A guide to getting out a student loan from collections

It is unfortunate that to get a higher education, we have to pay so much money. Almost all students in the world are under massive student debts, which they continue to pay for a long time. Since it is a huge amount, you cannot pay it in full. But instead, you have to pay a specific amount every month.

Unfortunately, if you default on that payment, and it's been over 300 days, your account goes to collection. It means that the creditor has partnered up with a collection agency in Washington DC to recover the money. Now, it’s the job of the collector to take immediate and full payment from you.

The situation sounds and looks dire, and it is, to some extent. But you can bounce back and get your loan out from collections.

Here are some ways to do that.

1. Confirm that the debt is yours

The first step towards getting your debt out of the collection is to confirm that it belongs to you. A lot of times, it happens that the service provider sends out your account to the collection by mistake. Or it could be possible that someone else took a loan and their names match yours, so the confusion or so on. If you don’t think it is your account and that you still have time to pay the debt, then do not move forward unless you confirm it with the collectors.

A collector will send you all the details about the debt. If you find that the details match yours, pay it. If not, then you have to dispute the debt with the provider and all the credit agencies that your state/country has.

2. Try settling the debt

Once you are sure that the debt is yours, you can talk to the creditor/collector to settle it. If you default on federal/private student loans, settling the debt is a great way to get out of it.

In this, you have the freedom to discuss your options with the collector or the creditor. You can ask for a settlement. It means that you will pay the full amount either in lump-sum if they agree to take a less amount. In this scenario, having enough cash in hands is imperative.

3. Rehabilitation

Loan rehabilitation means that you will be paying nine consecutive payments without fail. After this, the education body will adjust the monthly payments to our income.

This option is available to you only if you have a federal loan.

Another thing that you can do is consolidate your debt. In this, you get to pay a specific amount for three months, and after that, you get back to your monthly plan. It is an easy way to pay the debt as the amount that you have to pay is something that you can decide on.

4. Pay the debt

It is not impossible, especially if you defaulted when you didn’t have much to pay. Ask for loans from friends or family. Or try to cut back on your budget and increase your savings to pay the debt. You can take up a side hustle that pays well, like freelancing content writing or babysitting, or anything that fits into your schedule.

Don’t panic! Keep a level head and work with the collectors and creditors to reach a mutual solution.