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Resolving a Student Loan Judgment - The Bills.com Blog
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Resolving a Student Loan Judgment
Thursday, Jul 23, 2009
Question: The college I attended won a judgment against me back in 03-05, I really don't remember the exact year. The county court allowed them to attached a lien against my tax refund for the money due them. I have filed but because it's a joint account with my SS# being last, I guess, they have never collected the debt. Yesterday I received a letter from a credit collector asking for the payment in behalf of the college. I checked my credit report and the lien shows no comment as to the status of the lien. Also in the credit report, the judgment awarded the college is shown. I have dealt with having both of these negative reports for perhaps up to 6 years. The letter said that if I wanted to pay the college that I should contact them directly otherwise they would start their methods of collection. So what should I do?
Answer: I always tell people that you should pay any legitimate obligations which you are able to repay without causing a financial hardship for you and your family. So, if you legitimately owe the amount being claimed by your former school, I would recommend that you contact the college directly, as recommended by the collection agency to try to negotiate affordable repayment terms. Most creditors are willing to work with consumers who want to pay their outstanding debts; educational institutions are particularly known for their flexibility in negotiating affordable payments with their former students who have fallen behind
on their student loans.
The repayment options that the school can offer you will largely depend on the type of debt you owe. For example, student loans programs sponsored by the U.S. Department of Education provide former students with a multitude of ways to reduce and/or defer student loan payments, especially when faced with a job loss, reduction in income, illness, etc. Private student loans (which I think yours is based on your question) offer similar assistance to borrowers facing financial setbacks, though these options are usually not as generous as those allowed by their federally-insured brethren because, unlike government sponsored loan programs, the private lenders are in business to turn a profit.
However, unlike most federally-backed loans, private student loan companies are often willing to accept lump-sum settlements to resolve delinquent debts, which is a great option if you can raise the necessary funds. For example, a lender may be willing to accept 40% of the balance of your debt as full payment if you can pay it in a lump sum; again, you would
The repayment options that the school can offer you will largely depend on the type of debt you owe. For example, student loans programs sponsored by the U.S. Department of Education provide former students with a multitude of ways to reduce and/or defer student loan payments, especially when faced with a job loss, reduction in income, illness, etc. Private student loans (which I think yours is based on your question) offer similar assistance to borrowers facing financial setbacks, though these options are usually not as generous as those allowed by their federally-insured brethren because, unlike government sponsored loan programs, the private lenders are in business to turn a profit.
However, unlike most federally-backed loans, private student loan companies are often willing to accept lump-sum settlements to resolve delinquent debts, which is a great option if you can raise the necessary funds. For example, a lender may be willing to accept 40% of the balance of your debt as full payment if you can pay it in a lump sum; again, you would
need to contact the college to discuss if settlement is an option on your account. To read more about the debt negotiation process, you can visit the Bills.com Debt Negotiation and Settlement page.
As for your credit report, the judgment will probably continue to appear in your credit profile until your states limitation on the collection of judgments expires (often 10-20 years, but this period can be renewed and extended in most states), unless you satisfy the judgment by paying the original judgment amount plus any accrued interest and fees. If you pay the judgment, it will still remain on your report for seven years from the date it was first issued by the court. Judgments have a strong negative impact on your credit rating and overall credit worthiness as evaluated by most lenders, so I encourage you to resolve the judgment as soon as possible so that it will fall of your report once the seven year reporting period expires.
I wish you the best of luck in resolving this obligation, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
As for your credit report, the judgment will probably continue to appear in your credit profile until your states limitation on the collection of judgments expires (often 10-20 years, but this period can be renewed and extended in most states), unless you satisfy the judgment by paying the original judgment amount plus any accrued interest and fees. If you pay the judgment, it will still remain on your report for seven years from the date it was first issued by the court. Judgments have a strong negative impact on your credit rating and overall credit worthiness as evaluated by most lenders, so I encourage you to resolve the judgment as soon as possible so that it will fall of your report once the seven year reporting period expires.
I wish you the best of luck in resolving this obligation, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
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1. Posted by studen loan on Friday 24th July 2009 05:45
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