Has anyone had any success negotiating with a student loan provider for a lump sum payment? My brother recently passed away and I'm the sole heir. No sympathies please as we weren't all that close. Anyway, there's plenty of money in the estate to take care of my wife's student loans but thought I would try to negotiate with the lender to see if we can get the payoff down a bit.
There are two lenders and the total is around $90K (it makes me sick to my stomach that it's that much). Interest rates are around 6.5%.
Originally Posted by tk13:
I'm by no means an expert (welcome to ChiefsPlanet), but from what I understand, doing this will do a lot of damage to her credit score. It's supposedly easier to do with private loans than a federal loan, so it may depend on who you're working with.
I know, with credit cards, you want to maintain some percentage of debt being used as long as it stays under 30% of your total available credit. However, federal student loans are a whole other ball of wax. As someone else stated, they are not subject to discharge under bankruptcy, so there's probably little reason for them to want to lessen the amount you owe them significantly, because they'll lose all of the collectible interest. For this reason, defaulting on these loans is not worth it because it will do nothing but damage your credit rating.
Originally Posted by :
It's also my understanding that if any of your debt is actually forgiven, it becomes taxable income that will ding you next year on your return. But I'd be happy for someone with more tax knowledge than me to correct me on that. Either way I'd make sure to ask someone the tax implications if you actually pulled it off.
If you settle for less than you owe, you will receive a 1099 for the amount that was forgiven that you must claim as income. I'm not a tax expert, but I know this from past experience. [Reply]
Originally Posted by Amnorix:
Sounds like a good plan, except, possibly, for paying down the home mortgage faster. Depending on the rate, that may not be a terribly exciting thing to do. Once you factor in the tax deduction (assuming you're not capped by SALT), the effective cost of a home mortgage at prevailing rates is very low.
I'd be maxing out 401(k) deductions, IRA deductions, etc., before I'd be worrying about paying down the mortgage faster.
The Standard Deduction is now 24,000 for MFJ. It’s unlikely, not impossible though, that mortgage interest will make a material impact on his tax liability.
Originally Posted by luv:
I know, with credit cards, you want to maintain some percentage of debt being used as long as it stays under 30% of your total available credit. However, federal student loans are a whole other ball of wax. As someone else stated, they are not subject to discharge under bankruptcy, so there's probably little reason for them to want to lessen the amount you owe them significantly, because they'll lose all of the collectible interest. For this reason, defaulting on these loans is not worth it because it will do nothing but damage your credit rating.
If you settle for less than you owe, you will receive a 1099 for the amount that was forgiven that you must claim as income. I'm not a tax expert, but I know this from past experience.
It depends on how they structure it. Renegotiation does not necessarily equate to debt forgiveness. [Reply]
What kind of education does a gal get when she spends $100K?
Just a little food for thought...
How does her student loan fare in a divorce in your state??
Were you married/ living with her when she borrowed the $$$$?
Did she borrow more than the cost of the education? Did she borrow money to pay her rent, car, living expenses? Did you live with her, benifit in anyway from the money she borrowed?
Does your wife hold a professional or non professional degree. Will she be making money because she has $100K education or is she an expert in socialist policies, fine arts, or communication technologies?
Depending on how you answer these questions could come to the rational that her student load debt is actually 1/2 yours or possibly none of it. You may actually be able claim her professional degree as a marital asset. [Reply]