Sallie Mae Loan Default Again Possibly, what can my next steps be?
Posted by Temporary_Cellist_12@reddit | studentloandefaulters | View on Reddit | 5 comments
I need an idea of how bad of a situation I'm in. For context, I'm in California. I graduated in 2022 and immediately got a part time job around 2,000 a month. I defaulted last year on my 4 loans totalling 200,000 and Sallie Mae set me up on a plan where I pay 1300 a month for 12 months. I regret my degree and my choices. I have a co-signer who is affected and she has a house and car but she can't help me pay very often but she has covered some months with difficulty. Halfway through this year my work hours dropped and I only have 1500 a month, with my rent being 1000. I'm on food stamps and I do odd jobs to cover my utilities. I have been actively looking for a full time job and housing all this time but I can't find more affordable housing that has affordable commute to my job, or the a new job. I keep thinking if I just have more time I can find the work and housing, but I've been sending ACH payments that return to avoid default and I need need need to stop this. I'm aware of the penalties for that, but I don't want to go to jail or something if it's more serious than I think so please let me know. I have been locked out of my account and only interact with SM over the phone. The last attorney I contacted was for bankruptcy and said he couldnt help me about student loans and it would be bad since I have a cosigner. I know I need to have conversations but I don't know where to start first. I'm mainly asking for advice on the next steps legally, or how do I start really looking for CA lawyers.
I know I need to find better housing and more work and I've been trying and I've cut out everything that isn't food/utilities/commute. I've sold or am trying to sell valuable things I have. I can't move to my parents or anything without losing this job. I don't know what else to do, any advice helps, I'm sorry.
justbeaunicorn@reddit
Default and don’t set up a payment plan. Defaulting was the best decision I ever made. I did it back in 2017. They have now removed from my credit report.
LisaInSF@reddit
Nobody goes to jail for defaulting on a student loan! So just stop that.
If it’s a private loan (company that used to be Sallie Mae is now called Navient), it’s possible that you and the co-signer could be sued by either Navient or a debt buyer, but you are not dealing with that yet. The good news for California borrowers is that a new law, the Private Student Loan Collection Reform Act (PSLCRA) went into effect in 2022. This law makes it more difficult for private loan creditors to even attempt to collect these loans! Some lenders are not filing lawsuits in this state at all due to this new law! So there’s plenty of reason to be hopeful about this. If you can’t pay, you can’t pay and that’s the only truth here that many folks are dealing with. If Navient transfers the debt onto an investment trust or sell it to a buyer, your chances of being totally free from this burden will increase. However if letters from a law firm start coming, demanding payment and threatening a lawsuit, you will need a collection defense attorney; start saving your pennies for that! (Finding that person now may ease your mind.)
AutomaticFeeling5324@reddit
Base on OP's income I do not think they will sue him. They will most likely go after the co signer. You are right on no one is going to jail.
Here is what will happen next once you default.
1) they will start will calls and letters. (Even ones that look like they going to sue but not really)
2) Once you are 6 months and out they will attempt to settle your loan on a certain amount. Normally 80 percent of total amount.
3) If no settlement comes to term after 1 year or so they will try again to settle on even lesser amount 60 percent or 70. Some times even 50 percent.
4) This is the step when they attempt to sue. If somehow you get to this stage don't panic, get a lawyer and respond to their summon.
5) At the end, they know they can't collect the full amount they will try to negotiate rather than go to court. When they go to court it is a drawn out process which will cost them a lot of money which in term defeats the purpose even if they manage to collect.
Bottom line is, you and your co signer credit will take a hit, but it's not end of the world. Start saving if you going to default so you can negotiate for a settlement with a lum sum.
LisaInSF@reddit
I think there is a lot of variation among defaulters, and much of the variation is based on who owns the loan. Some lenders only close the account and report the default to CRAs. Others are more aggressive; but relatively few people experience the worst-case-scenario (lawsuit, no settlement, judgement). Most folks who post this kind of question are only at the first stage (the default)—there really no way to predict exactly what will happen. We don’t even know who owns this debt.
AutomaticFeeling5324@reddit
It is a roll of the dice I agree, but at the end of the day if you can't pay you can't pay. The good news is once you default your loan stop accruing interest, hence it stops the crazy interest from keeping you on the hook forever. A lot of people had to take drastic measure to pay it down. The rest of us were trying to just stay afloat and not the interest drown us. Mine was discharged and sold, so far I have only received two phone calls from the second owner of the loan. I also hired a lawyer to negotiate for me and drawn it out while I try to save up for a lum sum settlement. At the same time since I know my credit will be shot. I just start to get into the habit of using cash to pay for everything. I don't think its the end of the world when people default on their loan.