What it means and How to Get out of Student Loan Collections?

What it means and How to Get out of Student Loan Collections?

What it means and How to Get out of Student Loan Collections?

What Is Student Loan Collection?

Student loan collection is a nightmare for most people. When a person stops paying monthly payments of their student loan, they end up getting into the student loan collections. Their student loan can get into default or sell to a debt collector. Not to mention, loan collections can lead to several consequences.

Fortunately, there are many things you can do to deal with this problem. Read further to understand what you need to do.

How to Get Out of Your Student Loan Collection?

Here are some ideas that can help you solve this issue.

Consolidation of Your Student Loan

It is the simplest and easiest method to stop calls from loan collection agencies. Consolidate all of your loans into one bigger loan, including default federal loans. Your loans get out of the default once you consolidate them. This method is a federal program to help people. You don’t need to pay for anything in the consolidation process. It usually takes 1 to 3 months, based on your applying method, online or paper.

However, this option is not for you if

  • You come in active wage garnishment.
  • You already opt for the consolidation loan.

Settle Your Debt

People who default on either federal or private student loans can get out of the collection by settling the debt. You need to contact the collection agency when you have notified them and explain to them your circumstances. Try to discuss your options to get a reasonable solution. Moreover, you can negotiate with the agency that you can pay off less than you owe. For instance, a person who owes a student loan of $20,000 could possibly pay $10,000 through negotiation.

Making a settlement can be challenging for you. But if the debt agency agrees to it, you will have to pay the amount in a lump sum. This is why you need to have a great amount of cash.

Pay the Entire Amount

Although it is impossible for some people, it is the quickest method of all. You can ask your family or friends to help you pay the outstanding balance. You can also take an extra job to earn the money you want to pay off the debt.

Yes, these options are pretty difficult, but it is far better than allowing debt collection to hurt your credit score.

Declare Bankruptcy

If you cannot achieve any of the mentioned methods, the last thing you can do is declare bankruptcy. Generally, student loan collections are difficult to resolve after bankruptcy, but that doesn’t mean it is impossible.

For qualifying, you need to prove your eligibility to the court, such as a medical problem that does not let your work properly. You also need to prove that it is almost impossible to pay the debt while maintaining a decent living. Declaring bankruptcy can affect your life greatly. So, ensure that you have explored all the possible solutions before it.

Bottom Line

In a nutshell, you can get rid of student loan collections by declaring bankruptcy, paying off the loan, settling your debt, and through the consolidation process. Make sure to estimate the consequences of each method to pick the best options for yourself.

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