Do you want to know how to get a private student loan out of default? If this is true with you, then you are on the right page. In this post, I will be telling you everything you need to know and do in regard to getting your private student loan out of default.
How to Get a Private Student Loan Out Of Default
Many people still don’t know that they can get their private student loans out of default. And for those persons and students who are still wondering, yes, you can get your private student loan out of default. A couple of lenders in the market are ready to refinance a defaulted private student loan. And even if you opt not to refinance, you still have other options at your disposal such as negotiating a settlement with a collections agency or even paying the total defaulted amount.
Is It Right to Default on Your Private Student Loan
In almost every case study, it really does not make sense to default on your private student loan as it will tend to create a long-lasting consequence and dent that can stop you from achieving your financial goals and it is also avoidable for many people out there.
Will Lenders Work With Borrowers Who Are In Default
The truth is that many lenders will not work with borrowers who are in default. The most recent research on private student loan default rates ultimately found 66% of defaulters reached default more than once at a point in time.
Lenders tend to see it as high risk working with borrowers that fail to make payments. and when your debt finally goes into collections, you have a couple of options available to you and they are;
- Settle the debt with the collections agency or try negotiating the said amount down.
- Refinance your loan
- Pay the amount owed in full
- Declare a state of bankruptcy
All of these simply mean that, even though you have defaulted, it just might not be too late for you. One popular lender specializes in default student loans and this company is known as Yrefy. This very company is one of the rare financial companies in the industry that helps to refinance defaulted student loans. The company in question works with borrowers with bad credit and offers services of fixed interest rates for more manageable raiment plans.
Do I Have To Pay Back My Defaulted Private Student Loan
YES! In the event that you have defaulted on your private student loan, you are still responsible for paying it back. Many lenders in the industry may accelerate the payment period and this is when the loan in its entirety becomes due at once.
What Will My Lender Do If I Default On My Private Student Loan
Private lenders as you should know have fewer methods of recourse when people default on their student loans. But that however does not stop them from trying to get their money back. And with that being said, here is what a lender could do in the event that a student defaults on a private student loan;
- Add fees to your available loan balance
- Report your default to the credit bureaus
- Require you to pay the balance in its entirety
- May sue to garnish your wages or even institute a lien
- Send your account to a collections agency
Private lenders in contrast to federal lenders pursue repayment in a whole different manner. Sallie Mae for example requires defaulted borrowers to pay the whole balance and then report the default to credit agencies.
And for many private lenders, legal action is the last resort. Going to court is and might be expensive to you, so they try to avoid it unless other methods tried out don’t work. It takes years at most times for private lenders to take legal action. And once they get to that point, they will push for wage garnishment or even a property lien in a bid to recoup their money.
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