Private student loans debt settlement is a process of negotiation with the lender to find the reasonable solution, so the borrower could pay off the existing debt. Usually, the amount the borrower has to pay is smaller than the initial principal. Student loans provided by the government can’t be settled. This privilege refers to the private student loans only.
You or your parents can negotiate with the lender independently or get the help of the settlement company. You can familiarize with the list of the most popular settlement companies that deal with private student loans.
The process of the debt settlement private student loans is simple. You or the settlement company sends the settlement offer to the student loan lender (lenders). Usually, the offer should make up minimum 50% of what you have to be considered. The lenders usually demand the lump-sum payment of the amount.
If the lender (lenders) agrees to the offer, the negotiation must be fixed in written form. You will need it if you ever need to collect the balance due.
The lender (lenders) send the discharge to the credit bureaus. This information will remain on your credit report for 7 years.
This is a brief overview of how debt settlement for private student loans works.