Did You Know These Facts about Debt Settlement On Student Loans?

Student loan crisis has emerged as a needling problem today and borrowers are often found battling their debt woes with the help student loan debt settlement programs. Now, debt settlement implies that the borrower gets to pay his creditors a lump sum amount that is usually lower than the total amount he owes. Now, why at all would your lender settle for a repayment that’s lower than what was agreed upon? Read on, to know why. However, before that, please remember that you’re certainly required to fulfill some criteria before you can actually qualify for these settlement programs. The companies conducting these programs are very strict with their client screening process. They have strict underwriting demands that a borrower should fulfill in order to qualify. There is a minimum amount of loan required to qualify. Additionally, the “hardships” faced by the borrower should be equally serious.

How Can You Pursue your Creditor for the Settlement?

Under normal circumstances it becomes difficult for a borrower to pursue his creditor for a lower repayment. One of the major techniques to pursue him to do otherwise would be to tell him that you’re filing for a bankruptcy. In fact, most of the borrowers, who turn to debt settlement program, are on the brink of bankruptcy. However, it is not possible to discharge a student loan in bankruptcy. As a result, the entire process becomes a bit difficult.

What You Should Know?

Now, if you’re opting for a student loan debt settlement program, know for a fact that they would not offer as much reduction as other loans would have done. Here are some points that you should keep in view if you’re looking for student loan debt reduction or Student Loans Settlement:

The US Department of Education would not really encourage any settlement offer that includes debts triggering from court judgment or fraud
The US Department of Education will only accept default claim on a principal balance of a direct loan or a FFELP loan
The collection agency might as well agree to settlement that might lead to the relinquishing of collection fees, the full principal balance and ½ of the accrued interest (that’s not paid) or 90% of the principal and interest.

Beware!

If you have finally agreed to settle for a student loan reduction process, you should remember that you’re strictly maintaining these rules while doing the same:

Do not commit the mistake of agreeing to the amount of money that you cannot pay. It is a considerably lesser known fact that debt collectors actually profit from commissions on the settlement fund that is agreed upon. Make it a point that each and every clause is taken down on writing. Make sure all your debts are waivered once the settlement fund is paid. Do not hesitate to call the US Department of Education if you think that present negotiations aren’t leading anywhere.

Educate yourself more about the entire process and then opt for it. Know about it pros and cons and then judge its suitability.