Student Debt Relief

Chances are that when you originally took out your student loan to improve your education, you never thought paying of your Student Debt would be a concern.

After all; the whole purpose of this type of Student Debt, is to put yourself in a position to increase your income. Unfortunately, while our intentions are perfectly clear at the time, many things change during the years it takes to get an updated degree.

Student Loan Modification Explanation & Strategies For Loss Mitigation

A loan workout or Student Loan Modification is an agreement that is negotiated with your current lender that changes the terms of your current loan. Lenders are willing to negotiate when borrowers are facing financial difficulties and can't obtain other financing alternatives.

You must show the lender why it would be in the lender's best interest to agree to a workout arrangement. If convinced, a lender may be willing to reduce the loan interest rate, reduce monthly payment amounts or change other loan terms.

A Student Loan Modification generally occurs where the parties to a problem loan mutually agree to workout the problem by creating new and better loan terms. The hope is that the new loan will enable to the borrower to meet their obligations.

When applying for a Student Loan Modification, make a game plan on how exactly you are going to approach them. These people are trained in minimizing loss for their company and they get paid to by getting the most amount of money out of you as possible or declare that your case is un workable and take legal action on you.

That is how they mitigate loss. If you understand this, then you'll know that you have to approach them and all conversations very carefully. Everything can and will be used against you.

Items You Will Need When Applying For a Student Loan Modification
www.studentloansmodification.info

Document income and expenses. Keep all correspondence (even the envelopes) Before negotiating a deal, gather all the information you need, starting with any correspondence from your lender. That includes anything that you have unopened from the lender.

Don't throw away envelopes from the servicer -- postmarks sometimes can make the difference between being eligible or ineligible for relief.

Collect everything that relates to income and expenses. Find your last four pay stubs. They want to see at least one month of income. If your income is very sporadic, the support your story by showing how you're getting paid so we can calculate an average over time.

Gather at least three years worth of W2s and tax returns, plus three to six months of bank statements. Find all the mortgage paperwork and add that to the file.

Pull together all bills, paid or not, from the times you were falling behind on the house payments until now. Include utilities, auto payments, credit cards, student loans, child support, medical bills. Find the winter and summer heating and cooling bills.

You need to also include everything that documents why you fell behind. An employer's notification of reduced hours or a layoff, an invoice for an auto repair or a furnace replacement, a shutoff notice from a utility.

What to Do When You Call Your Lender:

Your lender has two platoons of employees who talk with delinquent borrowers. The first is the collections department, which consists of people who try to pry money out of you and get you current on the payments. The second group consists of the loss mitigation specialists.

These departments go by different names, depending on the servicer, including foreclosure prevention, loan resolution and delinquency customer service.

We'll use the most common name for the department: loss mitigation, or loss mit. It can be difficult to get through to the loss mitigation department if collection agents are discouraged from transferring calls. This is one of the benefits of having a helper, such as an attorney or a housing counselor.

The first will intimidate bill collectors and the second might have contacts within the loss mit department.

The trick with any bank and getting a work out done is learning to navigate their phone system so as to increase your chances of getting a live person.

Over the years Ive learned some tricks that help, sometimes you hear options that you know will lead to a person like when it says "to speak to a representative press ___" but sometimes they don't give you these options (cricket wireless is the worst at this) so you have to think, what options WOULD get a live person.

For example often anything that involves new clients signing up will get a live representative...cause they always want new business. You have to be a little savvy though, you cant just tell the sales guy you called them so you could get a warm body to answer the phone!

Once you get a live person, you want to be working your way up to a decision maker. This is sometimes harder to do for a homeowner than a 3rd party. Often with the homeowner they get stonewalled at the first level, and sadly the first tier in Loss Mitigation is really a glorified collections department.

They are paid hourly employee's who have very little if not zero motivation to go the extra mile and help you get some needed comfort and relief while resolving your problem. Often they just compound the problem by being rude and demanding, telling people things like "just pay your bills". So its essential that you get beyond these people and to a specialist.

Sometimes to get to this point you have to put up with the hourly employee's through a process of filling out their forms and information. Providing them with items such as pay stubs, tax returns and a whole host of financial information. Once everything is provided, then some lenders will assign the file to someone higher up in the loss mitigation department.

The MOST crucial element to this whole process is your Budget and if you have dome your due dillegence, you'll be ready . They will ask you for a detailed list of your monthly expenses. If its too tight, you may not get approved, if you have too much extra income you are going to have an outrageous payment plan. Don't agree to it!

The 2nd MOST important thing you can do is DO NOT SPEND YOUR STUDENT LOAN PAYMENTS. Often people stop making their payment because they are falling behind on other bills, or they cant quite make the whole house payment.

Over the years more often than not, the people I met with still have an income coming in each month, they just cant meet all their obligations, so while the house is falling behind they take advantage of the fact that they aren't paying their Student Debt in order to catch up on other debts. THIS IS NOT WISE AT ALL.

Sock away as much of that money each month as you can. Its crucial, heres why;

If you don't pay your mortgage for 3-4 months and your lender decides to negotiate a repaymenyt plan or a Student Loan Modification, then they will want what is called "good faith" money for you to come to the table with. Typically this is from 30-75% and sometimes 100% of what you owe in delinquent fees and attorney fees.

Often I speak with students who spend all their money and have nothing to work with. If that is the case, then don't expect them to work with you or you better have a REAAAALLLY god explanation and proof as to why you have no money to bring to the table.

We all know life throws curve balls at us, its the nature of the game, you'd better just expect it, cause its coming in one form or another.

Whether it be a car breaking down, an illness, injury or death. An accident in a car, you just don't ever know and its ALWAYS a good idea to have a rainy day fund.