Student Loan Settlement

Settling student loans can be tricky.  Loan servicers and collectors tend to view student loans as literally non-dischargeable (rather than just difficult to discharge) and want to settle high.  To settle low, you will need leverage which is usually based upon a review of forgiveness programs, litigation options, bankruptcy options, and other personal factors that may make collection difficult.  We can review your situation and help you determine if your loans can be settled and what a likely range would be.

Student Loan Settlement Services

We have experience settling student loans.  A settlement is not necessarily just us calling and negotiating.  It might be that we file litigation first and the settlement is an agreed resolution to the suit.  We might retreat to bankruptcy and offer funds from a creditor immune source like your 401k or a third party.  Usually, we start with a certified letter that details all possible points of leverage and follow up with a call to the lender, servicer, or collector.

The most important part of a settlement is what leverage do you have.  Leverage comes from many angles.  Here are common types of leverage in a student loan settlement:

  1. Availability of Forgiveness or Repayment programs
  2. Bankruptcy options
  3. Change in laws regarding dischargeability or likely change in laws
  4. Claims or counterclaims against the school, the lender, the servicer, or the collector
  5. Economic situation generally
  6. Evidentiary issues
  7. Low income and few or no assets
  8. Medical condition/s that would prohibit repayment
  9. No cosigners, guarantors, spouses, or other third parties that can pay or are required to pay
  10. No sources of income or assets
  11. Social media leverage
  12. Whether the loan is Private or Federal

The Differences in Settling Private vs. Federal Student Loans

Federal loans generally have no statute of limitation, can add massive collection fees under a cost averaging model that has a statutory basis, and can offset benefits such as social security or tax refunds.  Federal loans can also collect without filing suit via Federal Wage Garnishment or Tax Offset.  Because of this leverage, it can be difficult to settle these types of loans easily.  If you are able to pay 90% of principal plus interest in a lump sum, they are authorized to take this as a standard offer.  If you need a lower amount, then you need special consideration with a great deal of verifiable hardship.  Federal loans can be settled, but whether high or low depends upon your facts.

Private loans are the wild west.  Sometimes the original lender comes after you, other times a securitized trust that claims to own the debt, and other times debt buyers who picked up the loan on the cheap.  Settlement positions vary drastically from player to player depending upon their business model, purchase price of the debt, etc.  However, they lack the tools of the federal government and must file a lawsuit to collect and are subject to court rules, statutes of limitation, and other defenses.

Free Initial Phone Consultation

We settle both types of loans and can review your specific leverage to determine a good range for an initial offer and a likely range of settlement.   We offer a free initial phone consultation.  Call us today to see how we can help.  206-535-2559.