Legal Question in Credit and Debt Law in California

Private Student Loan Default Negotiation

I have private student loan in default and threatened to go to litigation. I am unemployed, looking for job, but can't afford any payments at this time. I found an organization online that helps borrowers like me negotiate a repayment plan with collections agency to keep out of court. I borrowed money from friend to pay them. They check fine with Better Business Bureau. My question is this: Did I make the right choice to pay this ''loan relief'' organization? I want to be weary of getting in even more trouble financially. When they asked me for my federal aid pin #, I got a little freaked out. But they said they need all of this personal finance info to proceed in talks with collections agency.

Should I find a local lawyer instead or is this specialized company a reasonable way to go? I have one day to cancel this agreement with negotiator.


Asked on 2/07/08, 4:48 pm

2 Answers from Attorneys
Linda Klinger Klinger Law Center

Re: Private Student Loan Default Negotiation

The first question I would ask you is have you tried arranging a payment plan with the lender directly already? If not, I would try that first. Then, I would say go with your gut. It couldn't hurt to contact a local attorney to see if they can get a better resolution for you or if they have familiarity with the debt relief company you are going with. One thing to remember, debt relief companies are not regulated and attorneys are, so if you are uncomfortable, going with an attorney may give you a greater comfort level.

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Answered on 2/07/08, 5:05 pm
Robert F. Cohen Law Office of Robert F. Cohen

Re: Private Student Loan Default Negotiation

I have heard horror stories about some debt relief agencies taking money and never paying it out. And, especially since they're often out of state, it's too costly to even litigate against them . . . especially since you're probably in difficult financial shape, anyway. I agree with Ms. Klinger that it might be worth talking to a regulated attorney, first. If you've given out your PIN number, change it.

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Answered on 2/07/08, 8:03 pm


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