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Advice About Default on Private Student Loan - The Bills.com Blog
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Advice About Default on Private Student Loan
Tuesday, May 6, 2008
Question: If I don't pay a Private School loan that I got through a bank (it has no stafford loan or federal govt associated with it) what can they do? Can they garnish my wages?
Answer: Private student loans are similar to unsecured debts owed with regards to collections. If you do not make repayments on the loan, the creditor/collection agency does have the right to take you to court. If a judgment is won, the creditor/collection agency can ask to have wages garnished and/or liens placed against properties or financial accounts. The only thing that differs
a private student loan from an unsecured debt is the fact that private student loans are currently not dischargeable in a bankruptcy filing. For more information on collection
actions for default on student loans, please visit our student loan information page.
I hope the information provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com/blog
I hope the information provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com/blog
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1. Posted by Torry Wheless on Monday 17th November 2008 21:54
I currently have a student loan that is in default that I am trying to take care of. Because of this loan it is hard to get loan from the bank. Is there any other options for me?
2. Posted by Bill on Tuesday 18th November 2008 10:30
That is a tough spot to be in, I cannot think of a particular service. You will need to get your student loan at least to a current status. Once that happens, your credit will recover and then you can look a a consolidation option or a replacement loan.
3. Posted by Natasha Mahalie on Friday 29th May 2009 09:29
I have currently defaulted on a private loan and want to know even if paid off will this be on my credit forever? If not, how long would this be on my credit?
4. Posted by Bill on Friday 29th May 2009 16:18
It will be on your credit report for 7-10 years.
5. Posted by Fred Jester on Monday 24th August 2009 15:22
I have a private student loan received in 1993, I was notified after 10 years by the college I owed no money. I am now being hounded by a collection agency for this debt. Should I call the CA? Is this recovery technique legitimate?
6. Posted by Bill on Monday 24th August 2009 17:13
I do not understand what you mean when you write, "I was notified after 10 years by the college I owed no money." Does this mean you paid off the debt in its entirety? If not, do you mean the college wrote-off the debt because you did not keep up with your payments? To learn more, see the page Private Loan Collections, which is available at the Student Loan Borrower Assistance Project.
7. Posted by Betty on Monday 7th September 2009 14:15
I have a private loan and have managed to eek out my monthly payments. I have been unemployed for over 1 year but have used my UI to pay my monthly payments. I am now out of money and UI benefits and cannot pay my private loan. What can I do? If I default, what are the consequences?
8. Posted by Bill on Tuesday 8th September 2009 09:07
Contact the lender and explain your circumstances. They may offer a deferment option while you get back on your feet again.
9. Posted by Zara on Wednesday 16th September 2009 11:20
I have a private student loan which went into default last year because the co-borrower filed for bankruptcy. I tried calling the lender to see if something could be worked out but was told there is nothing I could do. There are no collection calls or anything. Should I expect them to call in seven (or ten) years? Or should I assume that the debt has been somehow cancelled?
10. Posted by Bill on Wednesday 16th September 2009 12:10
To my knowledge, the only way a private student loan can be discharged in bankruptcy is if the borrower files an undue hardship petition. My guess (note my word selection) is that the bankruptcy is not yet settled, and the private student loan creditor is respecting the automatic stay that is in effect on the bankruptcy filer's accounts. I recommend you contact the co-signer and ask him or her if he or she is filing an undue hardship petition. If so, ask if the petition been accepted and ordered by the court.
11. Posted by Amanda on Tuesday 17th November 2009 10:52
I have defaulted on a private school loan. The problem is I never received any type of statements, bills, notices, or anything stating that these loans were due to be making payments on. Now they are in default and the company wants $30,000.00 or down payment in the thousands with monthly payments of hundreds. I have been making what they call good faith payments. I work part time due to budget cuts and my co-signers are going through collections and currently have judgments against them. I want to make payments to them but they wont accept what I can pay (which I really cant afford anyway, Im borrowing that payment) as a payment and I cant get a loan? They want the tomorrow or they said they will be taking me to court. What can I do?
12. Posted by Jason on Tuesday 17th November 2009 14:22
I just found out I have student loans in default. I am not working at the moment. I talk to the lawyers who now have my loans and they gave me two choices, pay the full amount or pay a good faith amount. Both of which I don't have and can not do. Do you have any suggestion for me on what I can do?
13. Posted by Bill on Tuesday 17th November 2009 18:09
Jason and Amanda: Your questions arrived at the same time and have the same issues so I will answer both of your questions here: A private student loan is not dischargeable in bankruptcy unless the petitioner files an undue hardship petition. Perhaps as a result of the special status student loans have, creditors and their collections agents are reluctant to negotiate settlements on student loans for less than the balances due. Read Collections Advice to understand your rights in the collections process. I also recommend you read Debt Negotiation and Settlement Advice. Your best course of action is to continue to try to work out a payment plan with the creditor, and communicate to them that as your personal financial picture improves you will become current on your payments.