If Navient decides to sue you, can you then ask for a settlement offer that they previously offered or try to settle or are they like "nope, too late" ?
Posted by AReckoningIsAComing@reddit | studentloandefaulters | View on Reddit | 49 comments
So I defaulted back in January intentionally as part of my strategic default plan (about 160k in private loans through them - original principal was only 60k, but gotta love that compounding interest over the last like 19 years).
Anyway, they started out with a 70% settlement offer back in the fall, then I just got a 55% offer this past week. I def don't have enough saved up to pay that, I was hoping to wait until I get an offer around 30%, then I'd prob try to scrape together what I can and maybe take out a personal loan or something.
I'm about 11 months into my SOL and my state has a 4 year SOL (also, my state prevents them being able to garnish wages).
I previously probably would have jumped at the 55% offer, but I really wanted to get it down to at least 30%.
My only worry is that if they move forward with suing me down the line, is all hope of a settlement gone at that point and then you're just fucked? Or can you call them and be like "lets avoid a lawsuit and I'll take that previous offer you offered" and they will take it? Or are the like "haha, nope, too bad, too late, etc" and they proceed with the court case?
Anyone have any experience with that?
Thanks.
morbie5@reddit
If wage garnishment is off the table why are you even considering settling right now? Do you have a cosigner
AReckoningIsAComing@reddit (OP)
I don't, it's only under my name. Even though they can't garnish wages in PA, can't they still go after your bank account?
morbie5@reddit
Yes but they still have to make a cost benefit calculation as to if to sue and go for bank levies etc. Not being able to garnish and not having a cosigner really helps you.
How much do you think you have paid them over the years btw?
dannydelco@reddit
There’s over 30,000 debt lawsuits a year filed in PA. They’ll sue for under a thousand bucks, as the collection law firms file in bulk. Even though PA does not have wage garnishment, collection lawsuits make up the bulk of the civil dockets. No amount is too small for them really.
morbie5@reddit
I know they can and have but I find it hard to believe they usually do actually file for amounts that low
dannydelco@reddit
Well, the student loan cases tend to be larger, so that's why we see more lawsuits with them. But for credit cards, it's crazy. The tiny balances they'll sue on. Plenty of sub-$1,000 lawsuits filed in Philadelphia, especially.
morbie5@reddit
If they can't get wage garnishments then what is the point? A bank levy, I doubt those people have much cash in the bank
AReckoningIsAComing@reddit (OP)
Good to know, thanks. I estimate I've prob paid them close to my actual principal amount over the years, but that's a very rough estimate.
morbie5@reddit
I'd play hardball then, maybe try to settle for like 20%, maybe even less. Throw out 10% as an offer and maybe go up to 20%
AReckoningIsAComing@reddit (OP)
I think I'm gonna try to wait out the 4 year SOL instead.
morbie5@reddit
That isn't what I would do but good luck to you then
AReckoningIsAComing@reddit (OP)
Thanks. It's mainly b/c I want to avoid the big tax I would have to pay on the forgiven amount. And I wouldn't really be able to claim insolvency, b/c I have a lot in my retirement account.
morbie5@reddit
They can still forgive the debt on their own past the statue of limitations and that would then still be a big tax for you. So trying to avoid the potential tax isn't a good reason to not settle imo.
AReckoningIsAComing@reddit (OP)
But why would they forgive it on their own after the SOL, what incentive would there be for that, since maybe not everyone knows about SOL and maybe they think they could get lucky with ppl still paying? How often have you seen them forgiving after SOL? And wouldn't I have to agree to have it forgiven? And also, wouldn't the SOL also cover any tax bomb from a forgiven amount without my permission?
morbie5@reddit
I don't know but they can and have before. Maybe if the company is getting bought by another company? Or if they are selling their student loan lending arm of their company? I think something this happened with Discover's student loan business
I can't give you a number on that, I don't know how often it happens
No
No
I'm not going to tell you to change your strategy on what to do, that is up to you. I'm just saying that if you are doing what you are doing to try to avoid the taxes then you may be in for a surprise
AReckoningIsAComing@reddit (OP)
OK, thanks for your input. I might wait for a really good settlement offer.
morbie5@reddit
Good luck!
AReckoningIsAComing@reddit (OP)
Thanks.
Infamous_Code_4078@reddit
When did they start offering settlement options after u defaulted? I have 100,000 I owe Navient and have thought of defaulting but for my state they are able to garnish wages so it’s been one of the reasons I haven’t
dannydelco@reddit
Remember- in order to garnish wages, they first have to sue and get a judgment. That is a process, it’s not automatic. If they sue, get a debt defense lawyer in your state.
Infamous_Code_4078@reddit
That’s true and is great for my private loan but unfortunately isn’t the same for the federal ones ☹️
dannydelco@reddit
Ah yes. Very different.
AReckoningIsAComing@reddit (OP)
I got an offer for 70% maybe 4 months after my first missed payment, so I hadn't even defaulted yet. Second offer of 55% came in maybe 3 months after default. Yeah, I feel very lucky to live in a state where they can't garnish wages, sorry you don't.
Infamous_Code_4078@reddit
Yeah u are lucky for sure, when they do offer that does that mean they want the full payment or your willing to make payments until the settlement is paid off?
AReckoningIsAComing@reddit (OP)
I think they usually require full payment up front. I think I've heard of a few people where they got like 6 months to pay it off, but not more than that. I think I'm gonna try to wait out the SOL.
jakobler@reddit
Yeah, you can definitely still try to settle even if they sue you... Lenders usually prefer to settle out of court rather than go through all that hassle, you know? But if wage garnishment isn't a concern for you, then I'm curious why you're thinking about settling right now?
AReckoningIsAComing@reddit (OP)
Thanks - mostly because they can levy bank accounts in PA still, from what I understand. Also, b/c ChatGPT told me that the balance continues to grow with interest even after the SOL expires and one day they could "forgive" the loan and then I'd have to pay taxes on that extremely larger amount. It said that it's rare, but I'd rather avoid that if possible. Plus, I'm not against paying something, especially if it's close to the principal amount I originally took out, I'm not against paying THAT back, it's just all that damned interest.
dannydelco@reddit
Well isn’t it a heck of alot better to pay taxes on a forgiven amount than to have to PAY the actual amount?!!
AReckoningIsAComing@reddit (OP)
Not if the amount grows and grows over years and years - then the tax on that may end up being much, ,uch larger than any tax I pay on a good settlement offer.
Positive-Tea-2054@reddit
Yeah, if you get an attorney, they can really help you fight back... Like, if you're worried about wage garnishment being off the table, why even think about settling right now? Also, just know that they’ve been ramping up lawsuits recently in PA, so it’s a tough situation.
dannydelco@reddit
Getting sued can be a blessing in disguise. The right lawyer can help drive a great settlement or even beat some of these lawsuits.
AanelIA1@reddit
If your loans are private and you believe you were scammed into taking the loans out, you can use the FTC Holder Rule as a defense to repayment when they come after you.
dannydelco@reddit
Maybe for one of the shady schools that went under, but not in a typical debt lawsuit would that be a defense.
AReckoningIsAComing@reddit (OP)
Def wasn't scammed.
porygon766@reddit
I’m about to default with Sallie Mae and it makes me feel like a criminal
oldchipotle@reddit
I just defaulted with Sallie Mae TODAY (120K) and honestly I feel a sense of relief in a strange way.
ReturnOfSeq@reddit
I defaulted with Sallie Mae and felt significantly less criminal than they are.
Impressive_Brain5734@reddit
Fuckkk em. Our gov't are criminals pls!
AReckoningIsAComing@reddit (OP)
Seriously, just do it, fuck them and their scammy/scummy ways.
dannydelco@reddit
They have really ramped up the lawsuits lately in PA.
AReckoningIsAComing@reddit (OP)
Have they? Do you have a source for that info?
dannydelco@reddit
currently defending a dozen cases by them.
AReckoningIsAComing@reddit (OP)
Have you seen with your clients if they are willing to settle for previous offers after initiating court proceedings?
dannydelco@reddit
Sometimes. Really varies. Once a lawsuit is filed then their lawyers need to get paid so sometimes the settlement amounts go up. But you can neutralize that by getting a debt defense lawyer of your own. Usually it’s well worth it especially if they have a track record with student loan cases.
Impressive_Brain5734@reddit
Yes if you work with an attorney they'll fight on your behalf
magicandfire@reddit
You can still offer to settle even after they file a suit against you. Lenders will usually prefer to settle out of court because suing you is going to cost time and money and even then there's no guarantee they'll get anything out of you, especially if they can't garnish in your state.
morbie5@reddit
You are correct but there is no way to guarantee that it will be as good an offer
AReckoningIsAComing@reddit (OP)
That's what I'm worried about...I don't wanna miss out on a great offer, which is prob why I would consider accepting a 30% offer, but would hope for 25%.
AReckoningIsAComing@reddit (OP)
OK, thanks, that makes me feel a little better. Do you know if they'll usually agree to the previous offer?