topic Re: Negotiate a settlement or let the SOL run out in a year - Navient in Student Loans

Negotiate a settlement or let the SOL run out in a year - Navient

Anonymous — Fri, 28 May 2021 17:23:30 GMT

Just joined the board, as this one looked like the most active, so hopefully I can get a straight opinion on this one.

Background: Private student loans originated in 2006 - have struggled off and on through repayment. Loss of job, got it caught up, loss of job, almost foreclosed on house, all my credit cards were pulled, just have one single small CC now. Now, I've got my home payments back in line for 3 years+, I have a smallCC, but most were pulled from me, and the big black eye on my report is my student loans. I want to take care of this, and expand my conventional non-secured credit back to prior levels. I had $100k+ worth of available credit at the time I lost my job, now I have a single sub-$1000 credit card that I pay off every week, just to keep my credit as good as it can be.

I have around $50k in student loans, and the last payment I made on them was 5 years ago. I've had a collection agency approach me and offer a settlement to satisfy these loans in full for around 40% of the original balance lump sum. I've also had someone approach me and tell me not to even contact them, and at this point let it run its course and in 1 year, the balance will be uncollectable and stop being reported as the SOL in my state is 6 years on private student loan debt. They said even discussing it with them, can refresh the statute of limitations and reset the debt. I've also been told paying it off could be a black eye as a "negotiated settlement"

I want to clean this up in the most economical and healthy way for my credit profile. I may be able to pay it off in a lump sum, as I've been saving up, but I really dont trust collection agencies and don't want to mis-step. Any insights, would be greatly appreciated. Thank you in advance for your time.

Re: Negotiate a settlement or let the SOL run out in a year - Navient

Red1Blue — Fri, 28 May 2021 17:59:25 GMT

I did not think student loans has SOL or expiration. They can not be discharged in BK. If I understand correctly they are stuck with us for the rest of the life.

Re: Negotiate a settlement or let the SOL run out in a year - Navient

Slabenstein — Fri, 28 May 2021 18:14:33 GMT

@Red1Blue wrote:
I did not think student loans has SOL or expiration. They can not be discharged in BK. If I understand correctly they are stuck with us for the rest of the life.

Private SL's do have an SOL, which varies by state. I'd be surprised, tho, if the collection agency didn't seek a judgement before it expires. @Anonymous , I'm not sure what I'd do in your shoes. $20k is a lot to drop on a debt if you can wait the 2 more years for the negative reporting to fall off, but it's also a lot less than the $50k + jacked up collection costs that a judgement would put you on the hook for. With regards to discussing the debt with the collector, my understanding is that what resets SOL is you admitting that the debt is yours, which includes making a payment or setting up a payment plan. So you should be able to talk to them and get information if you can do so without making such an admission, but they will likely try to get you to slip up and say it.

Re: Negotiate a settlement or let the SOL run out in a year - Navient

Anonymous — Fri, 28 May 2021 18:45:56 GMT

Yes, it's 5 years in, and I'm a state with a 6 year SOL on private student loans. But even after the SOL expires, I don't really know what that means. It keeps reporting, or that they just can't persue legal recourse, and it's behind me.

I really do want to clean it up. Since everyone is disclosing "this is an attempt to collect a debt", I don't ever feel anyone is being honest with what they are saying.

I just ran my Credit report and it says Naviant has charged these to collections, of which I think it has rotated through 2-3 of their inhouse people who keep sending letters with a prenegotiated settlement amount. I think it's with American Student Assistance now. If I can pay it off in a lump sum, I'd do it just to be done with it, I just don't know if these offers are legit or if they are some scenario to reup the SOL.

I'm about to start a new business, and this is the only irresponsable item i have lagging. Joining myfico to be able to track improvements, and getting this done so I can move forward. I really need to improve my credit, so I can have 30 days on normal business expenses, but the student loans are an anchor on any progress I can make. I bought my wife a used car, on track to pay it off in 1 yr versus the 5 it was financed, but still can't get another credit card and cringe any time I attempt to get a card and get denied. (Just tried today, for the first time in 2 years).

Again, thanks for the feedback if anyone has taken a private loan settlement with Navient or American Student Assistance, or anyone has insight on what happens after the SOL expires. I appreciate anyone who takes time to read this.
J

Re: Negotiate a settlement or let the SOL run out in a year - Navient

Anonymous — Fri, 28 May 2021 18:47:27 GMT

I should have clarified, this is a private student loan, not subsidized/guaranteed by the federal governement, so it doesn't have the staying power that an undergrad fed backed loan does.

Re: Negotiate a settlement or let the SOL run out in a year - Navient

SweetCreditObsession — Mon, 31 May 2021 22:34:18 GMT

I'm unfamiliar what would happen next. You might sign up for a legal service (one of those you can pay for by the month) and talk to an attorney to get solid and relevant guidance for your specific situation.

Best wishes!

Re: Negotiate a settlement or let the SOL run out in a year - Navient

calyx — Tue, 01 Jun 2021 14:14:39 GMT

Private student loans are generally treated like other tradeline.
Once the SOL runs out on them, that means that the owner of the loan has no legal recourse (taking you to court, getting judgements), not that you don't owe the money or that they cannot attempt to collect the loan.

The 7 year (except in some states like NY) rule involves the FCRA and the reporting of the tradelines (so they can report it for 7y or 7y + 180d if it's a collection account - from the DOFD).

In the event that you apply for a tradeline of greater than $150,000 - the lender can request a complete credit report (not just what has been on the past 7 years), so it would show there if it is not paid.

Talking to the collection (or original) holder will not reset your DOFD or restart the clock. If you chose to lump sum pay it off, it wouldn't "reset" the DOFD, either, though it may remain reporting until the 7y after the DOFD.

There are a few ways you can go about this - One is to just pay the 40% offered by the collection agency (or negotiate further), seeing if they are willing to "PFD" (pay for deletion), which means that if you pay it, they remove their tradeline (if it's reporting).
You can see if the original account holder still owns the account (whether the CA bought the account or they're just servicing the account), and offer to PFD with them.
Or you can choose not to pay it and ride out the SOL, hoping they don't take you to court for a judgement, and then wait out the reporting period. This also gambles whether or not you would choose to borrow large amounts (>150k) in the future with a lender that would request a complete report.

Negotiating for a PFD would be the best solution for the fastest clean up.
If you have two accounts reporting (OC & CA), getting it recalled by the OC from the CA and having THEM delete is best.

If you do pay it off and they don't delete, you can still try to get them to do a goodwill removal (more information about goodwill & the saturation technique is in the rebuilding forum).

Settling for less than the full amount is still better than having an open account, and for that amount, the risk for them trying to get a judgement (I don't know the laws of your state to be sure), is there.

Ultimately, your call.