Question:
Dear Steve,
I defaulted on my private Student loans with Navient due to not being able to pay! I already pay 900 dollars in Federal loans.
My private student loans were sent to collections due to missed payments. The collections agency wants to settle for 40,526- which I still can’t afford. We cannot seem to come to an agreement.
They recently sent me another letter with interest accumulating so now they are saying settlement for 41,000ish. I took the private loans out in 2006 to pay for college. I finished college in 2012. When I got out of college-started working in my field of study for the last 5 years; of course the job is not paying me very much to afford to pay private loans and federal loans so one of the loans gets neglected.
I can only afford to pay my Federal loans. I was on Navient “rate reduction” program twice for 15 months in 2013 and 2015. Once the program was over the payments resume to around 524.00 a month I cannot afford. So, of course, I defaulted on the loan and it was sent to collection this year, 2018.
Unfortunately, the collection agency & I cannot come to a different settlement than the one they are demanding. They are saying I have until 3/25/18 to pay. What are my options should I just wait until they send me a letter with the intent to sue- wait for the summons, respond to the summons then let the court decide?
I do acknowledge the fact that I did take the loans out and I should pay back, but what do you do when you cannot afford the high payments?
In my case, I defaulted, and I do not have thousands of dollars for a lawyer or for a settlement. What is the best course of action?
Furthermore, what is the point of getting private loans out of default when my credit is already ruined anyway?
Honestly, I never depended on my credit to buy things anyway. I do understand I can be taken to court & faced the possibility of losing the lawsuit.
How will I fight this in court?
Do I even have a valid argument based on information I provided? How long will it take for them to sue me? Will I be taken to court in the city/state I live in? Your help and advice are greatly appreciated. By the way, I live in Florida!
Ciera
Answer:
Dear Ciera,
You raise a number of good questions.
If you are taken to court the judge is not there to help you negotiate a reasonable agreement. They are there to enforce the legally binding terms of the contract you signed when you borrowed the money.
However, if you are sued you can still negotiate a settlement with the attorney suing you.
There is no crystal ball on how long it takes to be sued. It depends on a number of factors and the current creditor policy at any given time.
If you were sued on the private student loans it would be in your local court district. Not in federal court.
I would suggest you read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan.
Part of a sound strategy may be to wait and see what happens but that works out best as part of a larger plan on how to deal with your overall current financial situation.
It is always better to plan and prepare for a default, collections, and/or getting sued. Just waiting for the truck to hit you is never a good idea.
One place you can turn for advice on this specific subject would be my friend and independent debt coach Damon Day.
You can at least talk to him and discuss a plan of action.
Keep in mind, any negotiable solution is going to require you to have monthly income to pay monthly installments.
Another option would exist if these private loans were used for expenses other than for school or the school you attended was not FAFSA approved.
