A private student loan, on the other hand, cannot be consolidated into a federal loan. Whether you have a private loan, you should check the website of your specific lender to see if they provide consolidation alternatives.Īnyone with several college loans should be allowed to consolidate them. On the Federal Student Aid website,, you may combine your federal loans for free. Student Loan borrowers may be able to combine Federal Family Education Loans and Federal Perkins Loans even after a garnishment has begun in some situations. Most defaulted student loans are ineligible for consolidation once the garnishment begins. You can consolidate defaulted federal debts into a Direct Consolidation Loan before wage garnishment begins. (This is distinct from a refinancing, which combines government and private loans into a single payment.) ConsolidationĬonsolidation is the process of consolidating numerous federal loans into a single Direct Consolidation Loan with a single interest rate and monthly payment. Private student loans are more inclined to reach a settlement with you since recouping their money without a lawsuit is far more difficult.Īdvantages of settlement: If you successfully negotiate a settlement on your defaulted loan, you may be able to save money and begin the process of restoring your credit. In most circumstances, you may only settle if your debt is in default. Private student loan settlements often range between 30 and 70 percent of the existing loan sum.Ĭontact the debt collector in charge of your loans to find out what your settlement choices are and whether they are ready to accept your lump amount or settlement offer. A student debt settlement can prevent or postpone garnishment.įederal student loan settlements often waive collection costs but will not settle for less than 85% of the loan sum. Depending on how long it’s been since the court entered the order, you may be able to show the judge you didn’t have a chance to defend yourself.A student loan settlement is when you make a lump sum payment to repay your remaining student loan debt. Contact a lawyer near that location to find out the rules for setting aside the judgment. Try to set aside the judgment. If you don’t remember being sued, find out where the lawsuit was filed at. You may be able to do the same thing even if you’ve already filed for bankruptcy.Īsk to pay the lien at closing. If you’re trying to refinance your home, ask the creditor if it’s willing to lift the lien so you can close. You’ll need to open a bankruptcy case and then file an adversary proceeding asking the court to get rid of your student loan debt and the judgment. By itself, filing a Chapter 7 or Chapter 13 bankruptcy won’t remove the lien. It’s not uncommon to negotiate a settlement for 50% of the current loan balance paid in a lump sum.įile student loan bankruptcy. Contact the law firm that sued you and ask them about your settlement options. Negotiate a payoff. Depending on your financial situation, you may be able to offer the loan holder a lump sum payment to remove the lien from your property. You have four options if student loans have a lien on your home: Private lenders must sue the borrower and get a judgment before putting a lien on a home or taking money from a bank account. If you’ve already defaulted on your federal student loans, get out of default quickly, either by applying for a consolidation loan or entering into the loan rehabilitation program.Ĭan private student loans take your house? Until you default on private student loans, your house is safe. And if those payments aren’t affordable, ask for a deferment or forbearance. You may also be able to switch to the Extended Repayment Plan, which starts with a lower payment and then increases every two years. You may be eligible for a repayment plan based on your income and family size. The easiest way to stop student loans from taking your home is to stay out of default. If you can’t afford the monthly payment your loan servicer is demanding, explore your repayment options. If the government gets a judgment against you, then it could put a lien on your assets, including your home. Department of Education cannot garnish your wages, offset your tax refund, or take your Social Security Benefits, it may sue you. The federal government won’t take your home because you owe student loan debt.
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