Question:
Dear Steve,
I’ve read several articles about stopping payments on private student loans.
I joined the Army and paid off the majority of my own student debt, but then got married and inherited my wife’s nearly $100,000 in student debt.
Most of it comes from private loans.
I barely make ends meet each month, but I’m terrified of the consequences of stopping payments on private student loans.
How do I know if its the right move for me to make?
Michael
Answer:
Dear Michael,
I understand how it feels as if you inherited her student loan debt. At the very least you feel responsible for dealing with it. But it is not your liability. Just want to get that out of the way. You did not inherit it legally.
You ask a very simple but incredibly complicated question.
Here is where it gets complicated. Electing to strategically default on your private student loans has some pros and cons. You can read about those here.
But electing to strategically default on private student loan debt is not something that should be taken lightly without factual awareness.
Your entire financial situation should be considered and not every private student loan is good to do this with. And you have to have a final game plan in mind for each loan. You can’t look at all the loans the same way. It’s complicated.
Ignoring the loans and stopping payment is one part of a larger plan on how to deal with them. For example, are you eventually going to settle one or more loans or do you hope to hide and let the Statute of Limitations expire and then discharge them in bankruptcy? How many years of hiding will it take and is that even a smart thing to do? You might be able to then discharge them in bankruptcy but is the paint to get there worth it?
Dealing with the private student loan debt is certainly not something I would suggest just calling any retail debt relief company for help. This is expert-level rocket science specialist stuff.
The very best person in the United States that I know and the smartest person about these issues is my friend Damon Day. I would strongly suggest you contact him and at the very least, have a conversation about the specifics of your situation.
Think of Damon Day as a private student loan top-notch brain surgeon. If you want the best plan, go to the smartest person. Otherwise, call just anyone and pray you get even marginal advice and not a sales pitch for a solution you don’t need.
I might be talking Damon up too much but given what I’ve seen from people that just pick up the phone and call any old student loan help place over private student loans, there is not any way to compare the two services. One is the Mayo Clinic and the other one is a nut and bolt.
So, with a plan in place based on your situation and loans, and with some handholding to help you best understand what the process is, what to expect, and how to deal with surprises, you can get to the other side of this issue.
The worst thing to do would be nothing and just sit and stew in worry and fear.
I am extremely confident if you are willing to deal with these private student loans, you are aware of what you will have to go through, and you are committed to putting them behind you, Damon Day will lead you there.
Otherwise, defaulting will be determined for you by your income. When you can no longer afford the payments you will default, without a plan, and you will be the bug, not the windshield.
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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