I currently owe about $140,000 in student loans through private loans with Wells Fargo and Discover. I only make about $1400 monthly after taxes. My monthly payments, starting April, will be about 1,300 SOLELY to my student loans. This does not include my living expenses. Starting April, I will not be able to financially stay a float. I have literally done everything I can to minimize monthly payments. I have two jobs, the joint on my student loans paid off my car for me and pays my car insurance which is doing way more then even she can afford, I am moving in April from a place with my roommate to sharing a room with my boyfriend at his parents house to save on rent and I have downsized on my other expenses. I have reached out to debt relief programs and they say they can not do anything for me because I do not have government loans. I do not have a house to pull a loan off of either. I was told I may be able to get some of it settled and I need help getting this started if it is possible. Please, help!
Private student loans are based on the promissory notes. Read the promissory notes you signed to determine the nature of your obligations. Its unlikely that the agreements contain any language about your income, expenses or debt-to-income ratio. Unfortunately, private lenders are not obligated to give you a reduced payment or "settlement" that is based on your current income and expenses.
You can first try communicating with the lenders or loan servicers. Ask if they will grant you a period or forbearance based on current financial hardship. Be prepared to provide proof of income and tax records. Ask if the loans can be refinanced to result in a lower payment (which may have a higher interest rate and/or lead to a much higher amount of interest over the life of the loan.)
If you are not successful in efforts to work with the lenders or loan servicers, and cannot refinance the loans, you may wind up defaulting on the loans. Millions of people are in your shoes, and I'm sorry to say, there is no magic solution for this problem, as a result of our current bankruptcy laws. If you are sued, and are able to litigate the lawsuit, that may result in a settlement that is less than the amount of principal that you now owe.
This answer is for general information purposes only and is not legal advice. No attorney-client relationship is intended or formed by the posting of this answer. Law Office of Lisa J. Espada * San Francisco, CA *
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