Part II: What can people do when they have private student loan debt?
Private loans don’t have any government programs like federal loans do – payments are not based upon income, there is no debt forgiveness and no protections for someone who becomes disabled and cannot work. However, they will settle. They key is to put them in the position of wanting or having to settle. How we do this is we help our client track consumer collection law violations.
How many times do they call you a day? Do they call your cell phone after you’ve told them not to? Do they call you at work after you’ve told them not to? Do they call before 8:00 a.m. or after 9:00 p.m.? Do they discuss your debt with third parties? All of that is potentially illegal under the FDCPA, FCCPA and the TCPA and provides us with leverage to settle a debt and ways to escalate the conversation to a decision maker with higher authority to negotiate a settlement.
Private loans also have a statute of limitations unlike federal loans. There are other documentary defenses. They have to show they are the party entitled to enforce the debt for instance. Many private student loans are held by trusts similar to the mortgage industry. There are evidentiary rules that apply at trial or at a motion for summary judgment to exclude evidence of third party servicers. Is the debt accurately reported on your credit report? If not, that may be a FCRA violation.
Right now there is a movement just starting around the country to discharge private student loan debt in bankruptcy (for schools not eligible for federal loans (i.e. Caribbean medical schools) or private loans taken outside the cost of education)). This is a very interesting new development – we have several cases we have recently filed on this and hope for some new Florida precedent shortly.
That’s the aggressive approach – often, we’ve found being aggressive is the only viable way to deal with overwhelming private student loan debt. But this avenue will hurt your credit – and that of any co-borrowers. Another possibility if the interest rate is too high and you aren’t making a dent, you could try to refinance. LendEDU.com has an informative site comparing rates. However, with rates going up now, we’ve not seen any advantages for the current rates offered by SoFi, Citizens and LendKey which are some of the popular banks refinancing private student loans.
One option that may prove useful is you can buy out your co-borrower’s liability. It may take a hefty lump sum, but if you have a co-borrower with assets sometimes this is a great way to get them off the loan.
If you’d like to discuss any of these options further, please reach out to us: