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Student Loan in default, pay off before mortgage?

Established Member

Student Loan in default, pay off before mortgage?

I have a defaulted private student loan with Chase. This has been defaulted for maybe 5-6 years now. I called up, and the person on the line told me they will no longer attempt to collect at this time. They did issue a 1099-C about 5 years ago as well. My understanding is, I still owe the amount even though they 1099'ed me. It should be falling off in a year or so. (Live in NY). My lease is expiring in my apartment soon and I want to buy a house. This is the only major thing holding me back I feel for a mortgage. Should I try and offer a low ball settlement just to have it show on my report as paid? I think that would look better to a mortgage broker than having it unpaid. I just don't want to reopen any statute of limitations in regard to lawsuits. Why would Chase not accept a low ball if they aren't even trying to collect? Any help would be great thanks !

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Frequent Contributor

Re: Student Loan in default, pay off before mortgage?

Call your bank and make an appt to talk to a mortgage loan officer.. take a copy of your credit report with you.  An experienced loan officer can look at  your report and figure out the best course of action.  They will also give you some home budget numbers. 


Do not let the bank run your credit yet. If they decide you should try and settle the debt you will lose all leverage with the creditor after they see the mortgage inquiry on your report.


Best of luck!

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