Many residents in Fort Lauderdale carry tens of thousands of dollars in student loan debt. When a person who borrowed student loans runs into financial difficulties, they may be unable to make their monthly payments. If you’ve found yourself in this situation, you should know that you may have the option of negotiating a settlement of your debt under certain circumstances.
Student Loan Negotiation and Settlements Defined
A student loan settlement allows you to pay off your student loans for less than you currently owe. People with student loan debts who struggle to make their monthly payment may negotiate a settlement if they’ve defaulted on their payments or face imminent default. A person seeking to negotiate a settlement typically needs a sizeable amount of cash to put towards the remaining balance.
In most cases, lenders and servicers will only consider a student loan settlement once a borrower has already defaulted on their loan payments. Unfortunately, the U.S. Department of Education considers student loan settlements even less frequently than lenders of private student loans do because borrowers typically cannot discharge federal student loan debt in bankruptcy, and federal student loan servicers have numerous tools to compel payments. These methods include garnishing wages, seizing tax refunds, and sending accounts to collections.
What Are the U.S. Dept. of Education Policies on Student Loan Debt Settlement and Negotiation?
Because the federal government has little incentive to settle defaulted federal student loans, the Department of Education has strict policies on negotiating a student loan debt settlement. The department has several standard compromise options that allow borrowers to settle their debt by paying:
- The outstanding principal and interest, which allows borrowers to avoid collection charges
- The outstanding principal and half of the unpaid interest accrued since the loan went into default
- 90 percent of the outstanding balance of principal and interests
In rare cases, borrowers may negotiate a discretionary compromise, allowing them to pay less than one of the above options. However, the Department of Education must approve any discretionary compromise.
In addition, any outstanding amounts owed on a student loan debt that gets canceled out by a standard or discretionary compromise may get treated as income for the borrower. This means that loan cancellation could result in a potential increase in tax liability.
How Can Loan Lawyers Help You?
Because student loan servicers can seek payment through various means after a borrower defaults, they have little incentive to agree to a student loan debt settlement. That’s why you need the help of an experienced lawyer who can argue persuasively on your behalf for student debt relief. A student loan negotiation lawyer from Loan Lawyers can help you seek financial relief by gathering documentation to support your request for a settlement, such as:
- Your and your family’s income/financial records
- Credit reports
- Health records of a prolonged/permanent disability
Once we’ve gathered this documentation, we will review your situation and advise you on your options. Our firm can contact your lender or servicers to negotiate on your behalf and aggressively pursue the best possible resolution under the circumstances of your case.
Contact our Fort Lauderdale Student Loan Debt Negotiation and Settlement Lawyers for Help
Do you need help resolving crushing student loan debt? Seek help from an experienced legal advocate who can guide you through the negotiation and settlement process and help you move forward with your life. Contact Loan Lawyers today for a confidential consultation with a knowledgeable Fort Lauderdale student loan lawyer to discuss your legal options.
