May 17, 2022

College

Its all about the school

What Happens After You Pay Off A Student Loan Settlement?

12 min read

Three things happen after you pay off a student loan settlement:

– your credit report will be updated to show you paid for less than owed
– you’ll get a clearance letter
– you’ll get a 1099-c Cancellation of Debt Notice

The late payments won’t be removed from your credit report. You typically can’t negotiate a pay for deletion with student loan debt.

I suggest working with a credit repair professional after you make your final settlement payment. That professional may be able to get the negative information removed from your credit report.

The clearance letter should arrive a few weeks after you make your final payment. Getting the letter isn’t necessary. But it’s more evidence that you paid the settlement.

The Cancellation of Debt Notice is a letter from the IRS saying the difference between your loan balance and settlement will be treated as taxable income.

Speak with a tax professional to see if you can have that cancelled debt excluded from your income.

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Need help negotiating a student loan settlement? Schedule a free 10-minute phone call with me: https://www.tateesq.com/free-talk

Source: #1 Student Loan Lawyer | Tate Law

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