The truth is how private student loans are most of the times without many repayment options are the protection of the borrower. Therefore, many students who have private student loans are afraid of the lawsuit. The best thing is to act fast if you are facing a private student loan default.
Let’s talk about why can you experience the private student loan default. It may happen because you miss some payments, experience bankruptcy, or pass away (unfortunately needed to mention that too). If any of these situations happen, the delinquency of your loan will be sent on your credit report, the lender may put loans in a collection, you may experience huge fees, or you may finally face the lawsuit everyone is so afraid of.
Handling your private student loan default
Here are some of the options you have:
1. Requesting help: Consider all repayment options with your loan provider. The most important advice is definitely not to ignore the problem. You may be offered forbearance with a purpose to help you pay your loan.
2. Refinancing: Getting a lower monthly payment is another option. You may also ask someone from your family to help you pay your debt.
3. Negotiate: Talk about the settlement of your private student debt. The debt collector can help you with that, so, don’t hesitate to ask what needed.
4. Your rights: Every borrower has some rights, but those don’t value much if you don’t know what those are, right? In that case, you will be able to escape deceptive and unfair tactics that may be used within debt collections.
5. Think about consulting your lawyer: Of course, I am talking about a student loan lawyer here. If you are very upset, the best would be to escape direct contact with the lender.
6. Pay Off Your Loan in Full : Paying off your student loans fast in full will solve your problems. The debt will disappear and collections agencies will stop calling. You have three main options when it comes to paying off your loans–savings, friends and family, or refinancing.
7. Dispute the Debt : Disputing your debt allows you to verify the accuracy of your debtor’s claim. Debt collectors must provide you with information that proves you are legally obligated to pay the debt. To start this process, you need to request proof of the loan’s origins. Simply send a written notice asking for verification of the debt.
What Causes Private Student Loan Default?
You Miss Payments: Most cases of default occur when a borrower fails to make payments. Generally, private student loan default occurs when your payment is overdue for 120 days or four months.
Your Cosigner Goes Bankrupt or Dies : Cosigners help borrowers secure better interest rates and loan terms. They may never make a payment on your loan, but they are equally responsible for the debt in the eyes of your lender.
You Default on a Different Loan or File for Bankruptcy: Drastic changes in your credit status or history can also cause private student loan default. Most commonly, lenders may place your student loan debt in default if you default on a separate loan or file for bankruptcy. In these cases, you are a risk to borrowers, so they want their money back immediately.
Repairing Your Credit Score after Default
Your credit score will take a hit if you got into private student loan default. This can make it difficult to get approved for a mortgage, lease a car, or apply for a credit card. Some landlords even run a credit check before taking on new tenants. Luckily, there is a lot you can do to repair your credit. Here two simple ways to improve your credit score in 30 days or less.
Negotiate Late Payments: Speak with your creditors to see if they will erase late payments from your credit history. It only takes a few minutes to ask, and you have nothing to lose.
Dispute Errors on Your Credit Report: Get ahold of your credit report to look for errors. Contact the credit-reporting agency to dispute the errors. You will need to provide proof like payment records and identification. Source: Studentdebtrelief