Question:
Dear Steve,
You don’t mention or get into detail on how to negotiate a settlement for private and federal student loans.
I live in Pa. my loan is over 25yrs old, from 1989!! I haven’t paid on it in 24yrs. I have never been sued or had a wage garnishment, however I’m trying to sell my home and get a mortgage for the new home and in the loan process the student loan debt stopped me in my tracks for the mortgage.
My student loan principle was 8k and change and now it is close to 25k from interest and such.
Also if you can tell me on my loan history breakdown with the offset fees and interest and collection fees, there are 2 separate “guaranteed student loan added” items 1 for 7k and 1 for 1,700!! these are both in 2005 which I haven’t been in school since 1990 or 91.
Did they just ad fake loans on? Like you said there is no one to help us. Please if you can, this is ruining my life as I get older.
How do I settle this in a 50 % or less 1lump sum settlement and not get tricked?
Thank you in advance.
Allen
Answer:
Dear Allen,
Ironically just this morning I was thinking about this issue of people trying to get personalized assistance from mass-market solution providers.
The companies you constantly see advertising are probably not the first I would suggest since most in-demand experts are already busy individually assisting people.
What you have right now is an issue that is driving you to do something to get it out of your way. But before I rushed to do anything I would want to get some better data and facts.
For example, if the oldest loans are actually private student loans then they should not be on your credit report and are almost surely beyond the statute of limitations and if you were to be sued over those you could raise it as a defense.
Negative items on your credit report should be reported for no more than 7 years and 180 days from the time they last began to be delinquent. In practice, most are eliminated after seven years. For more on the Fair Credit Reporting Act, click here.
So I’m not sure how these stopped your current mortgage process since they should not be on your current credit report anymore.
Without any experience in what you want to do you are essentially trying to perform an appendectomy in a cave without surgical instruments. You have no experience in what you are about to do.
I’ve written before about This is How You Can Settle Your Navient Student Loan but the key to doing this is making a current acceptable offer to the right department. Without experience that’s the definition of a shot in the dark. How would you know a creditor is currently taking 30% or won’t go lower than 65% if you have no current data from other settlements from a particular department?
Did the mortgage company assure you settling the old student loans was going to clear the way? Did they let you know that could result in an income tax bill and that it would then update your credit report with current activity on that account showing the forgiven part of the debt might be reported as a bad debt?
In my opinion, a wise person gathers information and data, gets a professional consultation, and then lets that knowledge percolate for a day or so before taking action. After doing your research and talking to an expert in the field you will have a very clear path to follow. And based on that knowledge you may try to tackle this yourself, you might let a professional do it for you, or you may find there is something wrong with the credit reporting.
So I’m going to give you three wise options and you can decide on the next step.
- You can contact my debt coach friend Damon Day, who I have mentored for over a decade now. Damon and I talk about debt issues daily and he is one of the absolute top debt coaches I know. You can arrange a consultation with him, talk over your situation, get some clarity, and then be better prepared to take action. Damon has guided many people to settle their student loans.
- You can talk to my debt coach friend Michael Bovee, who I have known for seemingly forever. Michael Bovee is another of the top two debt coaches in the country and someone that is a straight shooter with advice.
- You can talk to a consumer attorney in your state for legal representation or you can contact my attorney friend Joel Cohen, The Student Loan Lawyer, and he can give you a different point of view.
Please come back and let me know what you decide to do, what you learned in the process, and what action you take.
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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Asked question on how to settle old student loans.
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