Why Should You Consider Student Loan Settlement?
Do you struggle to pay your student loans? Perhaps you're already behind and not sure if there's a way to dig yourself out of the hole. If this has happened — or is about to happen — to you, one tool that you may not realize you have at your disposal is loan settlement. What is loan (or debt) settlement and why should you consider it for your student loans? Here's what you need to know.
What Is Loan Settlement?
Loan, or debt, settlement is an agreement between a borrower and a lender to accept payment for less than the full debt amount and consider the debt fulfilled. Why would a lender accept less? Generally, this is done when the lender feels that they will not be able to get full payment, and accepting some payment is better than none. Both public and private student loans are usually eligible for settlement.
The settlement process usually begins when a borrower is significantly past due and the lender has reason to believe they cannot make payments. The borrower will then offer a lower lump sum to the lender, and the lender can decide what's in their best interests. While the contract may be terminated after the lump sum payment, the forgiven debt may be taxable and it may appear in a credit score.
Why Should You Settle Student Loans?
While many types of debt can be settled, student loans can be particularly good candidates for a few reasons. First, many borrowers fall behind in student loans, which can go on for years. This rampant problem puts an onus on the loan companies to get what repayment they can and settle old loans in order to deal with newer ones or avoid government oversight.
Second, you do well to pursue settlement for student loans because there are not many other ways to get rid of them. Many student loans are not eligible for bankruptcy discharge and service-based forgiveness is difficult to qualify for and receive. This means that even with the potential downsides to settlement — such as coming up with a lump sum or having taxable forgiveness — it's often your best alternative.
Finally, you can get help negotiating your settlement arrangement. Professional services will help you find the best route to your offer, negotiate with the company, and complete the transaction.
Where Can You Get Help?
Want to know more about settling one or more student loans? Start by consulting with a settlement service that offers student loan settlement programs. This investment in your future will pay off for years to come.