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Mediating Your Creditor to Settle your Student Loans

Experiencing difficulty in paying your student loans back is a normal dilemma. In fact, according to the Department of Education, more than 1 out of 7 federal loan borrowers fail to pay within the first three years of repayment. This doesn’t even count loans from private lending institutions. If you are experiencing problems, sometimes the only real and easy solution is to discuss it with your lender.

Talk About your Financial Struggles and Capabilities

Before you decide to talk with your creditor, it is best that you have already exhausted all programs that seek to reduce or postpone your debt; this is because settlement is usually available only to those who have done so.

Remember that when you approach your lender, you explain the cause and concern on the payment of your loans. Be sure that when you are offered better payment options, you also state your budget and share your insights or ideas on what payment options or plans you think will be more feasible in settling your student debt. This way, rather than appearing as someone who simply wants to be free of their obligations, you show to your lender your eagerness and desire to fully settle what you owe.

It is important to note that you should avoid complaining about your debt and how you feel about them. Sometimes instead of getting them to sympathize with you and understand your issues, you could end up making them feel more hesitant to help you. Talk to them about your problems and ideas, but avoid ranting.

Share a Detailed Summary of Your Finances

Usually, a settlement can only happen if the borrower can pay in lump sum. FinAid.org says that there are only three settlement offers available to collection agencies that do not require consent from the Department of Education. First would be through the payment of ninety percent of the remaining balance of the loan and interest. The second option is to pay the principal amount including half of the unpaid interest. The last settlement offer available to borrowers would bethe payment of the remaining loan as well as accrued interest.

The chances of having a settlement aside from the options available that exactly fit your needs may be slim and longer to secure but it is possible to happen. This is why it is also important to disclose your financial information.The creditor will be more capable to look through your perspective by providing all information regarding your finances such as your liquid assets, debts and income.

Since you are the one requesting a settlement that would be in your favor, refrain from mentioning any investments that may not be able to help them decide an option that works in your favor. Take note that should you avoid choosing payment options among the three settlement offers, it is the Department of Education that will review your proposed settlement.

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