Get Out of Debt Guy - Steve Rhode

My Private Student Loans Can Be Discharged in Bankruptcy, Right?



Dear Steve,

I took out a Sallie Mae student loan for my son in 2005, $22,000. The money was never used for his education. I used the money to pay off some debt with the intention of selling my house and paying it right back. The housing market crashed and couldn’t sell my house. He graduated and I started repaying the loan. So I have been paying every month, on time, since then. The interest went up and is now at 10 1/2%. So at this time I own $32,000 and pay $370 a month. To get my son off the loan as co signer we had to say he didn’t know anything about the loan. The loan has now been handled by Navient for 7 years. They took him off the loan, but in doing that they now say the loan is in default. I tried to pay them the December payment but they wouldn’t take it.

So my question is, what should I do? They are offering a settlement amount of $12,000 to be paid all at once. I am a 64 year old divorced women that works a retail job and make $11.75 an hour. I don’t have any savings and have no way to come up with $12,000. I’m working with Navients default loan department and so far this is what they have come up with. So far I think I’ve paid roughly a total of $36,000.




Dear Bonnie,

You are caught in the chasm between reality and possibility.

It may be absolutely possible to seek and obtain a discharge on this probably unprotected private student loan. Technically it appears to meet all the criteria to fight for a bankruptcy discharge. However, and there seems to always be a however, the cost of filing the bankruptcy and paying an attorney to file the needed Adversary Proceeding to sue the lender and seek a court opinion the loans are not protected and unqualified, could be expensive and not a guaranteed result. When it comes to court, nothing is guaranteed. However, you may want to contact one of the attorneys on my list of great student loan attorneys and ask them for their opinion.

The good news is Navient has offered you a settlement which is a guaranteed result. The bad news is I don’t think they are giving you their best offer here. Navient has been known to take some money down and stretch settlement payments over a few years at no interest. That might be more doable for you.

You know I’ve got to point out, unless there is some burning reason your son is not helping you with this situation, he absolutely should pitch in.

To negotiate a better deal with Navient see this article or contact an experienced debt coah like Damon Day or Michael Bovee.

Big Hug!
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