Medical Bill Forgiveness: Ways to Get Out of Medical Debt

Nicolas Cesare  | 

When you default on your federal student loans, you are often able to use student loan rehabilitation to get out of default. This is because federal student loans all share certain terms, student loan rehab being one of them. However, what happens if you default on your private student loans?

Private lenders can arrange their own terms for each loan, creating unique situations when borrowers default. To understand your options for recovering from private student loan default, first, you must understand how private student loans work, and what can happen to your loans when you default.

What Happens When You Default on Private Student Loans?

Your private student loans go into default when you miss a certain number of monthly payments on your debt. For most federal loans, this happens about 270 days after your last missed payment. However, if you have private student loans, make sure to check the terms of your individual loans to learn more about your specific timeline.

If you haven’t paid anything over the period of time laid out in your loan terms, then your loans will go into default. When this happens, your entire student loan balance becomes due. This is not because your lender expects that you’ll suddenly have all that money. Instead, this is to make a point that you are responsible for the terms you agreed to. Your options for gradual repayment over time will disappear when your loans go into default.

A record of your default will also end up on your credit report, which can severely damage your credit score and make it more difficult to get loans of any kind in the future.

How to Get Your Private Student Loans Out of Default

If you don’t get your private loans out of default quickly, then your loan provider might sue for wage garnishment or send a collections agency after you. Being proactive can mean the difference between financial recovery and financial ruin. Below are some ways you can recover from private student loan default.

Private Student Loan Rehabilitation

Student loan rehabilitation — or student loan rehab — is a powerful tool that lets you get your loans out of default and get any record of your default scrubbed from your credit history. However, one of the cons of student loan rehab is that it’s rare for private lenders to offer it.

Before you try anything else, find out if your lender offers student loan rehab for your defaulted loans. If they do, you’ll probably be expected to meet a series of on-time payments. Once you do, your private student loans will be taken out of default and you can resume your usual financial life. However, if your lender doesn’t offer student loan rehab, then you should start looking for other options to get out of student loan default.

Consolidate Your Private Student Loans

One such option for recovering from loan default might be to consolidate your private student loans into a single loan that you can afford to make payments on. As with student loan rehab, the exact terms of your consolidation will depend on what your lender offers. However, you can probably expect that you will need at least one non-defaulted loan that you’re in good terms with. When you consolidate, you will be lumping your defaulted loan in with the loan that is in good standing..

Pay Off Your Loans in Full

In principle, it’s possible to pay off your private student loans in full to get them out of default. However, taking this option requires that you have the cash on hand to cover the full amount of your debt. If you don’t have this kind of money lying around, you can try to ask your friends or family for a loan to help you get out of default.

Negotiate a Settlement on Your Private Student Loans

Similar to how you can settle your credit card debt, it’s possible to negotiate with your private student loan provider to find a settlement that works for all parties involved.

When you’re negotiating a settlement, remember that the lender is primarily interested in getting their money back. So even if they can’t get the full amount, they can be willing to accept smaller lump payments to recoup their losses. Take the time to talk with your lender to find an amount that they will accept and that you are able to pay.

Repair Your Credit

Unless you were able to do student loan rehab and remove your default from your credit history, then your credit score is definitely going to be in bad shape after you get out of default. It’s imperative that you repair your credit, or else your student loan default could haunt your financial records for years to come.

Private student loan default can put you in a difficult situation. Stricter terms on private student loans make default more likely, but private lenders aren’t always willing to offer the same tools for getting out of default that come with federal student loans. Talk with your lender to find out what kind of student loan default solutions they offer and then work on your own to get your credit repaired after student loan default.


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Nick Cesare is a writer from Boise, ID. In his free time he enjoys rock climbing and making avocado toast.