and they threaten to put liens on my parents mortgage and vehicles. I’m not sure what to do. Sallie Mae has split into two companies. Sallie Mae and Navient.

    Navient now services all my loans. I tried setting up a payment with them a few days back on the 31st of December for 2014. The amount of $1578 was supposed to come out of my account by Navient but another amount was taken out by Sallie Mae for $1413 which I never authorized. I have no clue what’s going on and what to do. My account manager from Navient isn’t in office till Monday and I’m afraid that there is some mistake some where and for the reason this money was taken out by the wrong company. It frightens me that Navient will take myself and my parents to court because I failed to have this payment ready for them because Sallie Mae made a random charge to my account. I tried to contact Sallie Mae by phone and was deferred to Navient offices and when I tried to log on to my Sallie Mae account I was redirected to Navient instead. My friend says I should try to talk to a debt consolidation company on Monday before things escalate to an even worse situation.

    My other question is. If they put a lien on my parents house and our cars, can they take their house and cars even if they are not paid off? Will the try to foreclose the mortgage and resell the house and do the same to the cars? I’m freaking out because of this whole situation. My parents can’t help me out because they are trying to get by just by paying for the mortagage and their two cars and other bills. I haven’t had luck finding a job in my field and have only been waiting tables and trying to find a second job but to no avail yet. If you have any advice for what I should do or could do in my situation I would truly appreciate it.

    • Hi Bounthavy,

      I’m sorry to hear about your situation, but know that you are not alone and that many other Americans are facing similar student loan debt crises of their own.

      Were you able to speak with your loan servicer to figure out why Sallie Mae withdrew money from your account?

      I would be very careful with pursuing a debt consolidation via a third party, because some of those companies are outright scam artists who will charge you an arm and a leg to do things that you could do on your own, and for free.

      Start with speaking to Sallie Mae to find out why they took money from your account, then figure out who is really servicing your loans (Sallie Mae or Navient). It sounds to me like you might have loans with both companies? That could be the cause for confusion…

      They could put a lien on your parents home and their cars IF your parents cosigned for the loan, but if your parents didn’t cosign for your student loan, then the lender can’t go after any of their assets.

      Even if your parents did cosign for the loan, the lender won’t be able to take their house of their cars. What they can do, is, like you said, put a lien on the property (meaning that if your parents sell the property, the lender will be repaid with the money that the house sells for).

      The lender could also go after your parents Federal Benefits (if they’re receiving any), like Social Security, withdrawing up to $750 per month from they SS checks, or they could garnish your parent’s paychecks, taking up to 15% of their disposable income from each check.

      Please get in touch with both Sallie Mae and Navient to work out a new arrangement that is affordable for you, because you do not want to let your loans remain in default. Hopefully they will be able to work with you and restructure your debt in a way that allows you to start paying it off in smaller increments.

      Good luck!

    • Navient and Sallie Mae CANNOT take your cars or your house! This is ridiculous! Please consult a lawyer if they are threatening you with these measures

  67. My private loan with Discover Student loans recently went into default. I arranged to make a payment that would keep the account from going into default. I made the payment before the deadline but it did not go through because I used an international routing number instead of the domestic one. It was an accident.
    They informed that the payment did not go through and I corrected the mistake within 7 days. Yet my loan has still gone into default. I spoke with the supervisor of my agent and he said he would check and see what he could do. What are my options if the loan stays in default?

    • Hi John,

      Only Discover can tell you exactly what your options are. Unfortunately, when it comes to private student loans, the lenders have most of the power.

      Having a student loan in default will definitely negatively impact your credit history, so I would suggest doing whatever you can to get the loan out of default, unless you don’t plan on purchasing a car, home, or anything else large enough to require taking out a loan in the future.

      Good luck!

  68. HI,
    In 2011 I made a written agreement with National Collegiate Trust/NES collections to pay a defaulted private student loan,” $150.00/month, at the end of each month, until the loan was repaid in full.” I have made all payments as agreed until October when I discovered the loan was moved to a different collection agency-Transworld Incorporated (TW). TW refuses to honor the agreement despite my providing documentation showing all payments were made. They now want me to give them the balance of $33,000, which of course I don’t have. How can I get them to honor the original agreement of $150/month, by the end of the month, until the loan is paid in full?

    • Hi Anita,

      Do you have written documentation of the deal that you struck with National Collegiate Trust/NES? I’m hoping you do, because that may be the one thing that could save you in this case…

      My advice here would be to speak with a local lawyer who specializes in contract law, especially if you can find one who specializes in debt collection or student loan debt resolution.

      It’s not cheap to speak with lawyers, but I can guarantee you that it will cost less than $33,000. I can’t give you legal advice on this matter, and it is a legal matter, because it sounds like you had a contract with one company that was sold, and is now being violated by another company. I’m not sure if Transworld Incorporated is allowed to do that, but an attorney would be able to tell you for certain.

      In the meantime, I suggest reviewing the FTC’s Fair Debt Collection Practices Act (FDCPA) so that you understand your rights in this situation. You can find the FDCPA here.

  69. I had 2 private student loans with Wells Fargo, and during a period of income instability, I was able to only pay a portion of each monthly payment. One of the loans is in repayment status, but the other has just recently been stuck in a default status. My monthly payment on the defaulted account was originally $151.96. Upon learning of the default, I contacted Wells Fargo and was able to negotiate monthly payments of $200 a month for 6 months and then $500 a month until the loan of $20,000 is paid off. Half on my monthly income is already going toward my student loan debt, and $500 a month will cripple me financially. My representative with Wells Fargo has said that there is no hope of getting my loan back into regular repayment status, and default status is essentially a point of no return. Is there any hope that I can convince them otherwise? Does that actually happen? I can manage payments of $200 a month now that I am fully employed again, which is still more than my prior minimum payment.

    • Hi Natalie,

      It sounds like they want to play hardball with you, and aren’t going to be nice about moving your loan out of default status. The reality is, default isn’t a “point of no return”.

      The lender can move your loan out of default status at any time, but they have to be convinced to do it, and that takes proving to them that it’ll somehow make them more money in the long run.

      Your situation proves why it’s so important to avoid default in the first place, and why it’s worth doing everything you possibly can to avoid allowing a private loan to default.

      I think your best bet is going to be asking to speak to the representatives supervisor, and moving up the chain at Wells Fargo until you can get someone who’s able to make a decision for you.

      You need to clearly explain that you cannot pay $500 a month, but that you’re willing to negotiate for a payment that is affordable to you, and which you will make each month moving forward.

      You may also want to start looking around to see if any other private lenders will allow you to consolidate your private loans with them. It’s not easy to get a defaulted loan consolidated, but it is possible.

      When you’re negotiating with Wells Fargo, make sure to mention that you are considering consolidation with another company as an option – sometimes that threat alone is enough to get the lender to play ball.

      Good luck!

  70. I co-signed on 2 private student loans for my daughter back in 2003-2004. They were held in forbearance until she graduated in 2005. We started paying on them once she graduated. In 2008 I was forced to file Ch. 13 bankruptcy (5-year plan) knowing the SLs would not be discharged but would be held in abeyance until I was discharged. My daughter contacted the lender and asked about continuing payments even while I was in bankruptcy. They allowed her to until about a year or so after I filed and suddenly the loan balance showed zero. It appears that the loans were sold to another company but we were not informed of this sale. I was discharged in March 2014 and waited to hear from the lender concerning beginning payments again. Just last month we both got a letter from a collection agency stating these loans were in default and wanting payment. My question is what effect my filing bankruptcy has on the statue of limitations.

  71. Hi Tim,

    My parents are pretty much financially illiterate and I didn’t realize this when I was told to sign on the line for my student loans at 17 (as a cosigner). I was just served a summons for two loans that got out of hand. I have my debt under control and am handling my federal loans fine. I feel like I could repay these loans under reasonable circumstances. My original lender isn’t willing to deal with it long term…but they said they might settle for a significantly lower amount…but I can’t pull $15,000 out of thin air. I have decent credit and think I could be approved for a consolidation program, but I don’t know if that option is available when the lawyer is holding my loan not my original creditor. Are there any options open to me at this point?

    • Hi Tina,

      When it comes to private student loans, there aren’t a lot of options available. The one thing to keep in mind is that your loan has been sold to someone else, who likely paid pennies on the dollar for it (since it wasn’t being responsibly paid back), so you should be able to get away with paying back much less than you might think.

      However, you’re going to have to negotiate over the amount that you pay back, and the way that it’s repaid. One-time settlement fees should be substantially lower than the total value of the loan. I have no idea what you owe, so I can’t tell if that $15,000 was a good offer, or a total rip-off.

      My advice to you is to make it crystal clear to this collector that you aren’t capable of paying back your student loan as it was originally structured, but that you are willing to negotiate for a reasonable one time, or monthly payment.

      Don’t lie about your finances! Be honest about how much you can afford up front, or monthly, and negotiate for a plan that you will be able to sustain long-term.

      If they said they’d settle for a $15,000 one time payment, offer them $5,000 one time, or $15,000 over some period of multiple years. Don’t agree to their first offer, but be nice about explaining why you can’t accept it (you literally can’t afford it, right?).

      Remember – these companies are used to playing hardball, because they do this all the time. They will try to squeeze every last cent out of you that they can get. Don’t let them!

  72. Hello,
    Just came across this article and while I am not in default, I feel like I could use some advice. I have almost $150,000 in student loan debt between Federal, Dept. of Education, Sallie Mae private loans, and a Chase private student loan. I have worked out some repayment plans with Sallie Mae and have been paying a little over the minimum each month on each loan. I had my Chase loan in forbearance for a long time and I started getting collection calls. I went to go pay and was surprised to see they wanted almost $500 a month from me. I work a full time and part time job to be able to afford my other loans, car and insurance payments and whatnot, I can’t even afford to move out of my mother’s house. With stricter budgeting, I was able to make the Chase payments but called them to try and work out some sort of repayment plan or a lower rate or something. They told me they no longer offered student loans so they couldn’t do anything to help me and that my best option was to get another company to buy my loan from them. I know my credit score isn’t all that great and neither is my debt to income ratio, so I am nervous that I won’t be able to find any help. I saw Chase mentioned a few times in the comments and it seems no one else has been told they are better off going to another company… Do you have any suggestions for me?

    • Hi Lindsay,

      Sorry to hear about your situation. It’s definitely not unique, even if it is very frustrating.

      From what you’ve said here, I would recommend that you look into refinancing options for your private loan, even if your credit score and loan to value ratios aren’t going to be great.

      Since it sounds like you can’t afford to pay off the existing loan as it’s currently structured, I think your best bet will be to get the loan transferred to another lender who can offer you alternative payment plans.

      You’re going to end up paying more money for the loan in the long-term, but at least you should be able to restructure things so that you’ve got affordable monthly payments!

  73. Hi Tim,
    I lost my job two years ago. I was miraculously able to keep up with my private and federal student loan payments for about a year. Then my federal student loan gave me relief from payment because I’m on food stamps, and I was granted 2 six month forbearances on one of my private loans. I continued to pay my other private lender off and on. Unfortunately, the forbearances ended and I didn’t make any payments, intending to do so as soon as I could and before default. Then in september I was unexpectedly hospitalized and things went from bad to worst. (on a side note, my insurance agency is refusing coverage for the almost 30 day hospitalization) But somehow I got a job! 🙂 then 10 days later (a week ago) my private lender defaulted my loan and it has now gone to NCO collection agency.
    I called my private lender requesting they pull it back from the collection agency, explaining I now have the ability to pay. (I have seen this happen with court fines all the time.) But my private student loan lender refused to take payment and I was transferred to the recovery unit. This worker in the recovery unit was rude and uncaring, claiming they could do nothing about it. And I could no longer make payment.
    I desperately do not want to be in default, particularly when I finally see the light of being able to pay.
    Is there anything I can do? the recovery unit worker, claimed he had no supervisor, when I gently pushed that he must he said the best he could do was give a message to the unit’s director for him to call me–which he hasn’t.
    Does my private student loan lender have the ability to forgive my delinquency and reclaim the debt? Is there anyway to fix this? Is there someone at my student loan company that has the ability to say yes to my request? and if so how do I actually get to that person?
    I would really appreciate any suggestions.

    • Hi Jenna,

      Sorry to hear about your troubles here, it sounds like a real mess, but I do agree it looks like there’s light at the end of the tunnel for you!

      The bad news is that there isn’t any Government agency that I’m aware of which has a mission to help borrowers with private student loan debt, but the good news is that you could TRY contacting someone at the Ombudsman Group and asking for their advice about how to proceed here.

      The Ombudsman Group is a neutral, confidential group fully informed about current student loan laws, and focused on resolving disputes for borrowers with federal student loans, so their mission isn’t specific to your problem, but I would try contacting them anyway.

      Other than that, your best bet would be speaking to a lawyer who specializes in student loans, who will certainly be able to help you figure out what is and isn’t possible for your debt.

      I don’t think your private lender (or collections agency now) has to allow you to take your loan out of default, but you should try to convince them that this will be better off for them in the long run because you’re now willing and able to pay, so there’s no reason not to restore your loan.

      Make sure that you’re honest with them, tell them that you’ve got some income now and are looking to make things right, and try calling them a couple times a week to prove that you’re serious about it.

      At some point, someone over there should realize that they’re not getting any of their money back with you in default, and that it’ll be cheaper and better for them to restore your loan to good standing.

      Good luck!

  74. Hi
    For the past five years, I have been able to make my monthly private chase student loans payment, but since September I have stop making any payments because I went back to school and I am not currently working. I have tried to negotiate with chase, but nothing, I have tried to file for forbearance and nothing.. I don’t know what to do.. … and I keep getting rude phone calls and letters by mail that I need to pay. But how if am not working… any suggestions?

    Thank you,

    • Hi Cari,

      Your best bet is going to be getting hold of an individual person at Chase and explaining what’s going on to them. Let them know that you plan on keeping this from going into default, but that you need your help with negotiating a forbearance while you get through school. They may require you to pay some amount of money each month, but you should be able to negotiate for an affordable rate, and be able to prevent your loan from defaulting.

      Unfortunately, it’s all up to whatever you can get them to agree to, and with private student loans, the power is squarely in their hands. You will certainly be fighting an uphill battle here, but oftentimes the lenders are willing to work with borrowers who are polite, clearly intend to pay off their debt, and simply asking for some temporary assistance along the way.

      Good luck!

  75. I have private student loans that went into default, but I never received any bills from them to collect, I was just served a law suit after 8 years. The first time they tried to sue me I was under hardship forbearance on my federal student loans, and my husband took that letter to the court house and they told him that there was nothing they can do. Then 2 years later they come after me again, we tried the same approach the court house didn’t want to take the paperwork, they advised us to send it to the collection agency that is suing me. I did that, and the next thing I know there’s a hearing date scheduled. I couldn’t attend the hearing, so I recently received paperwork asking for my job information and bank account and mortgage information. My situation now is that I lost my job, I do not own a house, and I have nothing in bank. What are my options?

    • Hi Cin,

      It sounds like you’re in a pretty rough financial situation. Frankly, I don’t know that the collection agency will be able to get anything out of you, since you don’t seem to own any assets. What they could do, however, is start garnishing your wages (meaning automatically taking money out of your paycheck) once you start working again.

      You’d better call the collection agency and let them know what’s going on. Tell them why you haven’t been able to afford the loans, and to work out a new payment plan that you can actually afford. It’s possible that they might be willing to work with you by taking your loan out of default (which will help your credit score) and offer you some decent repayment terms.

      If they aren’t willing to play ball, then tell them you’ve got nothing to give, and you’re going to file for bankruptcy, get the loan discharged, and they’ll get squat.

      You’re going to need to play hardball here, so it would be a good idea to speak to a local bankruptcy lawyer and ask them for advice before proceeding.

      Good luck!

  76. I have a private loan that defaulted and went to a lawyer’s office for collection. I made an arrangement to pay $50 every 2 weeks but it will take me a very long time to repay $6800 at that rate.

    My mom co-signed so I was desperate and called one of the student loan debt relief places. I was told to come up with $3,035 and they were sure that they could settle for that. I borrowed the money and called them back.

    They are now stating that they never told me that amount and that they are thinking that they cannot get a settlement for that amount. They told me that they could TRY, but if they do that the collection agency will say that since I have access to a lump sum of money that they would make my payments jump to $300 a month instead.

    Now I don’t know what to do or believe. I KNOW that they told me $3000 to settle it because I wrote everything down. Can the collection agency do this after we agreed to the $100 a month? Can’t I just tell the collection agency that I had a relative that was willing to pay the settlement for me? Do I really need the debt relief place? I am just sooo stressed and confused. Thanks for any advice.

    • Hi Stephanie,

      NO! You do NOT need the debt settlement people to work this out for you! You should be speaking directly with your lender (or the collection agency who bought your defaulted loan, like you were doing before) and working out a deal directly with them.

      $50 every two weeks is a great, GREAT deal! Yes, it’ll take forever to pay it off, and yes, it may cost you more in the long-run to do it that way, but paying just $100 a month for a defaulted student loan is like a gift from the Gods – do you realize how many people who visit this site would kill to find themselves in that position?

      Do not send a single penny to the debt settlement people, and instead, keep making your payments for $50 every two weeks.

      If you want to try and get it all paid down early, then contact the collectors directly and let them know that you’re interested in making a lump sum, one-time final payment to resolve the debt, then ask them how much it would cost.

      Don’t tip your card, don’t say you already got approval for a loan, don’t say you have relatives willing to give you money – as soon as they hear that you’ve got another source of funds, they’ll be like sharks smelling blood in the water, and will try to wring you for every single penny that they can squeeze from your wallet.

      You have to keep in mind that you’re in a financial war with these people, and that they make their money by getting people like you to give up out of frustration, feeling hopeless, and simply agreeing to whatever they demand.

      If I were you, I wouldn’t screw up the good thing that I got going for myself, and I’d keep paying $100 per month until the debt is fully repaid.

      Good luck, and BE CAREFUL!

  77. I am stuck in default on a JP Morgan Chase private student loan of about $14,000 and it is now about $22,000. It has been in default for about 3 years. I have attempted to set up payment plans but the casworker assigned to my loan is not willing to help in anyway nor negotiate. I recently came across rehabilitating the loan per random google searches, but I am unsure if this is only an option for federal and not private. I am attempted to join the OCS program in the Army but I cannot join nor can I get a better job to repay my debt due to my credit. Im stuck and have no solutions as Chase is not willing to work with me. Any suggestions?

    • Hi Angela,

      Have you tried contacting whoever your caseworker’s supervisor is? Try going around them and getting to someone else at Chase, explaining exactly what’s going on, making it clear you want to rehabilitate the loan, and figuring out a solution that will work for both of you.

      Private lenders want their money, and are usually more likely to agree to loan modifications and extensions than simply telling a willing borrower to get lost, so either they think you’re lying about your ability to make payments, or you and the caseworker have built up some bad blood.

      I would try to get a new contact, tell them you’re willing to pay, and ask them to make you an offer that is affordable for your income. Don’t give up on this, as it’ll only get worse.

      If you really can’t get anywhere, consider looking into refinancing options with other companies, or debt consolidation, and make sure to warn Chase that you’re about to abandon them for another lender who IS willing to work with you.

      Trust me, they want your money, and someone over there should be willing to work with you, given that you’re telling them the truth, being nice about it, and requesting a reasonable compromise.

      You’re not the only person in this situation, so keep that in mind, don’t get excited or emotional, but be serious and make sure they know that you mean business.

      Good luck!

      • Hi, I am in the same kind of situation.

        My lender for a private studnet loan was Chase. I defaulted back in July of 2014 (right before finishing nursing school after having a baby). I called them to figure out some type of repayment plan and instead I get transferred to a collection’s agency because they have charged-off my acocunt. When I talked to the lady about options she said my only options were to pay the settlement in full $23,000 (full balance is $32,001.71) and then they would send me paperwork or I could do a down payment of $6500 and agree to pay $400-500 a month until paid in full then i would recieve paperwork.

        i am trying to get my RN license in NJ but you cannot register if you are in default of student loans unless you have documentation that you are or will repay those loans. The collections agency is saying they will not give me any type of paperwork until paid in full. Is that legal? Can they deny me paperwork if I do a payment plan? If I cannot financially afford to pay the $6500 down $400-500 a month payment, what can I do? I am more than willing to make payments now and then revisit payment arrangement later, once I get a nursing job where I can make the money to pay the loan back. Any help would be greatly appreicated.

        • Hi Amanda,

          You absolutely need to speak to a lawyer, right away. I can’t give you legal advice on this one, but a local attorney will be able to guide you through this.

          I don’t know if what the collections agency is doing is legal or not, but obviously this is a top priority for you right now, so I’d recommend immediately consulting with a lawyer and getting it sorted out.

          When you do figure out whether or not that was legal, please come back and let me know. I’ve never had anyone ask this before, but I’d like to have the right answer if it ever comes up again.

  78. Michael Jordan says:

    I currently have roughly $100,000 in private student loan debt, amounting to $850 per month in minimums. Nothing is past due, but naturally, it is a strain to pay this each month. I was contacted recently by a student debt relief program that claimed that I could hire a lawyer to represent me. The claim is that these student loan companies would not be able to furnish proof that they are legally able to bill me for these loans. Supposedly, the worst case scenario is that I am ineligible to sue (they can furnish such documents) and the lawyer would negotiate much better terms for my loans. Best case scenario is the loans are discharged.

    The cost to do so is $475 per month, which is what they estimate my student loans should be each month, given better interest rates. If I am unable to sue, I don’t pay the attorney anything further than the first month and I gain whatever negotiations he / she has gotten for me.

    Is this a real thing or a complete sham? It just seems fishy to me.



    • Hi Michael,

      This sounds like a scam to me. You shouldn’t need a lawyer to negotiate anything with your student loans, but all sorts of predatory refinance, consolidation, etc. companies have come out of the wood-work, and are more than willing to promise you the world for a price.

      Be extremely careful with something like this, and realize that anything they’re attempting to do, you could do entirely on your own as well. There’s no magic pill with student loans – you’re in a tight spot – if you need to negotiate new payment rates, contact your lender yourself and let them know what you’re considering doing.

      If you want to give it a shot, simply tell them yourself that your lawyer has requested they furnish proof that they’re legally able to bill you for the loans, then see what they come up with. You don’t need a lawyer to do that – you can do it yourself! For FREE!

  79. I have a private student loan that went into default. When contacted by a collection agency I was advised that I had to pay what they requested, but I explained to them that I already had a garnishment on my wages for a different loan, so I couldn’t afford to pay what they were demanding.

    I told them I was willing to pay something, but they refused the offer and issued a second garnishment on my wages. Now I’m earning less and less each week!

    Is there any hope for me? What should I do?

    • Hi Necie,

      Sorry to hear about your situation. Garnishments are no joke, and are extremely difficult to get out of.

      How much are you making? What state do you live in, and how large is your immediate family?

      It is possible to get a private student loan discharged by filing for bankruptcy, but to get approval, you have to be able to show that the debt is causing an undue burden on your life (basically making it impossible for you to provide for yourself or your family).

      I would recommend speaking to a local bankruptcy lawyer who has direct experience with student loans, and seeing if they think you’ve got a case.

  80. Hello, My daughter isn’t paying on her rather large private student loans(Sallie Mae..AKA=SM).I tried to make monthly payments on an agreement with SM but they still called 5-10x a day.The agreement was only for half of the loans i found out and they wanted more per month.So my payment would have been between$900-1000 per month.
    The problem is,my daughter is going to move out of the country soon and SM won’t be able to touch her.So now the loan’s will be my problem(co signed).The loan’s have more than double in size now and there is no way i can make payment’s like SM wants.
    I gave up talking to them,they wouldn’t listen,they got rude,they wanted payment NOW !!
    I could pay $1000 per month for 30 years and it wouldn’t be paid off due to interest,fees..etc.
    They called yesterday and said they are coming after me and it’s too late for me..they said “good luck” and hung up.So now i guess they will garnish my wages,come after my house and bank acct(which is empty anyway).
    What should i do now?II’m lost and stressed.
    Thank you.

    • How did your daughter’s loan situation turn out? I have huge private and federal student loans. I graduated but have a job paying half of what was anticipated. I just wondered how it worked out for you. I have nothing in my name but will face wage garnishment.

      thanks for your time,

      William Antrim PhD

  81. Carter Roane says:

    If I defaulted on a private student loan but have started the process of rehabilitating it, would that affect my eligibility for federal financial aid if I am looking to go back to school?

    • Hi Carter,

      Your credit history shouldn’t have much (if any) impact on your ability to receive a Federal Student Loan.

      Check out the FinAid website here, for a detailed explanation.

  82. Hi im trying to do some research for my parents who are trying to retire but are faced with the threat of wage garnishments due to private student loans that they cosigned on for my brother. Any thing you can offer for help is appreciated

    • Hi Jessica,

      Unfortunately there aren’t a whole lot of options for private student loan debt. This page covers all the relief options that I’m aware of.

      I would try contacting their whoever services their loan to threaten them with defaulting or declaring bankruptcy, which means the lender will end up needing to go to court and battle it out with you guys to seek restitution, which most lenders don’t want to do.

      The trick is that you will need to convince them that your parents financial situation is so dire that they’ve got no choice but to declare bankruptcy and pursue a discharge under the “undue hardship” rule.

      It IS possible to discharge private student loans via bankruptcy, but only if you can prove to the court that your parents’ loans are “posing an undue hardship” on their life (making it difficult for them to afford basic living expenses).

      Take a look at our Private Student Loans Bankruptcy page for details, and if you think you can prove that your parents are facing an undue hardship, contact whoever services their loan with as much financial details as you can collect so that you can convince them you’re serious about pursuing this path.

      If you can scare their loan servicer into believing that they might lose the case in court, then you just might be able to squeeze a loan modification, or even some debt forgiveness out of them.

      Good luck!

Speak Your Mind