How to Get Rid of a Student Loan Judgment

#1 Student loan lawyer

Updated on December 10, 2022

When a student loan lender gets a judgment against you, the air around you thickens, and your choices become limited. No longer can you claim the statute of limitations has ended or the debt collector didn’t prove it owned the debt or that the balance was correct. The judge’s signed court order strips you of those defenses and crushes your hopes for freedom. From that point forward, your paycheck, bank account, and home could all be seized in a single instant to repay the debt.

Worse still, interest may continue to grow, adding tens of thousands of dollars to the balance.

Ahead, learn three ways to get rid of a student loan judgment.

If you want help getting rid of a student loan judgment and want to see how I can help, book a call with me. I’ll review your loans, hear more about your issue, and come up with a plan that gives you a way out quickly.

Ask the court to set aside the judgment

A lot of student loan judgments exist because the borrower didn’t respond to the lawsuit, not because the debt collector proved the borrower owed the money. Sometimes they got the paperwork and decided not to go to court, and, every so often, they were never served, but the debt collection agency’s lawyer told the court that they were properly served. So the judge granted them a default judgment.

If this happened to you, don’t worry: you may be able to ask the court to set aside the judgment. If granted, the judgment will be lifted, and you’ll have a chance to defend the lawsuit and contest things like the statute of limitations or if they have the right paperwork.

Negotiate a settlement

A judgment is a piece of paper. It doesn’t guarantee the creditor can collect anything from you. They still must discover where you work, bank, and live. After that, they must send a wage garnishment notice to your job, file a levy request with your bank, and register a lien on your property. All of that takes time and money, with no promise that they’ll ever get paid in full.

They’re often willing to accept a settlement as a result. I’ve negotiated several of these deals over the years. In my experience, the settlements are usually for a lump sum equal to 40-60% of the balance due. Occasionally, you can get a deal where you pay the settlement amount over a few months, but most of the time, they’ll demand the money right away.

If you don’t have that type of money lying around, you may be able to get a new loan that pays off the judgment and puts you back in a payment plan. There’s only one private lender I know of that offers this type of student loan refinancing: Yrefy.

File student loan bankruptcy

The popular belief that student loan debt is untouchable in bankruptcy may lead you to believe that you’re stuck with your educational debt and judgments forever. But that belief is wrong. While it may be difficult, student loans can be discharged sometimes. The process is complicated and involves overcoming a threshold much higher than credit card debt, medical bills, and other consumer debts to wipe the loans out.

Despite those challenges, filing bankruptcy may be your only option to get rid of the student loan judgment. I file a few of these cases across the country every year — usually against National Collegiate Student Loan Trust, Sallie Mae, or SoFi. Typically, one of two things occurs:

We work out a deal that lets my client make monthly payments over several years, usually with 0% interest.
The lender consents to the debt being discharged.

Depending on the facts of your case, you may obtain either outcome. You may also be able to convince a judge you meet the standard to discharge your student loans. Private student loans are often easier to erase in bankruptcy because they don’t offer income-driven repayment plans, deferment, forbearance, and so on. Read more about private student loan bankruptcy.

Speak with a student loan bankruptcy lawyer in your area, or book a call with me.

How long does a student loan judgment last?

A student loan judgment can last up to 20 years, but many states let the creditor renew it before it ends. For example, in Missouri, a judgment for student loan debt will last 10 years from the date the judgment was entered. Before that day comes, the judgment holder can return to court and ask the judge to renew the judgment for another decade.

Related: How Long Are Student Loans?

Does a student loan judgment appear on your credit report?

Student loan judgments no longer show up on your credit report. The three major credit bureaus stopped reporting civil judgments in 2017.

Although the judgment will no longer appear, your defaulted student loans may still be reported, depending on how long it’s been since the loan was charged off.

Can the student loan judgment be forgiven?

The Biden administration recently announced it was canceling up to $20 thousand of federal student loan debt per borrower. Before you get too invested in your debt disappearing, you should know two things.

First, the cancellation only applies to federal loans — not private loans. And it’s likely that the judgment is for a private student loan you borrowed. The U.S. Department of Education rarely sues student loan borrowers. It doesn’t need to because it can garnish your wages, take your tax refund, and seize your Social Security benefits — all without a court order.

Second, the company that owns the judgment likely won’t agree to forgive your loan due to financial hardship, age, disability, and so on. In general, private student loan forgiveness isn’t really a thing. That’s even more true when you’ve missed student loan payments, defaulted, and had a judgment entered against you.

Bottom Line

Once you have a student loan judgment against you, there are few options to get rid of it. I’ve helped dozens of people find a way to tackle their loans, even when there seemed to be no way out. Let me help you. Book a call today.

UP NEXT: Student Loan Forgiveness 2022: Who Qualifies