- December 7, 2020
- Posted by: Carter Davis
- Category: News
When you have student loans from a private lender, the government’s beneficial student debt policies won’t be relevant to you. If your loan payments are piling up and defaulting, it might be time to consider settling your student loan debt. We have the steps to private student loan debt settlement to help you get started on your journey to student debt relief.
Step 1: Know When to Settle
The process of settling your debt begins with answering a question: are you qualified to settle your student debt? As we talked about in our previous blog post, debt settlement typically occurs after you’ve defaulted on many of your payments. A lender won’t want to settle if you’re still able to make payments, even if it’s negatively affecting your life. Defaulted payments have severe effects on your credit, so if it looks unlikely that you’ll be able to begin paying again, debt settlement is your likely option to dig yourself out of the hole.
Step 2: Get Professional Help
In order to properly negotiate with your lender, you’ll need a sturdy defense that will ensure you won’t get taken advantage of. When you plan to settle student loan debt, you’ll need the assistance of a professional student debt relief company such as Hope Credit. Attempting to settle your debt with a private lender alone will result in the lender making you pay more than you need to—which can have worse results than defaulted payments if you’re unable to pay the settled amount. Our professional team will guide you through the steps to end your private student loan debt.
Step 3: Negotiate Your Terms
Now that you have your defense team, it’s time to speak with your private lender to negotiate your terms. You’ll likely need to pay at least 50% of the remainder of your loan—generally within a time frame of about 90 days. Let your defense team do all the talking. The lender can use any unnecessary information you divulge, such as payments on other things, against you. Make sure to keep the final agreement in writing for your own protection.
Step 4: Pay the Settlement
The next step to private student loan debt settlement is fairly simple: pay the agreed-upon sum of money in the given time. The sum will seem like a huge payment at first, but once it’s paid off, your private student loan debt from that lender is gone.
Step 5: Pay Your Taxes
All the canceled debt is considered taxable income, and it will show in your taxes. To avoid IRS attention or tax debt, be sure to report the full amount of canceled debt on your taxes. Once everything is finalized, check your credit and work towards repairing it for the future.
When you’ve decided it’s time to settle your private student loan debt, don’t go into negotiations alone. Contact Hope Credit to get the best settlement agreement possible.