Consolidating defaulted private loan

The situation: I took out a private student loan from Wells Fargo several years ago with an interest rate of 12%.Once I graduated I had trouble affording to pay it back, partly because of the insane interest rate, and so eventually I defaulted on the loan, which I thought wasn’t half bad since I was told that actually stops interest from continuing to accrue (though I understand this has a very negative effect on my credit).Shortly after defaulting Wells Fargo threatened that they would file a law suit if I didn’t settle or otherwise make a payment arrangement, and so I agreed to an arrangement since I didn’t have cash for a lump sum settlement.

I’ve taken care of all my outstanding medical bills and paid off all my credit cards.

The only outstanding loans I have now are my car loan which is about half paid off now and my student loans (mix of both private and Fed Loans) – that still includes this defaulted loan from Wells Fargo (all my other student loans are in good standing).

I have now been ignoring the Wells Fargo student loan for about a year…

just last month I got snail mail from a law firm saying that they represent Wells Fargo and were confirming my debt, and then then just last week I got another lettering from the same firm saying that they are attempting to resolve the debt and they are going to take legal actions against me to collect the debt if I do not respond and resolve (I assumes that means a law suit followed by garnishments).

I had made payments on the arrangement for little over half a year when I got a law suit from Wells Fargo for an old credit card that I had stopped making payments on several years prior (after getting laid off from a job), and soon after started to get my wages garnished (25% of my income on wage garnishments).

Around the same time I also had a medical emergency and was hospitalized (and got stuck paying several thousands of dollars in medical bills that my health insurance company refused to pay for).

As a result I stopped making payments per the arrangement I had made with Wells Fargo for my private student loan.

Very recently I got a much better paying job (I now make almost 0K/year).

I haven’t contacted Wells Fargo yet and want to get some advice before I proceed.

I spoke to a family friend who is a lawyer, but does not specialize in anything related to finance.

He had suggested I send a physical letter to Wells Fargo making a low ball offer of around K to K to settle the loan, but from what I’ve read online I am not too sure that is the best course of action.


  1. It was like back when texts were rationed, and when I lacked anxiety about viewing "read" receipts.

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