Question:
Hi Steve,
My son has a large student loan that is not in payment stages, since he is still in school. The max 7 year deferment is fall of 2018. His father committed fraud and lied about family net worth. Son was told his dad would have no issue paying off debt, but couldn’t qualify for the loan or as co-signer at the time. His father forged his own stepdad’s signature (he is approx 75 years old) as co-signer for loan. (Not sure if step-dad is aware of loan) Less than 1 year later, his father was sentenced to jail for 5 years for fraud regarding an investment fund, along with being ordered to pay 1.2 million in restitution to investors.
Family was left with nothing but debt. Over the last few years, my son and I have paid some $$ – about $9K towards a principle bal of $40K, but interest is 8.5%, so no real dent.
A family member is offering to lend me a lump sum of $20K up to maybe $25K if we can settle the loan completely. Any chances to settle?
If so, now or wait till it becomes payable and/or delinquent? My son is currently enrolled at another University and set to graduate early 2018. His degree will not yield a high income and he has other federal loans that will amount to around $20k, but these should be more manageable & were entered into later, without any false promises from his father and without a co-signer. We have not contacted Wells Fargo yet, since we wanted to see what the best plan of attack may be.
Pat
Answer:
Dear Pat,
Well that’s a crappy situation. It’s like a misrepresentation x 2.
This is probably going to be much easier than you think to take care of because it seems what happens with the cosigner is less critical given the entire cosigner circumstances. That might not be a fair statement but it’s a real one.
It is entirely possible to settle private student loan debt if you know what to expect and how to do it. Let me say, there is no substitution for someone to hold your hand and guide you through this process. I would strongly suggest you talk to my debt coach friend, Damon Day. Having a professional on-call will help you not panic when the bank tries to scare you through this. Without any experience, you are the least qualified to know what to do.
That being said, it is possible to settle the Wells Fargo private student loan but you will have to default on the payments. I know, that sucks. But settling debt is more like a game where you know the process than a brilliant financial discussion.
To get your account in the right department and eligible for a settlement you have to be behind. And being behind means the account will report negatively to the credit bureau, your son will be in collections and will get collections calls and letters, and the bank has every right to take legal action if they want to.
But even if he was sued over the delinquent debt is not the end of the world. In fact it’s often a way to get the settlement faster. I know, sounds crazy!
Read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan and you’ll get a better idea of what I’m talking about.
So the circumstances leading to the unaffordable debt suck, it’s still your sons loan, it can most likely be settled, and there will be some pain for the gain of settling it.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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Question asked.