Compensation garnishment sounds alarming, however fortunately you might conceivably stay away from that and other severe outcomes by managing with your private student loan default right away. Here’s what to do:
1. Request help with your private student loan repayment
If you can’t keep up with your private student loan payments, don’t ignore the problem. Reach out to your loan servicer or loan provider to inquire about repayment options. Some lenders will offer forbearance to help you catch up and avoid a private student loan default. You can also request a new repayment plan via email — here’s a sample letter to get the ball rolling.
2. Refinance the private student loan
If you’re having trouble making your private student loan payments, you may be able to refinance your debt to get a lower monthly payment. However, once the private student loan is delinquent, your credit score will take a hit, making it more difficult for you to secure a new loan — so it’s best to try this method before you miss payments.
In a pinch, you may be able to ask a relative or friend to borrow money to repay your private student loan. Still, this option can put your relationship at risk, so be sure you tread carefully.
3. Settle your private student loans in collections
If you have private student loans in default, you might be able to mediate a settlement of your student debt. Reach your debt collector and inquire them how much it would take to resolve the debt — it doesn’t harm to ask.
Note that this process will serve best if you have any savings you can give right away as leverage in your negotiations.
4. Know your rights as a borrower
As a borrower, you still hold specific rights — indeed if you’re in default. As the Federal Trade Commission notes, it’s illegal for debt collectors to utilize “abusive, unfair or deceptive debt collection tactics.”
For example, they are not allowed to call you before 8 a.m. or after 9 p.m. without your permission, and if you tell them not to contact you at work, it is unlawful for them to proceed to do so. The Consumer Financial Protection Bureau (CFPB) has some specimen letters if you require to push back toward a collections agency.
Also, be informed that the statute of limitations in your state could shield you of action against older debt.
5. Dispute the debt and request verification
A debt collector is lawfully needed to equip you with information that confirms you are, in fact, obligated to repay the debt.
Normally, you will have to demand full documentation of the loan’s origins, and you have 30 days from the beginning of communication to demand this validation. Once you get the validation, examine the information with your documents.
If there is a mismatch, you might be able to prove that the debt is not valid, that you owe less than the creditor claims, or that the debt doesn’t belong to you.
6. Consult a student loan attorney
If you have a private student loan in collections, a student loan lawyer may be able to help. The attorney can issue a cease-and-desist letter to collections agencies to stop them from contacting you directly. The attorney can also explain any relevant state laws that may protect you.
Engaging a student loan attorney might become a essential if you’re being sued over a private student loan default.
Private student loan default is serious — however solvable
The consequences of defaulting on a private student loan could be critical. However, there are many alternatives to help you bypass harsh consequences.
Work with your bank to examine repayment alternatives to retain your loans current. Also if you do end up with a private student loan default, always recollect that you hold rights. Evaluate your constitutional protections and affirm them as necessary.