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I’d Like to Settle My SallieMae Student Loan. But How? – Jody

“Dear Steve,

I’m currently in a chapter 13 bankruptcy that I will make my final payment on in June and will be discharged soon after. I have a Wells Fargo student loan that originated as $25000 in 2004 and was about $35000 with interest in 2007 when I filed.

I’m being told that there’s no way it can be discharged, etc. And I’d like to settle the loan (my parents are willing to give me money). I’d like for this to be for the smallest amount possible. Is this an option? Should I try and get an attorney involved? No one seems to want to touch it because it’s called a student loan….but it’s really just a terrible loan disguised as a student loan??? any help would be greatly appreciated!

Thanks!

Jody”

Dear Jody,

Unfortunately SallieMae holds most of the cards here with far reaching powers since it is a student loan.

Your best shot is to call SallieMae directly and start talking about settling the debt. If you eventually get to a point where they make you an offer don’t feel like you need to accept it right then on the phone. Think it over for a few hours or overnight.

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The initial response from SallieMae is going to be they can’t do it. Just keep asking for a supervisor and working your way up the food chain.

You will want to get the offer in writing and make sure the agreement says the settlement will fully take care of the total debt since they could otherwise chase you for the balance due.

Since you will probably no longer be insolvent, be aware that the amount of debt they forgive will be taxable to you as if you earned the money. You will owe the IRS tax.

I have heard of a few cases where people have been able to settle but those situations are not common at all and the percentage settled for is much higher than for other debts.

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If I had to guess I’d think that in the rare chance they did agree, the final settlement amount will be around 80% of the debt or the $28,000 mark if paid quickly in a lump-sum by a wire transfer.

Please update me on your progress by

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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