Experiences Settling with Sallie Mae for Private debt
Posted by littlepickle74@reddit | studentloandefaulters | View on Reddit | 28 comments
With my mom as co-signer, I took out approximately $9k of private loan debt from Sallie Mae in 2010. In 2019, I filed for chapter 13 bankruptcy because my credit card and student loan payments were out of control and two of three of my private loans had already defaulted. Though Sallie Mae was current when I filed, it automatically defaulted as expected due to the bankruptcy. For those unaware, debtors generally make a claim on your plan and receive monthly payments during your bankruptcy. Mine lasted five years. For whatever reason, Sallie Mae chose not to make a claim and instead let the interest build on the loan. The other services did. The Sallie Mae loan amount now totals $17k. My bankruptcy was discharged in December and Sallie Mae has come back around looking for their cash. So far, I’ve only gotten a letter that states “you still owe the money,” but it doesn’t include an amount or any information on repayment. The debt is now charged off, which bombed my nicely recovering credit score. Seeing the credit dip, I decided to poke around and contact a student loan attorney for a consult to see if what they did is actually allowed in terms of not making a claim but jacking up the loan with interest. The attorney did a free consult and mentioned he does student loan settlement negotiations for a flat fee that is pretty modest. I’m hoping that it would be possible to settle with Sallie Mae for potentially 50-75% of the principle, but am wondering (a) if it’s worth using an attorney to do that and (b) if folks would be willing to share their experiences negotiating settlement with Sallie Mae for a private loan. I’m wondering if I even need his services or if I should just try and get this done myself.
magicandfire@reddit
I don't have any advice because I'm still considering default, but what happened with your mom/cosigner? Is she not still responsible for the debt?
littlepickle74@reddit (OP)
When you file for Chapter 13 there is a co-signer stay which prevents the servicer from suing them during the active case. It’s a big part of why I filed. We got mixed advice as to whether she was even allowed to make payments during that time. It was listed as defaulted on her credit report and they wouldn’t agree to report it differently if she even tried to pay it. Now that im discharged, I’m trying to make sure I handle this before they consider approaching her as it would be fair game again. I’m in a better position to deal with it than she is, anyway.
Aggravating_Storm493@reddit
Hi there. I just found your post and this comment as I’m doing my own student loan settlement research at the moment. What ended up happening with your mom/cosigner?
I filed for bankruptcy and got my loans discharged, though Firstmark is trying to come out of the woodwork claiming I have a balance. My lawyer is handling it and is actually like : I want them to send you an email or mail so I can file for sanctions, as that’ll cost Firstmark a lot of money. She told me not to worry as we have all the documents from the judge etc. Lawyers love when these services FA so they can FO I guess, even though I’m panicked as heck.
What is interesting is that my private loans were discharged quite a bit ago, over a year ago. I filed for bankruptcy two years ago. And they stopped trying to get payments from my co-signer since that time, a year ago.
The loan is also off of my dad’s credit report and has been since around the time my private student loan was discharged. But after they mailed me (not my dad) to say I owe a balance, I was waiting for them to send any communication to my dad, and nothing until today. When they lied saying they tried to contact him several times + the loan is severely delinquent + might go into default by the end of the month.
Sorry for this rambling - I guess my point is how is your co-signer / what did they end up doing? We are considering debt settlement if the loan ends up coming back on my dad’s credit report but it’s just weird that for a year after my private loan discharge, they didn’t bother my dad and they only just messaged him today. They physical mailed me a few weeks ago, and that’s when my lawyer took over.
Part of me wonders if they’re just trying to scare us into paying them something? Wouldn’t put it past them. But it sounds like, from your experience, your cosigner ended up fair game once your discharge went through?
StdntLoanDfltersMod@reddit
I settled with Sallie Mae, and I had an attorney help with the negotiations. We ended up settling about 65-70% off of the total amount.
I hired an attorney because the workers at Sallie Mae were assholes to me. They changed their tune once my attorney started communicating with them.
CaliDreamin87@reddit
Can you give info on your atty?
amypauli@reddit
did u have to first default? I really want to settle before I have to default
StdntLoanDfltersMod@reddit
You have to default first
FloraAL66@reddit
How many payments did you make before you defaulted / stopped making them?
Immediate-4593@reddit
How did you find a lawyer that works with student loans? I basically had a debt lawyer just tell me I have to repay the loan, which I literally can’t
littlepickle74@reddit (OP)
That’s helpful to know! Thank you!
FloraAL66@reddit
Appreciate this thread. I am co-signer on my daughter’s Sallie Mae loans. The monthly payment is outrageous ($2,000) .. she’s supposed to start making payments end of March. The reality of the matter is she can make these payments for approx 18 months by draining her savings account but there’s no way she or I could ever make these payments long term. Not even 1/2 that amount. So she’d basically be throwing away $36,000 in interest (her savings account) like trash out the window. Should we default right out the box and try & put her $36,000 towards a settlement (including what I’ve got in my savings)? Neither of us own any property / assets to speak of. Anyone with experience in this area who could chime in is greatly appreciated. Thank you !
littlepickle74@reddit (OP)
For me, I think the way to think of defaulting is whether you need to use credit for the next 7 years. Once the default hits, it becomes hard to do anything like buy a house, finance a car, or deal with home repairs. When I defaulted, my credit was already trashed because of tons of missed and late payments. I’ve been working on rehabbing it for 5 years so that my husband and I can eventually buy a new house. It’s difficult to take that plunge without knowing the future I think.
FloraAL66@reddit
Thank you for your response. Im going to start a new post to get more eyes on my questions .. Good luck to you !
littlepickle74@reddit (OP)
You as well! I actually took the plunge of hiring an attorney to negotiate the settlement as of this morning. If I get anywhere I’d be more than happy to provide an update.
JRhod3sie@reddit
Any updates? And what type of attorney? Thx
littlepickle74@reddit (OP)
We started with asking for proof of the debt and an accounting of it to see where things stand in the first place. Also if they can’t supply that info I believe they would be SOL on collecting. They responded that they needed a limited power of attorney to provide my lawyer with any information so we just sent that in. It’s kind of an odd situation because they don’t seem to be trying really hard to collect from me right now. There’s a part of me that feels like I’m poking the bear and I should just wait out another year or two for it to drop off my credit. My husband is more in the camp of settling it and handling it so it doesn’t pop up again at an inconvenient time. I’m using an attorney who is sort of a generalist in a few practice areas but charges $750 of a flat fee to settle student loan debt. I’m not sold on him yet and not 100 percent sure hiring him was the right decision at this point. I had consults with several other attorneys and they would all bill hourly to settle, though, so we figured it’s worth a try.
JRhod3sie@reddit
Thank, I received my discharge letters from CEHE I went to Stevens Hanger in 09. But I have private loans with them also wondering if I can leverage my discharge to help settle for a lower amount on my private loans. I f*cking the these crooks and even more mad at myself that I went through them. I was young angels didn’t have a clue what I was doing yet alone signing. Anyway, I’d like to do a class action for all this that took out private loans by these predatory schools. Just don’t know how to go about that! Thanx
FloraAL66@reddit
Please ! I would so appreciate you sharing with me. Thank you !
Thumper727@reddit
I was offered a settlement from navient (original loans were Sallie Mae) last week. It's a little less than 30% of the balance but I have to make it in payments over 3 years and I've already made payments for over 16 years. I'm trying to decide if it's a scam or too good to be true or maybe they know something I don't so they're trying to get a new agreement fast. I just feel like in one way or another they are going to keep screwing me over for the rest of my life. 😭
mtt10025@reddit
How late were your loans?
Thumper727@reddit
My last payment was 8 months ago. I'm not exactly sure when I went into default I think it wasn't until this month. They don't give any good offers for help until after you've gone into default. I think every settlement is going to varry based on how much you've already paid what your income is etc. my income is low enough that it's they took me to court they wouldn't get a penny. And I've already paid them more than I borrowed. They could get a judgement based solely on the mood of the judge if they took me to court and that lasts up to 20 years I agreed to the settlement. who knows what will happen in 20 years. I also have a cosigner who can't pay and I didn't want this on their credit report for 20 years either. I just want it to go away. Now that there's no interest i actually have a chance and can see hope for some kind of future. My interest was 15%. I just went in circles for over a decade with the rate reduction program. They lower the interest for short period then increase it again erasing all of your payments with interest and fees. It's really messed up and obviously a purposeful strategy that they have to keep people in debt forever.
mtt10025@reddit
That’s awesome. I’m probably a month behind you and they just offered a 35% settlement
TheToken_1@reddit
Maybe see an attorney can try and have those loans discharged anyway considering they were private student loans? Also, if they are considered non-qualified private student loans then they don’t fall under the federal guidelines, it’d be considered a normal unsecured debt.
littlepickle74@reddit (OP)
Yes I think that’s exactly what I’m trying to determine. I appreciate that you think it’s worthwhile to pursue.
TheToken_1@reddit
No problem. I forget the site, but if you do a search regarding non-qualified student loans it’ll show the criteria for it. It’s a government site that explains it. But I know one way to know if it’s non-qualified is if Sallie Mae sent the money to you directly instead of the money being sent to the school, then the school giving it to you.
BeanoFTW@reddit
Wait, were these PRIVATE loans or STUDENT loans? You say during your post that they were private loans, but you're going to talk to a student loan attorney? Why a student loan attorney?
littlepickle74@reddit (OP)
There are student loans that are private, which are a credit product produced by banks. There are student loans which are federal, which is a credit product produced by the Department of Education. My loan with Sallie Mae is a private student loan. While it is considered unsecured debt, it is still governed under laws that are applicable to federal loans. In 2019, private student loans were not automatically discharged in bankruptcy. The laws changed a few years ago to make it easier to do so, but it’s still not automatic. Private student loans are a very specific grey area with bankruptcy law. My bankruptcy attorney was not an attorney with specific expertise in student loan law. There was no cure for the issue I experienced with Sallie Mae through that route.
BeanoFTW@reddit
Ah, thank you for the explanation and the additional details.