TERI Student Loan & Debt Settlement Program
- Unlike federal student loans, TERI loans are privately backed.
- Student lenders offer settlements reluctantly.
- Student loans usually cannot be discharged in bankruptcy.
We have several TERI student loans, and are enrolled in a debt settlement program. TERI keeps calling and says it won't settle.
We have several TERI private student loans that are K-12 loans totaling $40,000. We had a financial hardship and are working with a debt settlement company that said they could help us settle on these loans because they are not federally backed. I just received a letter today from them saying that it is now in default and that they are pursuing their right to collect the whole amount(it is 90 days late)the company has power of attorney letters sent to them, but they have still not contacted this debt settlement company yet. I was told to ignore their calls and/or refer TERI (AES) to the settlement company. this whole thing scares the heck out of me. What would you advise? There are no options with TERI. We tried to make payment arrangements and they won't budge. I told the debt management company I do not want this to go to judgment, and I would much rather make the payments somehow. If this is a scare tactic they are winning.
Your loan is "guaranteed" by The Education Resources Institute (TERI). It is a private student loan, as it was not guaranteed by the U.S. Department of Education (DOE). It is common for confusion to exist as to whether a particular student loan is a private loan or a federally insured loan. Many student loans, such as Stafford Loans, and PLUS Loans, are offered by private lenders, but are still guaranteed by the DOE. As I mentioned, yours is not.
How Settlement Programs Work
Your problem is one faced by almost every consumer who enrolls in a debt negotiation program, and one most good debt settlement firms discuss with clients upfront.
While in a settlement program, you are no longer making monthly payments to your creditors. Instead, you are saving that money in an account to be used to settle your debts; however, your enrollment in settlement program does not stop your creditors from expecting payment each month under your loan agreement. Therefore, your creditors will likely continue their collection efforts while you are saving money to settle, as TERI has already done.
The fact that collectors are calling you and making threats is par for the course for most people enrolled in a debt settlement programs. It does not mean your creditors will refuse to accept a settlement. In addition, your settlement company may be able to help reduce these phone calls by sending cease communication requests to your creditors. TERI, being an original creditor and not a third-party collector, may choose not to honor these requests, but TERI may stop calling to ensure compliance with federal and state collection laws.
I encourage you to communicate with your settlement company about these calls and how much stress they cause you. It may also be a good idea to stop answering the phone when collectors call. If you do not have the money to pay them, all these calls will do is cause you unproductive stress.
Although it does not happen to most people who enroll in debt negotiation program, your creditors may choose to pursue legal action against you for not repaying the loan as required by your original agreement. From my experience, only a relatively small percentage of debt settlement clients are sued, though almost all are threatened with lawsuits by their collectors.
Collectors often tell people they will not work with a debt settlement company. This statement is a negotiating tactic. Although a few do not under certain circumstances, the vast majority of creditors will negotiate a settlement eventually because it is in their financial interest to do so.
Student loan providers can be more difficult than other creditors when it comes to negotiating settlements, possibly because they know that their notes cannot be discharged in most bankruptcy proceedings. In fact, many debt negotiation firms will not accept student loan debt, even in cases, such as yours, when the student loans are private (i.e., not insured by the U.S. Department of Education).
I presume that since your debt negotiation firm accepted your TERI loans, it has a track record working with TERI or similar providers of private education loans. However, you may want to call the settlement company with which you have been working to ask specifically how many accounts it has settled with this creditor, what the average settlement percentage on those settlements is, and how often are clients being sued by TERI or similar private education lenders.
Hopefully, this information will help you decide whether or not you should continue the negotiation program or try to work out repayment plan with TERI on your own.
Alternatives to Settlement
If you feel strongly that the debt settlement program in which you have enrolled will not settle your TERI account, you may want to look into a couple of alternatives. Unfortunately, the alternatives available to assist you in resolving your student loan debts are fairly limited.
One option is to try to consolidate your loans into a single debt, which will hopefully charge a lower interest rate and require smaller monthly payments. However, since your loans are private, you probably will not qualify for federal consolidation programs, which may make consolidating a less attractive option. To find out more about consolidating student loans, read the Bills.com resource Student Loan Consolidation.
Another option is to consult with a bankruptcy attorney — bankruptcy usually cannot discharge student loan obligations, but if you can prove to the judge that repaying the debt is causing you an "undue hardship," he/she may grant you a discharge. Hardship discharges are not granted frequently, so you should not peg your hopes on this option.
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If you are considering bankruptcy, I strongly encourage you to consult with an experienced bankruptcy attorney as soon as possible.
While there are options out there to help you, you may find the best thing to do is to stay in your settlement program, cross your fingers, and hope that everything works out for the best. If you want to learn more, Bills.com offers a wealth of information on various student loan related topics, available at Student Loans Information and Savings.
I wish you the best of luck in finding a solution to the difficulties you are facing with your student loans, and hope that the information I have provided helps you Find. Learn. Save.
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2022 was $16.91 trillion. Student loan debt was $1.60 trillion and credit card debt was $0.99 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
The amount of debt and debt in collections vary by state. For example, in Florida, 29% have any kind of debt in collections and the median debt in collections is $2137. Medical debt is common and 14% have that in collections. The median medical debt in collections is $915.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.
A credit report is an inexact record of your financial history. Unfortunately, if the lender (in this case TERI and/or Nelnet) has no record of who it sold your collection account to, and the collection agent that bought your account has not reported it to the consumer credit reporting agencies, then you have no way of learning who owns the rights to your collection account. I have three suggestions: 1. Make your student loan payments to a separate savings account that you do not otherwise touch. 2. If and when the collection agent contacts you about the debt, validate the debt. 3. If the collection agent validates the debt, negotiate a settlement of the debt. Use your savings in the separate account I just mentioned and offer the collection agent a lump-sum settlement.
Regarding your credit score, it takes one slip to damage it and years to repair that damage. See the Bills.com resource Improve Your Credit Score to learn what steps you can take to improve your credit score.