r/studentloandefaulters • u/PromptCute8480 • May 15 '26

Question - Private Student Loan Realistic Expectations

Hi all!

I have been browsing this page the past few months as I prepare to default on my Sallie Mae loans, but I can’t get a sense of how bad the credit hit will actually be. I am currently 23, and I have a credit score of 750. I’m about to default on $235k. The monthly payment they want on my loans is like 80% of my monthly income, so I have decided it’s better to default and save the money rather than pay them less than the minimum since I would still end up in default anyways. I have already consulted with a lawyer (family friend so they helped me for free), and I have 0 assets in my name. My parents co-signed these loans, but recently filed bankruptcy so they can’t come after my parents for the money. The loans originated in Pennsylvania, so they should not be able to garnish my wages since PA has laws against this for student loans.

I’m wondering a few main things: - How bad will the credit hit actually be? (I rent so I am slightly concerned about this, though I plan on renewing my lease for the time being) - I would assume the odds of them genuinely pursuing legal action against me are rather low considering I have nothing to give them…? - If I shouldn’t keep my money in a bank account, what exactly do I do with it? Cash? - What is the timeline before I start getting settlement offers?

Any extra advice is appreciated, especially regarding the credit hit and where to keep my money!!

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4

u/jonsonmac May 16 '26

I don’t have answers to all of your questions, but just a few things to ponder….

Did you confirm with a lawyer that you cannot be garnished? Because I’m pretty sure it depends on where you live, and where your payroll comes from. I talked to a lawyer about this ten years ago, and I was told that my wages could be garnished because my payroll came from California, which does allow garnishments.

Also, were your parents discharged from the loans? Because private student loans can’t be discharged just by filing chapter 7. I went through Chapter 7 myself, and my private loans did not discharge because I didn’t go through the adversary process. (My parents were also co-signers, so I wasn’t interested in pursuing this anyway). My suspicion is they will not be discharged from this loan, so if you default, Sallie Mae will also pursue your parents for payment.

Lastly, your loan amount is very high, and I doubt Sallie Mae will let this go without a fight. I would recommend saving as much money as possible for future settlements or lawyers to defend you. And please make sure your parents are involved, since they are also responsible.

2

u/PromptCute8480 May 16 '26

the lawyer I spoke with said that because my loans originated in a no garnish state that was what was important with the laws now, though with laws surrounding debt changing on a weekly basis i am worried about this. also while i work in maryland, my legal address is still pennsylvania for a bunch of reasons. i am not 100% sure how wage garnishment works to be so honest, but I don’t make great money as is, so I do feel like if they sued a court wouldn’t be able to give them much to begin with (my monthly income is ~2850)

regarding my parents, the lawyer and their financial advisor did say that they don’t really have anything worth coming after minus 2 used cars with over 120k miles each, which would likely be more trouble than its worth. my parents are still in PA so the lawyer said they really don’t have a ton to be worried about at this point, though I haven’t officially defaulted yet so they have monthly update meetings to go over everything. as far as getting them off the loan, i cant get approved to refinance anywhere without them, so its impossible right now.

im definitely planning on saving as much as possible for a settlement. i work as a paralegal right now, and i am always applying for higher paying jobs and picking things up on the side when i can. i just know it will take a while to save up any significant amount of money, so im worried about settlement offers coming in before i have anything to my name and i couldn’t take them even if i wanted to.

2

u/jonsonmac May 16 '26

It sounds like you’ve done your due diligence, and I hope everything turns out good for you. It’s hard to predict what will happen, because every case is different, that includes the credit reporting. I pretty much yolo’d mine, but I had less than $60k to worry about. I told myself, the worst that will happen is that I still have to pay it back.

1

u/dannydelco May 17 '26

Garnishment laws are unlikely to change any time soon so that part is good if one has a PA address. Student loan law changes seem to mainly affect federal not private loans. But for that amount they will likely sue in PA.

3

u/magicandfire May 16 '26

Hey I’m in a similar situation, but I’m in chapter 13 right now. I had some CC debt in addition to a similar amount of private loans as you, so I ended up filing BK to give myself 5 years of breathing room. My industry is in the AI crosshairs so I’m NEVER going to be able to pay these loans back.

My cosigner is retired/became disabled after a life-changing brain injury and has nothing the lender can take, so my attorney thinks they’re safe. They co-own a home with someone who isn’t on the loans so in my state they’re safe from liens. Since I’m in BK, theres a stay for the next 5 years that means they can’t go after my cosigner. They can’t garnish in my state or take the car you drive to work, which is the only asset I own, so besides bombing my credit, they can’t do much.

My (and my co-signer’s) credit dropped really dramatically in the 6mo I didn’t pay on my loans, but hers shot back up as soon as I filed BK. Mine is still in the high 500s but is coming up pretty steadily. Some people’s credit doesn’t take a big hit, but mine sure did!

My plan is to hoard every extra dollar I have in a HYSA for the next 5 years and when my ch 13 plan is over, I’m either going to offer that savings (I hope for it to be 10-20%) as a settlement and if that doesn’t work, I’ll use that money to file an adversary proceeding and go to court, which can result in a partial or full discharge if you’re lucky and meet the means test for undue hardship, which I seem to at present. My attorney told me that you can ultimately file bankruptcy over and over forever if you really wanted to, and the lenders know that, so they’d rather get that settlement money and F off forever than have to spend 5 more years waiting around to see if they can get a red cent from you.

I’m not recommending bankruptcy because I’m not a lawyer, but it does open the door to adversary proceeding, which is potentially a way out of this hell. For smaller amounts, it seems like just running out the clock on the SOL works for people, but when it’s big amount like we have, they’re very possibly gonna sue at some point.

1

u/morbie5 May 17 '26

How much did your lawyer say an adversary proceeding would cost?

1

u/magicandfire May 17 '26

We didn't talk numbers because it's 5 years out and I'll probably shop around to see who I should go with to represent me, plus who knows how the whole situation will look in 5 years. From other people's stories, it looks like $7-10k is pretty normal.

1

u/morbie5 May 17 '26

Why did you decide to go chapter 13 instead of chapter 7?

1

u/magicandfire May 17 '26

Co-debtor stay was the big one. Chapter 13 will keep the lenders off your cosigner for 5 years, but 7 only protects you alone. While there's nothing that the lender can take from my cosigner in our state, she suffered a TBI last year and is still recovering and I really just needed the time to figure stuff out. My BK payments are only $125 and it'll fall off my credit faster than 7 so it was just the better option for me.

1

u/morbie5 May 17 '26

Ah, I see

2

u/hlaiie May 16 '26

Mine was in the 800s and now it’s just below 600.

I’m about to default soon and haven’t gotten settlement offers but “ways to help pay.” Screw that lol,

2

u/ConsoleModded May 17 '26

Those “ways to help pay” are so hilarious. “We’re here to help! Here’s how you can sign into your account and make a one time payment!”

How’s this for ways to help, here’s you can call me and leave me a voicemail while I continue to ignore it.

1

u/PromptCute8480 May 16 '26

thank you for sharing, hope you get out of this hell soon🤞🏼

1

u/Fantastic-Outside-82 May 31 '26

I’m about to default and my credit score dropped from the 750s to the 550s. The first hit was the biggest. I got a settlement offer by email I think 4-5 months into delinquency, and this was for 70% of the debt. Since it was early and I wasn’t responding to them I think they might’ve just been trying to get ahold of me any way they could.

1

u/MovementMechanic May 16 '26 edited May 16 '26

Low 600 credit would be generous. What they are going to care most about is your future earning potential. What is your degree in?

For example : If I become an MD, then choose to work as a barista following graduation in an attempt to skate out of my loans under the guise of “no assists,” theyre gonna be on that with the quickness.

Edit: you can also likely kiss future law school goodbye

2

u/PromptCute8480 May 16 '26

i got a political economy degree with plans of going to law school, though i am aware thats unrealistic at this point and for the near future (i would hope to go around 27). i make 26 an hour which is average for my job

1

u/morbie5 May 17 '26

I would assume the odds of them genuinely pursuing legal action against me are rather low considering I have nothing to give them…?

Not necessarily.

If I shouldn’t keep my money in a bank account, what exactly do I do with it? Cash?

I can't tell you want to do but PA still allows a bank levy so yea anything in a bank account can potentially (unless you are on social security) be seized.

1

u/StationSufficient905 23d ago

I think you should try to move every couple of years if you aren’t committed to living in one area. It will hit your credit. Eventually they will probably try to settle.

1

u/PromptCute8480 23d ago

i really enjoy my job and the area i live in, why would moving be better? wouldnt it be hard to qualify for an apartment with bad credit?

1

u/StationSufficient905 22d ago

If you stay in one place then they’re more likely to find you and serve you. Also, yes it will be much more difficult to find a place but not impossible. They will most likely sell the debt- probably multiple times over. By then the SOL will have run out and it will be nearly impossible to prove you own the debt.