Question:
Dear Steve,
Consolidated student loans approx $80k.
Been in forbearance/unemployment forbearance for ever. It just seemed so easy to claim unemployment and forebear.
I cannot believe how easily it was to forebear, and now I’m kicking myself.
Recently started defaulting (I am 3-4mos behind)
I cannot afford payments, even interest only or lowest income.
Hubby’s income is substantial, but not enough to cover our expenses and any bill Navient sends my way.
Mortgage and cars are in my husband’s name; my dad was a co-signer for my loans years and years ago but he has nothing that they could take and doesn’t make much (and is close to retirement age)
I now work 25 hrs week, bring home ~200/week
$80k navient federal loans: I’m considering defaulting and waiting for (or asking for) a settlement offer. In preparation for this, I have consulted a CPA who prepared our taxes two different ways: married filing separately and filing joint.
If we file separately we will lose about $10k of our refund (I know, the IRS isn’t the place to save money… but that’s not the point of this forum) We use hubby’s tax withholdings to make up for my not working, and therefore rely on this refund yearly to make ends meet.
Once I am defaulted and ask for (or am offered) a settlement, will they ask to see tax returns before finalizing a settlement? Or will I be OK to just keep defaulting and take/ask for a settlement when the time comes if we file jointly?
I am under the assumption that our house and cars are safe, because they are in my husbands name – but is this correct assumption?
Again, I’ve exhausted all deferment options, and at this point even interest only is not affordable. Thanks for any and all input. I’m sick over this, barely sleep at night… seems like my only way out of this is dying and even that doesn’t seem to make them go away.
Thanks. Keep up the good work with the rescue dogs 🙂
Tara
Answer:
Dear Tara,
Thanks for reaching out to me. You’ll have to update me in the comments section below, because I have some questions.
You mentioned this was for a Navient federal student loan but also said your father was the cosigner. However, federal loans don’t have cosigners. Private loans do. Federal loans that are the responsibility of someone else are typically Parent PLUS loans.
If these are federal loans, the defaulting route is a non-starter. Don’t do it. You are more likely to have a wage garnishment, lawsuit, or the responsible party pursued, think father.
To figure out the status of the Navient serviced loan you should login to the National Student Loan Data System. If your loan is not listed here is it not a federal loan. That is a critical factor to first clarify. Again, let me know what you find out when you login there.
If I was to bet I’d say based on the frequent forbearance and cosigner that this is a private loan. We will just have to wait to see what you find out from the NSDLS site.
If this turns out to be a private student loan, please let me know if the loan proceeds were disbursed to you, used for anything other than tuition and books, and what school you went to.
One fact I want to leave you with is if your father is actually a cosigner on a private loan he is 100% responsible for the balance due. This is what cosigners agree to take on when they sign and assume the liability. And if this is a Navient private loan then he might be able to negotiate a cosigner release but for just a few thousand more dollars you can typically get the full private loan settled.
I’ll watch for your comments and updates.
One more thing, you should not overwithhold in hopes of getting a big refund. Just adjust your withholdings to get more in the check each month and breakeven at with the IRS at the end of the year. No sense giving them your money for free.
