Need an opinion. Best to worse case scenario. Strategically defaulting. (Navient/Earnest)
Posted by RevolutionaryEbb2522@reddit | studentloandefaulters | View on Reddit | 17 comments
I'm in my early twenties and owe about 179k in student loans. However I have been paying 2k a month for roughly 2-3 years and it only took the loan down by 10k(principle). At this point I'm strongly considering defaulting and settling for 60-70k just for the fact that a lot of my income is going to this loan and it's not doing much damage which means I'll be close to my late 30s early 40s when this will possibly be paid off. It's not that I financially struggle paying these off I make well enough, I just am thinking long term that this money can go towards a house or my future children or a car. Basically 312,000 over 10-12 years. My credit rn is 750 I have a few credit cards all being paid off on time. I've already contacted a lawyer who's dealt with cases from navient where they were able to settle. Not looking to get a house now, my goal by the end of the year is to get a nice apartment and decent car, so I won't have to worry about my credit for a while and by 30-32 get a house which about 7 years from now. I can pay the settled amount maybe 3-4 years max. Realistically can my credit bounce back from this and will I be able get a house or better car in future without hassle? Is this plan feasible? Any one else have similar situation.
DisembarkEmbargo@reddit
I defaulted about 2 years ago now. I settled a year later. I paid 30% of the total lump sum. I had a financial help from friends and family. My credit score went down 150 points. Now it's higher than before because I got my first CC after settling!
Sometimes, it's sucks. I saved up 50k over 4 years. Now I can't meet my IRA contribution max this year and I have only 2k in savings. But honestly, I want children and a house. I didn't want this debt looking over me in my 30s. I still have federal loan debt but it's much less and on repayment plans alot of the times interest does not accrue.
reddtormtnliv@reddit
If you paid 30% of the total lump sum, why do you have debt still? I though settling implied they will no longer collect?
Usukidoll@reddit
Late on this but
Yes you can settle with private student loans
I think you can also settle federal student loans but ya gotta default on them first (not a good idea).
reddtormtnliv@reddit
I asked chatgpt and it said you can settle public loans at 90% payment, but private loans can be settled as low as 30%. Not sure if this is true.
Usukidoll@reddit
The private ones can be settled for as low as 30% but not if you recently defaulted. More like 1-2 years down the road of default status .
RevolutionaryEbb2522@reddit (OP)
Yeah I think in the long run it's worth it, otherwise I'll be stuck paying 2k, also I want default before the American rescue plan runs out. I think I'll have to pay taxes on the loans if I dont
DisembarkEmbargo@reddit
Sounds like a good plan. But make sure you have enough saved for 30% down. Round up your estimates because your loan will gain interest until you default (that would be probably about a year).
I did get a small tax benefit because I "paid" interest on my loan because of the plan! I for sure knew my assets at the time of the default where way smaller than my debts so I knew I was insolvent anyway.
Even though I don't think you need a lawyer in this case to like negotiate adult a debt settlement. I think it would be helpful because my nerves really started to get to me when I was negotiating a debt set tle cousin and my uncle and my fiance like on calls I just couldn't take them anymore.
And if things go really south and may try to see you, then you have a lawyer that can support you
RevolutionaryEbb2522@reddit (OP)
I think I'm gonna settle for even less because a lump sump of 54k to me is insane. I'm gonna have my lawyer negotiate a lower price
DisembarkEmbargo@reddit
I think you should prepare to pay more just in case. Good luck!
davebone6195@reddit
I am currently strategically defaulting on my Navient loans. I borrowed Sallie Mae Tuition Answer Loans back in 2005. They still say I have 240 months to pay and have doubled since then...even though I had been making regular payments.
Since I stopped paying them in May, my credit score dropped 150 points. My CC, which I had (and still are) paying on time reduced my credit limits to just above current balances. And those CC that did not have a balance closed my account.
Navient has reached out several times by mail and phone to attempt to get payment. Now, 120 days past due, they are offering to settle but I know that will still be way more than I can afford.
I would suggest getting a Google Voice number and changing your contact info on Navient to that number. That way, you do not actually need to accept the calls (you can put it on do not disturb) as they will call you multiple times in a day. Once you get closer to 120 days past due, the calls will slow down to 1 or 2 per day. That is where I am at right now.
If you don't mind, would you let me know who your lawyer is you talked to? I am still actively looking for one. Thanks and good luck!
Impressive_Brain5734@reddit
Came to say i am in the same boat. Borrowed in 2004/2005 and stopped paying around June of this year. The credit card thing caught me by surprise tbh. I spoke to Josh Cohen who has experience with student loan defaulting before I stopped paying. https://thestudentloanlawyer.com
brighteyesburn@reddit
How much were his consults?
Impressive_Brain5734@reddit
$200, was very apprehensive about paying that at first so I shopped around but he actually specializes in student loans so that helped the decision.
brighteyesburn@reddit
He’s the one that has all the helpful YouTube videos, right?
Impressive_Brain5734@reddit
He does have a youtube
RevolutionaryEbb2522@reddit (OP)
I'll message you the info on the lawyer, about the credit cards they just closed the accounts of the unused ones? Also let's say they gave you a credit limit of 12k on a credit card did it decrease or stay the same
davebone6195@reddit
The unused ones were closed. The ones that had a larger limit but in use were reduced either to just above or below the current usage amount on the card.
This was not for all cards, just some of them.