How do I make a settlement offer to Key Bank on my private student loan?
Hi Andrew. Here's my story. I have 2 private student loans from KeyBank for approximately 60K. I defaulted 5 years ago (April 2011) and have not made a payment since. I received a settlement offer from law firm in August 2014 for approximately $36K but I was unable to come up with a lump sum at that time so I ignored the offer. I am now in a position to make a settlement offer and have about $30K to work with.
I've lived in Nevada for 10 years and statute of limitations for promissory note is 6 years. Prior to Nevada I lived in AZ and South Dakota which is where I lived when loans were issued. I'm not 100% sure but I believe both AZ and SD SOL's are also 6 years. Thus, it looks like 6 years is the magic number.
I'm at 5 years since default and deathly afraid KeyBank or Collection Agency is going to sue me. The clock is ticking. Ugh!
(1) Should I wait until I'm presented with a settlement offer since the statute of limitations is getting close? Or do you recommend I make the first move?
(2) Do I initiate contact with KeyBank or collection agency? I have my credit report and it's very confusing so I'm not sure which loans are in collections and which ones are not.
How do I go about making a settlement offer re: private student loans from Key Bank? Wait or start the process myself? Who do I contact (original lender or collection agency)?
—as
There are really two different approaches you can take with Key bank about your student loans at this point. Contact them now to negotiate a settlement, or wait and see what happens as the clock winds down on statute of limitations (SOL), and credit reporting limits.
You mentioned a law firm sent you a settlement offer in Aug 2014. It’s probably a good idea to check a copy of your most recent credit report to make sure they did not obtain a judgment against you. Sometimes this happens without borrowers even knowing about it when a summons is sent to an old address, which happened to one of my clients. If it was a law firm in the same state as you, they may also still have the account, since that’s typically the last stop in the collection cycle for private lenders like Key Bank.
WARNING: By contacting them, it may draw attention to an account that they could have otherwise forgotten about. However, if they don’t have your current contact info and they haven’t already tried to summon you to court, they may be preparing to do that before the SOL expires.
Settlement Strategies for Student Loans with Key Bank
If you contact them you’ll want to do so with a settlement strategy in mind. Sometimes with old collection accounts, borrowers decide to “let sleeping dogs lie” and wait to see if they will try anything. The downside of this is that it’s not a proactive solution and you may be put into a situation where you are on the defensive and have to hire an attorney to defend a lawsuit, if they do try to go that route. However, if they do not do that, you have a very good chance of getting it past the SOL and then Key Bank off of your credit report. However, there are many different actions that can reactivate SOL so you may want to talk with a consumer defense attorney in your state about that – just because 6 years passes since you defaulted doesn’t mean that something didn’t happen during that time (like a partial payment) that could restart the clock.
On the other hand, you could take a proactive approach and contact them to initiate a settlement offer (starting with a lower offer than what you intend to settle for). In many cases, borrowers benefit from hiring a professional negotiator with years of experience in settling private student loans. There are a lot of horror stories out there about borrowers who settled, only to find out that the remaining balance is still being collected on or that a collection agency refused to honor a settlement. With the right documentation, those problems can be mitigated post-settlement. A good negotiator can usually negotiate a better offer than someone trying it themselves for the first time – as well as make sense of multiple listings on your credit report. Regardless of whether you do it yourself or you hire a professional, you’ll want to get the offer in writing. It’s a good idea to reach out to Keybank first, and if they prefer that you talk with a collection agency about the account then they will let you know that.
Don’t give up too much information and stick to your hardship story during negotiations – definitely don’t discuss any assets or even your income. This gives the other side leverage. With the account this far past due, a settlement significantly less than 50% of the balance may be possible. KeyBank is not the most aggressive private student loan lender from what I’ve seen, but the fact that it was with a collection law firm in 2014 is reason enough to go back over your credit report and make sure they did not obtain a default judgment by summoning you to court at an old address (it’s not supposed to happen, but it does).
The benefits of settling this account now could also be a boost to your credit score, by curing the charge-off and improving your debt to income and debt to credit ratios. One of my clients experienced a very large jump in his credit score after settling a private student loan that was about as far behind as yours is. How much your credit score will increase depends on the other factors influencing your score, but you will most likely see some increase after settlement with Key Bank.
Doing Nothing about Your Student Loan
By paying the charge-off through settlement, you will also remove one of the most common obstacles to obtaining a mortgage or car loan. If neither of those things are on the horizon and you don’t have funds to settle, then perhaps the best bet is to wait and see if the other side takes action before time runs out. You’d want to be ready to hire a consumer defense attorney if they spring a surprise lawsuit on you though. Once the account goes past SOL, they can still try to take you to court – it’s up to you to defend yourself or hire an attorney who can make the case that the loans are past SOL. Being past the 6 year mark doesn’t automatically mean the lender won’t try to take you to court, so it would be up to you to raise the SOL defense (or your attorney).
As mentioned earlier, there are also different actions that can restart the SOL clock, so before you commit to that strategy it would be best to seek legal advice. If you decide to take the settlement route, you don’t need an attorney to do that for you. You can do it yourself or hire a professional who can help you negotiate the lowest settlement – and then make sure it’s executed properly.
You definitely have some options here, and which route you take really depends on your goals and plans for the next several years; as well as the amount of funds you have to put toward a potential settlement. If you’re looking for a negotiator with private student loan experience, I’ve helped many borrowers in similar situations as yours and have some examples of my student loan settlements posted on my website.
Anyone with questions or concerns dealing with Key Bank and your private student loans is welcome to post in the comments below for feedback. You can reach Andrew for a one on one consult at 800-939-8357, option 4 rings to him.
About Andrew Weber C.S.L.C.Andrew Weber is a Certified Student Loan Counselor and Certified Credit Counselor through the N.A.C.C.C., and has been helping borrowers with a variety of federal and private student loan issues since 2012. A negotiator since 2009, he has negotiated settlements on unsecured debts, including many private student loans, in excess of 7 figures and climbing.
HI, I have 3 loans totaling about 55k that were transferred from AES to Key Bank collection after default. I called to find out repayment options and they told me I had option to settle the loans. I saw you wrote not to tell them your assets when negotiating settlements, but are you required to tell them your bank account/checking balance or other assets if they ask?
Absolutely not, but the collection agent may demand it and say that it’s required for them to agree to a settlement. Knowing how to sort fact from fiction and knowing when collectors are bluffing is one of the reasons to consider working with a student loan negotiation expert.. there’s just no comparison to the experience of someone who’s done this hundreds of times vs trying it on your own for the first time.
There are several common, very avoidable mistakes people make when negotiating on their own, and this type of disclosure is one of them. If you’d like to talk with me further, feel free to call the hotline and select Option 4 (for student loan help) or email Michael directly and he can connect you with me.
Hi Andrew,
I have been making payments on my KeyBank student loan when it was consolidated at Great Lakes with my federal loans. It was then sold (I assume) to FirstMark and the monthly payments increased significantly. I requested and was granted a 3 month grace period, I made one payment last month and then could not make the payment this month. I live in Illinois where the refinance minimum is $40k, this loan is roughly $38k.
I am running out of options. I am considering letting the debt go into deferment and taking it from there, either settle at that time or wait and see. My issue is that my uncle was the cosigner on this loan and I know I will need to tell him this plan.
The promissory note was signed while I lived in Ohio (6 year SOL) I know live in Illinois, I’ve been here over 6 years. I believe the SOL here is 10 years. Are there any other options I should consider? I just can’t find a way to get lower/more manageable monthly payments. Which SOL would apply? Do you have any other advice for me?
Thank you
It sounds like your Key Bank student loan is now part of your consolidated federal loans. When you log in to NSLDS does this loan show there?
Hi Andrew,
My name is also Andrew and I just received 4 letters, dated June 27, 2019, 1 each, for my 4 outstanding student loans with KeyBank, stating that the accounts are in default and that the entire balance is due. The loans are for $3371.38, $2367.13, $3037.83 and $5101.04. I made payments on them for 16 years, but have not been able to for the past several months as I have been out of work since February of last year-I did make payments for a few months after from savings. I was thinking I would call them tomorrow and tell them my income is zero, but I would really appreciate and be very grateful for your advice on how to proceed at this point. I’m worried about them coming and taking my furniture and car. Thank you very much in advance.
Hi Andrew, Keybank is generally not to aggressive with legal action especially on smaller amounts, and although trends can change with lenders that is not something I have seen any recent evidence of. No lender will try to take your furniture or car, even if they win a lawsuit. The most common forms of forced collection post-judgment (if a lawsuit is lost) are wage garnishment and property lien, and occasionally bank levy (for private lenders). But even with litigious lenders, this can be avoided by working out a payment plan or settlement.
Nothing good will really come of calling them and telling them you have $0 income. In general if you are unable to afford a payment plan or settlement, it’s usually better to take a “wait and see” approach and try to stay off the radar, rather than risk making yourself an active collection target by communicating with them. Granted, a borrower in default can be an active collection target by the lender even if they are not communicating, but talking with them is one sure way to get them to initiate active collection efforts with phone calls and letters.
I don’t really recommend contacting the lender unless you have a proactive plan to either settle the loan or make payments. Otherwise, without a firm gameplan, the lender/collector will steer the conversation in the direction they want it to go; possibly trying to get information from you that could harm your current or future efforts to resolve the loan or trying to scare/confuse you about your options.
If you’d like to settle (it will require some funds – usually around 40-50% with Keybank, sometimes less) feel free to reach out for an evaluation.
Thank you so much for your reply-I feel better. I will be sure to contact you about how to proceed when my financial situation improves. God bless you for all you do for those of us in debt-it’s an incredible burden that often seems overwhelming.
Hi Andrew – that’s what I like to hear.. I’m glad my advice has made you feel more at ease and I appreciate your kind comments. Feel free to reach out anytime.
Hi Andrew,
Thank you again so much for your reply last year. I received a call today from Capital Management-I think they are now handling the loans from Key Bank. I called them back not realizing what it was about and I’m sorry to admit but ended up telling them what you said not to about no income and possibly that my mom could help with a reduced settlement amount. The woman I spoke with was very nice and did show on the account she could reduce the loans by 35%. When I told her that still seemed high, she said to ask my mom what amount my mom felt she could do and then they could go from there. Is this a situation we could hire you to help with or at least if you could share your advice I would really appreciate it. Thank you again so much.
Andrew
Hi Andrew, so this is a good example of why it makes sense to hire a professional negotiator. You’re making some mistakes as you’ve admitted; mistakes that can harm your chances of getting a good settlement. It’s not your fault, debt collectors work day in and day out on honing their skills so that they can have interactions like these with borrowers.
I have a certain method and different strategies I use when negotiating – the types of settlements we discuss achieving are usually not just handed out by the debt collectors easily, as you’ve learned. To be honest the approach you’re taking is more or less the opposite of the approach I would take if I was negotiating on this. And don’t let the kind persona fool you – the best debt collectors know that you do in fact catch more flies with honey.
I don’t provide do it yourself coaching for private loan settlement, but if you’re interested in becoming a client feel free to call in and choose option 4 to be routed to me.
Any conversation you have or information you provide to the collector is just another obstacle for me to overcome in negotiations; so if you’re considering hiring me, it would be wise not to disclose any more information to this collector.
We regularly settle Keybank accounts for much, much less than what you’ve been offered, and I’m sure I could settle this one for a great percentage as well. And with a debt collector like Capital Management involved, it’s crucially important to make sure that the settlement is executed properly as well – something that I also insure.
I have 3 student loans with key bank from 1998, 1999, and 2000. I consolidated all loans and transferred to sallie mae. 3 different charge off’s from key bank are now on my credit report as of late 2016. The charge off balance is noted but is indicated as closed. I had no idea that this was ever an issue. I have never been notified by Key bank and been paying my private consolidated loan with sallie mae faithfully. I need help!! How do I fix this???
Did you stop paying Key Bank at anytime prior to consolidating?
no, I did not because it was in deferment. I consolidated prior to end of deferment
In that case I would file credit reporting disputes with the credit bureaus against Key Bank.
I was heading in that direction, but not sure which company. There are a multitude of companies and need this to be taken care of correctly. Any suggestions would be most helpful!! Thank you.
If your loans with Key Bank were never charged off, that will be one disputable error. And if the bogus errors from Key bank are more than 7 years old, that would be another reason to dispute.
You can file credit disputes on your own.. Michael has many good resources on his site that tell you how to do it on your own.
In 2015 I had to file chapter 7. I thought that my Key Alt Student Loans ($5k and $13k) were discharged by this, and my phone and address changed. Last week, I received two forwarded letters saying the amounts were due immediately. Further, my Key Bank checking account was debited without warning by Key for $749, which nearly caused me to overdraft. Should I discuss the matter with the collections department at Key and try to arrange a payment plan?
Were you sued for collection on these student loans, and a judgment entered against you?
If not, I would look at moving banks, and then find a way to settle those Key bank loans for less than what is owed if it were me. What if they accepted a drastically lower amount and went away for good? How long would it take you to raise 6 to 8 grand?
I think settlement would be a better option if you can afford it. The most recent settlement I negotiated on a Keybank account was well under 40% of the balance.
Making payments on the full balance is a less palatable option when you have the chance to cut the balance in half (or more).
Having a checking or savings account with the same financial institution that holds your delinquent private student loan is risky and not recommended. I’ve heard of Keybank doing this to other borrowers without warning. Wells Fargo does it too – this is known as cross-collateralization. To make matters worse, this unauthorized (yet probably legal) withdrawal likely renews the timeline on your state’s statute of limitations for unsecured debt.
I would immediately remove all but $50 from any Key savings or checking accounts you have because they can potentially withdraw much more, and their legal ability to do this is probably hidden in the fine print of your private student loan master promissory note. Completely closing out the account is not a bad idea either.
Negotiating private student loan settlements for the lowest possible arrangement is difficult, if you’re doing it on your own for the first time. If you’re interested in settlement, feel free to call in to the CRN hotline and press Option 4. I can usually save borrowers more than what they could negotiate on their own, including my negotiation charge.
Hello, I am current on my Keybank loans, I originally borrowed 85k. I deferred payments while I was in school and the interest compounded the debt all the way to 115k. I have been paying on time for almost 9 years now but I still owe close to 75k! Is there a way to negotiate a settlement when you are current or do I have to default?
My overwhelming experience is that you have to default. Also, settling too early on accounts with Key bank this size can be a difference of tens of thousands. Call in for a consult at 800-939-8357, ext 4, and get more prepared.
Hello! So I have 2 loans with Key Bank totaling $9000 (about $4.5k each). We went through a bankruptcy (chapter 13, then converted to 7 in 2015) and the loans recently popped up on my credit report as CHARGE OFF on 1/14.
Is this something you think we could get settled for a lower amount? I have a bonus coming up and it’d be great if I could just pay this thing off and be done with it. Thanks!
Settling Key bank student loans is possible. Call in for a consult at 800-939-8357, ext 4, or fill in the talk to Michael form in the right column of this page and I can get you scheduled for a phone consult from there.
Andrew,
I am a co-signer on my step-daughters 2005 student loan for which she has been paying on since Nov. 2006 due to her dropping out in 2/2006. Recently I have been struggling to get her to talk to me, or her father, since she decided to quit her job, leave her place of residence and take off with a group of biking musicians that tour CA and Canada supposedly returning early next month. Up until now she has made her payments each month and now she is almost 30 days past due. For my credit to stay prestige I feel that I need to pay it but that just may give her the idea that she no longer has to and I don’t want that to happen because it is still her responsibility. If this loan goes into default could KeyBank come after me for the remainder of the loan as I was told that it could be a possibility? Also, I was told that if I make even one payment that I could be solely responsible for the loan and that KeyBank will no longer contact the student; is this true?
Any advise, preferable before Aug. 30, would be appreciated.. I know that this is a last minute request for advise but I just found this feed and thought something helpful may come from it.
Thank you
Hi Tammy, for your credit score not to be impacted, payments would have to be made on the Keybank loan to keep it in current standing.
While in theory Keybank could legally pursue a cosigner if a private loan defaulted (after 6 months of nonpayment), in my experience Keybank is one of the least aggressive private lenders and does not pursue litigation immediately after default. They will send the account to collection agencies for a while; during which time there will be ample opportunities to settle by implementing a strategic negotiation strategy, This is often difficult for borrowers who have not negotiated with professional debt collectors before, and in many cases a reputable negotiator who has experience settling private loans can negotiate a lower settlement than what the borrower (or cosigner) could on their own.
Settlement is, in my opinion, the fastest and least expensive way to pay off a private loan. However, for a current borrower (and cosigners) the credit damage involved with a “strategic default” is significant.
If maintaining good credit is a top priority for you, then strategic default is probably not a good idea. However, it may be worth considering all factors involved and the amount of time and money that will be paid to this loan over it’s life cycle. I settled a Keybank private loan last month for around 33% of the balance owed.
Whoever told you that a cosigner making one payment would remove the original borrower from the loan was incorrect. The original borrower will always be on the loan. There are ways to apply for cosigner removal, but recent studies on the subject have shown that private student loan lenders decline 90% of such requests.
If you’d like to discuss the situation further, feel free to call the CRN Debt Relief Hotline at 800-939-8357 to set an appointment to chat with me.
My wife has about $50k in outstanding student loans. $35k is with Key Bank (with Great Lakes as the loan servicer) and $15k with Navient. Both loans are co-signed with her grandmother whose only income each month is her Social Security. My wife is a stay at home mom with our 2 children, and she has no income. Since I work, we are paying on the Navient loan each month as directed, and we have had the Key Bank loan in deferment since August 2015. The Key Bank deferment will expire in February 2017. Also, we are residents of Pennsylvania.
What options do I have with the Key Bank debt when the deferment expires? I would like to settle it for a lower amount, if possible.
Can you raise 35% of your loan totals? How soon will you be able to access that amount?
Michael,
My wife and I were thinking of using a home equity loan to pay off Key Bank, so we would be able to get 35% of that loan total. Depending on loan approval, appraisal and closing, we should be able to have all of that before the deferment ends in February.
Give me a call to go over what settling with Keybank is going to look like. You can reach me at 800-939-8357, ext 2, or press 4 and connect with Andrew, our resident student loan expert.
Hi Brian, a 35% settlement can be possible on a private Keybank loan, but it would require the loan to be in default and would probably take months of negotiating. The default alone would take 6 months from the date that your loans exit the deferment. There will be extensive credit damage if you choose to do a “strategic default” for the borrower and any cosigners, which is an important aspect to consider. Virtually no private lenders will settle for any significant reduction when a loan is current.
I urge borrowers to be extremely cautious in using a HELOC to pay off an unsecured loan, unless they are absolutely certain they won’t miss any payments on the HELOC in the future and potentially risk losing their home. Feel free to call into the hotline and chat with Michael or I if you’d to discuss further.
Thank-you!
I submitted request for consult. Can I talk with you since you have history re: my situation?
I manage the submissions for the site. I am forwarding the consult form you submitted to Andrew. I am not sure if he will be available over the weekend like this, but he will reach out to you.
Readers can reach Andrew for a student loan consult at 800-939-8357, then press option 4 to ring his phone.
I received a call from Mercantile Adjustment a few days ago representing KeyBank. I requested statement/letter. End of conversation. Mercantile also sent 2014 settlement offer. So “sent for collections” dosent make sense. Maybe I overlooked it on CR. What are your thoughts?
Also, I noticed you offer a DIY Debt Relief Program. I may be interested in this.
I’ve been checking my credit report daily via Credit Karma. New update as of today “2 ACCOUNTS SENT FOR COLLECTIONS”. Both are KeyBank private student loans.
Account #1: $47,193
Payment Status: Collection/Charge Off
Date of Last Payment: Nov 01, 2010
Account #2: $13,255
Payment Status: Collection/Charge Off
Date of Last Payment: Nov 01, 2010
Oh Boy!!!! It looks like SOL is closer than I thought. Does “sent for collections” mean collection agency or law firm? Or could it be either?
Now what? Do I need to start negotiating settlement?
Please advise.
Hello, I left you a voicemail today in response to your consultation request.. feel free to call me whenever you have some time.
Thank-you again! This is by far the most beneficial information I’ve received. I feel some sort of relieve but also lingering fear of an unexpected knock on the door. I don’t think I could emotionally/mentally handle a lawsuit at this point.
I’ve lived at the same address for 8 years and last written notice/correspondence from a collection agency was about 2 years ago. Is there a way to monitor transfer to collection attorney other than written correspondence? Lifelock? Identity Guard?
I’ve been avoiding calls from collections for 2-3 years. Is this good/bad? My fear is if I talk to them it will stir the hornets nest.
Lasly, would it be harmful if I provide collection agency’s copy of my income tax return with SS# blacked out to prove income is LOW.? My thoughts are if provided this info. they will be less inclined to sue. I’m assuming they already know I have no assets per credit report and public records.
My anxiety is pretty high if you haven’t noticed. This is all so mentally and emotionally draining. Ugh!
You’re very welcome, and I definitely understand how you’re feeling Almost everyone with accounts in collections experiences some anxiety and unease about the situation. The best way to feel better about that is by arming yourself with facts and knowledge and having a strategy in place.
If you’ve lived at the same address for 8 years then it’s not your fault they aren’t reaching out to you. Most likely they are not actively collecting on these accounts since there hasn’t been any activity or communication on them in a long time.
You can avoid calls as long as you screen the voicemails for any pertinent information, for instance if the caller identified that they were calling from a collection law firm. You could then research the collection firm and see if they are located in your state. In general, I recommend for borrowers to try to make some type of settlement or payment rather than ignoring calls or letters, but if you aren’t getting any letters then that is a good sign that they aren’t actively trying to collect as of now. It is true that if you talk to them without a plan to repay or settle, it will likely just result in them focusing more phone pressure on you.
In my opinion Lifelock is overrated and oversold, and you can get much of the same benefits through Credit Karma’s free credit monitoring service. I would keep checking your credit report every 6 months or so to see what is showing there. Usually the current debt collection firm will be listed there for each account.
I would not provide any collection agency with a copy of your tax return unless it was an condition for them to accept a low settlement. I’ve negotiated many low settlements on older accounts and have never used a client’s tax return to do that. So I don’t think that would be necessary.
If you do happen to get summoned to court, just simply hire a consumer defense attorney in your state. Michael or I could make some recommendations, if we are familiar with any consumer defense attorneys where you live. That’s why I recommended doing a little research and finding some attorneys near you, so that you’re ready if that does happen.
This is the drawback of the “reactive” approach – you are waiting for the creditor to make a move and hoping that they don’t. The proactive approach of settlement helps you take back control of your situation and end the collection cycle, which does remove the doubt and worry over the situation. So it’s up to you whether or not that would be worth it, since you have the inheritance that ideally would be used to build your new future.
As I mentioned earlier, somewhat of a middle ground between being reactive and being proactive (both of which can be valid methods for dealing with debt issues) would be having the strategy of hiring an attorney should they try to file suit, having funds saved to hire the attorney and pay a settlement or repayment plan, and holding tight to see if the creditors try to pursue as the clock is winding down.
Talking to an attorney about SOL would also be a good idea to make sure you haven’t done anything to restart the clock. If that did happen, and the SOL is renewed, settlement becomes a much more viable option in my opinion. If your SOL will run out within a year though, then you don’t have much further to go until the collector loses their ability to effectively take legal action. And then after 7 years +180 days from the last date of activity, the accounts should fall off of your credit report.
I reread your initial response again and keep wavering between settlement or wait it out. So, I decided to lay it all out and ask if you were in my shoes what would you do?
Total Debt = 106K
60K – KeyBank in collections with Mercantile
34K – NCT in collections with Transworld
12K – Wells Fargo CC in collections with Midland Funding
I haven’t made payments on any debts in 5 years. I don’t own a home or any assets. I’m self-employed and gross adjusted income is less than $20,000. Bad divorce, single mother followed by several deaths in my family. I spiraled into a severe depression for several years and now just starting to get back on my feet both emotionally and financially.
Here’s my delima. My parents offered to give me 60K as early inheritance. I can either set the money aside and hope creditors don’t file lawsuits or use the $$ to settle debts.
If I choose to wait it out and creditors view my credit report they will see I’m over 100K in debt and haven’t paid in 5 years. I don’t own a home or have any assets. So if they search public records they will find nothing. Does this information or lack there of benefit me re: creditors decision to file lawsuits? Or, is it irrelevant?
If I choose settlement option will self-disclosure re: my income of >$20,000 and the fact I have no assets harm me? You mentioned, “Don’t give up too much information and stick to your hardship story during negotiations – definitely don’t discuss any assets or even your income.”. Also, do I have to go into all the details of my personal life to prove hardship?
Hello, I think it would be ideal to use the early inheritance for building your future and not for paying on settlements, if you don’t have to. I hesitate to answer “what would you do in my shoes” type questions because my style of financial counseling is to fully inform the borrower and let them make a decision without any influence or bias from me.
A middle ground you could take here would be to keep track of correspondence on all of the accounts, and if you see any of the accounts become assigned to a collection attorney in your state, you can take the proactive measure of settling with them at that point. If that doesn’t happen, then you may be able to ride out the SOL and then have these fall off of your credit report shortly after.
But you will want to be prepared if any of the lenders try to take you to court even after SOL has expired. Many borrowers don’t know about SOL and therefore lenders will still try to file suit, thinking that the borrower doesn’t realize they can raise SOL as a defense. Also as we mentioned earlier, many things can affect SOL and you would want to talk to an attorney in your state for specific SOL questions, since policies regarding SOL vary from state to state as far as what can reactivate the debt or restart the clock.
When I present hardship stories to lenders for my clients, I emphasize financial, emotional, and medical hardships. I will also emphasize their financial situation if that will help the negotiation (if they have a difficult financial situation that would make payments or settlement in the future less likely).
They may ask you for more detailed information like assets etc, and in your case it’s fine to say you don’t have any. For borrowers that do have assets or retirement savings, I do not mention that in the negotiation. The collectors may want that information, but part of the job of a professional negotiator is getting to the agreement without giving up sensitive information like that. But in your case disclosing a lack of assets and low income would only help the negotiations if you get to that point.
Wells Fargo isn’t that aggressive with their private loans, but Midland Funding can be. However it’s a small account so they aren’t likely to pursue it too hard. KeyBank, as we discussed, is also not very aggressive. However NCT is the most aggressive private lender and you’ll want to keep a close eye on who they assign the NCT account to. If it goes to a collection attorney in your state, you’ll probably want to try to work out a deal or prepare to defend a lawsuit. NCT tries to sue people much more than other lenders do, from my experience.
However, since you’ve made it 5 years without that happening, it’s not likely to happen now. But you still want to be prepared if it does happen, so looking up some consumer defense attorneys and possibly getting an opinion on SOL might be a good idea. Not all consumer defense attorneys have experience defending private student loans, so that would be a question to ask if you call them for more information.
Thank-you for thorough response. Lots of good information!
I found copies of 2014 settlement offer and it was NOT a law firm but rather Mercantile and they just so happened to call yesterday and still have the account. I checked credit report. No judgements. I’m leaning towards waiting it out but have a few questions.
1) If lawsuit is filed will I be able to offer/negotiate settlement before it goes to court?
2) Do creditors have access to financial “information”? Balance of Bank/Savings accounts? Credit report? Tax return?
3) What information do creditors use to decide whether they file lawsuit or not?
You’re very welcome.. and it’s good that there isn’t a legal collection firm involved yet – definitely a good sign. If they file a lawsuit, you’ll need to hire an attorney to respond so they don’t get a default judgment. It’s tough, but possible, to negotiate at that point. Usually once the attorney responds to the summons and prevents the impending default judgment, negotiations can resume as normal.
Creditors can pull your credit report, and if you have updated employment info on the credit report they would be able to see that. They can’t see what’s in your bank account and they cannot access your tax return unless you provide them with that info.
For the last question, it really depends… each lender has different criteria. But for all of them it ultimately boils down to the calculation that they will be able to collect on a judgment by executing it, and going for a bank levy or lien should they win a judgment. KeyBank is definitely one of the least aggressive lenders when it comes to lawsuits though. NCT appears to be the most aggressive private student loan lender in that regard.