Defaulting on private student loans, in contrast to federal loans, can happen as soon as one or two payments are late.
If you have a private student loan, you should review your loan agreement to find out when the lender will declare default. Not paying a bill isn’t the only reason someone might go into default sometimes.
Pay strict attention to your loan arrangement, as you might be considered in default if you:
- Miss a payment,
- Breach other terms of the loan agreement,
- Declare bankruptcy
- Even if you are current on payments for this loan, you are still in default on other loans you have with the lender.
- Provide the lender with inaccurate information when applying for or repaying the loan.
Private student loan lenders have several options when you fail to make payments: they can try to collect from you directly, hire a collection agency, or even write off your debt and sell it to someone else.
Even if the debt has been written off or sold to another collection agency, you are still responsible for paying it.
Any lender or collection agency worth its salt will sue you if they can’t get their money. To learn more, visit our page about court decisions and lawsuits.
Debt collection companies and lenders are not beyond violating your rights. Check out our article on issues with collecting agencies for some pointers and advice.
Leaving Default Behind
The procedure for resolving a default on private student loans differs significantly from that of federal loans. Private student loan providers, in contrast to the federal government, are not obligated to provide “get out of default” schemes.
You should inquire with your lender to see whether they provide such services. Find out whether they have a program like this and if they would fix your credit when you finish by asking about the prerequisites.
Following 120 days of nonpayment, the majority of private lenders will write off the loan. Depending on the lender, the time duration can be different.
Most private student loan providers will not assist you in getting out of default once your loan has been charged off.