So You’re Delinquent On Your Student Loan… Now What?
If you’ve missed a student loan payment, you might be considered to be in “delinquent” status. While this might sound like terrible news, there are ways you can recover.
If you’ve become delinquent and you have federal loans, then you’re in luck because you may have up to 9 months before it gets reported to the 3 credit bureaus (Equifax, Experian, and TransUnion). If you have private loans and you go delinquent, then be sure to take steps to recover ASAP; most are reported when they are 60-90 days past due.
In either case, if you let your delinquency ride out, then it could potentially remain on your credit report for up to 7 years, negatively affecting your financial future.
Don’t fret, we’ve come up with some steps to help you recover after you’ve become delinquent.
Get on the Phone
Once you are delinquent on a student or personal loan, your lender will most likely try to get in touch with you within the first 15 days of a missed payment. Use this to your advantage! If they haven’t called you, then call them. You want to be on your lender’s “good side.” Explain to them the situation and what they recommend so you don’t miss another payment. When you speak to your lender, consider also asking if your delinquency has caused any late charges or fees on your account. If this happens, you might want to cut back on some of your non-essential expenses to help you pay this down.
You might want to consider signing up for automated payments to ensure you stay on track with your loans going forward. Depending on the lender, if you choose this option, you might also qualify for a lower interest rate. You should still plan to check your loans each month to make sure they are always coming out of your account and to make sure that you have enough money in your account to make the payment. Consider setting a reminder on your phone to help you remember.
Make a Payment or Two
You want to do your best to pay off your outstanding monthly payment and even add a few bucks to it. That way, your payment will go towards the interest and principal payment. This will help you get back on track with your student loans while also showing your lender that you are doing everything you can to stay on track and avoid default.
Weigh Your Options
Take a step back and understand the real reason as to why you missed your monthly payment and became delinquent in the first place. You might have missed it because you simply forgot or you may have missed it because there weren’t enough funds in your account. If this is the case, you might want to speak with your lender and explore alternative repayment options. If you aren’t in too deep with your delinquency, then you might be able to qualify for deferment or forbearance. Speak to a representative as to what the best option is to help guarantee your credit score won’t be damaged.
If you find yourself still struggling with repayment, then you might want to seek out a debt attorney to help you better understand your options. For example, if you are struggling to meet your monthly payments, you might be able to qualify for income-based repayment loans.
Becoming delinquent on your loan isn’t always the worst case scenario. There are ways you can recover if you take action quickly. The most important thing is to avoid defaulting on your loans. Speak to your lender or loan servicer and figure out the best way to make bring your loans current and make your payments manageable. If this doesn’t work, seek out student loan debt help from a debt resolution firm.