“How can I avoid a future of terrible credit and being buried even deeper?”
I’m in a lot of trouble with my student loans, and I don’t know where to start. The backstory: Last year, I got laid off from my job at a nonprofit in New York and and moved back in with my mom in Arizona. I wasn’t in the best place, mentally, and I missed a couple of loan payments. Once I fell behind, I felt even worse, so I stopped opening them altogether. I owe about $25,000 last time I checked, which was around February.
Well, technically, you can — but you will run the heavy and potentially more expensive risk of being sued by your creditors. As you mentioned, private student loans are subject to a statute of limitations, which means that if you don’t pay anything for a certain period of time , your creditors lose the right to sue you for what you owe.
If it’s been over 120 days since you last paid a bill, your private loan has likely been sold to a collection agency . You will hate these people, but you will have to engage with them anyway. Here are some useful templates for “action letters” to send to collectors when you’re in default. Your objective is to negotiate a new payment plan or debt settlement that you can stick to.
Speaking of your federal student loans: there’s nowhere to hide here. The government wants its money back, end of story. There is no statute of limitations. If you don’t pay, they have the right to garnish your wages or withhold your tax refunds.
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