Should I Reach Out to Navient Because of Covid-19?

Question:

Dear Steve,

Been paying thousands Of dollars to a 7000 loan taken out in 1995. Now I owe over 40k because of deferment and interest.

I had been paying up until last year when I hit hard times changing jobs. Finally I get back on my feet again paying my bills including 400 IRS payment per month and 1130 in rent per month. I want to start paying my Student loans again but I was furloughed until May 1st.

Should I reach out to Navient and tell them what happened to me with work ( not working because we’re closed due to covid 19).

Or should I wait until I get back to work? Navient is billing me $450 per month since October but I can’t afford to pay that. What should I do? Any advice you can help me with? I would really appreciate it

Tough Choices

Answer:

Dear Tough Choices,

I know these certainly feel like tough choices. I’m. not living your life and have the luxury of being able to see the situation from a different perspective.

Contacting your creditors and explaining your desperate situation in hopes they can help is something I would not try to talk you out of doing. They are your creditor and you have a contractual relationship with them.

One of my favorite TV shows is The First 48. The show follows homicide detectives from the murder through the important initial days of a case. One of the big lessons learned from watching the show is that people brought in should call a lawyer and get legal advice to get a knowledgeable advocate for them if they are innocent.

Dealing with your creditors is a similar situation. When called into an interview, people often ask the police if they need an attorney. The cops almost always say no. But that’s because that is what is best for the investigating officer.

So it is kind of the same situation when you call your creditor. In this case Navient. I’m assuming these are private student loans.

Not having an advocate represent your interests is going to leave you at a disadvantage most of the time. You are emotionally involved and have no experience in the situation. You have no idea if the creditor or collector is telling you the whole story.

So what can you do? I’m a huge fan of the most talented debt coaches I know: Damon Day and Michael Bovee. They are friends I have known for years and talk to often. They are able to look at your situation and give you a professional opinion of the path to follow. They are not widget salespeople just trying to sell you a company solution like the typical debt relief representative is trying to do.

People typically need a little of this and a little of that to have a custom solution to their unique problem.

It might just be that given the uncertain economic times right now, an approach is to default on everything and pick up the pieces when things start to turn around is not the craziest idea if it is done with a plan in place. In the meantime, you can try to hold onto as much money as possible to ride through the financial crisis.

Before you can plan a journey you need directions. And this is what you need right now. Given the fact you are out of work right now, it might be an opportunity to renegotiate that IRS payment. But, my bigger issue is if this tax debt is more than three years old. If so, when things turn around it might be possible to discharge the old IRS debt in consumer bankruptcy. You might want to read this.

I think there is going to be a big surge in bankruptcy following this Covid-19 mess. And the worst thing to do right now with all the economic uncertainty is not to rush to make any payment promises or more commitments. Let’s see where this storm dumps you out first and then deal with things.

I would strongly suggest contacting Damon Day now and scheduling a phone consultation to discuss a personal plan forward. It will be a great investment in time and not leave you alone in the police interview room.

Damon and I talk often and if you decide to call Damon, just ask him to discuss your situation with me and I’ll pitch in my opinion as well to help you out.

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Big Hug!


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