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 Post subject: Letter of Compromise
PostPosted: Mon Mar 15, 2010 9:09 am 
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Anyone ever written one? I have been advised to write a letter of compromise to the US Department of Education regarding my $60,000 in student loans. The advisor suggested: "As it relates to the loan, I would suggest that you send them a proposal for them to forgive 75% of the loan and provide a long term payment plan for the balance."

I've done some research and from what I've found, everyone is saying there is no way in Hades that they will accept this and that student loans are NEVER negotiated on successfully unlike some other forms of debt.

Can anyone offer any insight on this?

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PostPosted: Mon Mar 15, 2010 9:16 am 
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Sorry LK, this is one area I've no experience in. My understanding is much like yours.

I understand the reason why defaulting on Student Loans is so hard is because the students were being told that the first thing you do when you get out of college is declare bankruptcy (which was mostly true, no assets and lots of debt), canceling all your student loans and other debt. Lots of them followed this path, and today's students no longer have that option.

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PostPosted: Mon Mar 15, 2010 8:39 pm 
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Damn, I never got that advice!

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PostPosted: Mon Mar 15, 2010 8:41 pm 
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You weren't old enough, Jasmy and I and the rest of us born mid-50s and earlier are about the right age to have benefited from it. That loophole closed up late 70s/early 80s I think.

If I had a time machine to take me back to when I made stupid decisions like dropping out of college . . .

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PostPosted: Mon Mar 15, 2010 8:48 pm 
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I've always wondered what would happen to my student load debt if I died. I mean, at the moment, I own absolutely nothing and I have about $50,000 in student loan debt which I defaulted on like, 4 years ago. If I died, that debt wouldn't go to my parents, would it?

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PostPosted: Mon Mar 15, 2010 8:51 pm 
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Got nothin', and I won't pretend at expertise.

Gotta' say, however, that I am curious about the laws and facts surrounding this.

I also have a variety of philosophical questions surrounding the query.

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PostPosted: Mon Mar 15, 2010 9:46 pm 
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Raltar wrote:
I've always wondered what would happen to my student load debt if I died. I mean, at the moment, I own absolutely nothing and I have about $50,000 in student loan debt which I defaulted on like, 4 years ago. If I died, that debt wouldn't go to my parents, would it?

From what I have read, the worst that can happen is your estate would be attached first before any inheritance would be distributed.

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PostPosted: Mon Mar 15, 2010 11:51 pm 
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Your government loans will not survive your death. This means that your estate will not have to pay back your student loans. Also, the death of both parents with a PLUS loan (assuming both took out the loan) is grounds for the “death discharge.” The death of only one of the two obligated parents does not cancel a PLUS loan. A parent can also discharge a PLUS loan if the student for whom the parent received the loan dies.

Discharge because of the borrower’s death (or, in the case of PLUS Loans, the death of the student for whom the parent borrowed) is based on an original or certified copy of the death certificate submitted to the school (for a Federal Perkins Loan) or to the holder of the loan (for a FFEL or Direct Stafford Loan).

WARNING FOR PRIVATE LOAN BORROWERS: There is no administrative discharge for private student loans when the borrower dies. Private loan debts will be handled the same way as other debts. That means that they will be part of the borrower’s estate. This estate settlement process (also called probate) varies by state.

I hope this answers the question about what happens if you die.

I don't look forward to my loans. I'm at about $16k right now, with a little bit of personal debt outside of the student loans. Fortunately, my fiancee has zero debt and is almost done with school as well. So between the two of us, we'll have like $20kish.

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PostPosted: Tue Mar 16, 2010 2:42 am 
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I'll be debt free within 5 years(assuming I can find a job making at least $20k a year). Sure, my credit will be absolute dogshit, but I'll be without debt. The only thing is, I'll have to live with my parents until then. Which they have no problem with. Nor do I. It is nice to know that, should something happen to me, my parents wouldn't be stuck with my debt.

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