He is picking himself up in general and well done to him for doing so, what that also means is it is a good time to start dealing with this decisively. The outcome he wants is probably an achievable repayment schedule. The first thing to do, is to sit down together and plan what it is you can achieve. Thus fortified with a plan and your support he needs to go in and talk to them. Threats are just that .they have had the desired effect, they have prompted a reaction. Now is the time to start demonstrating that the problem can be dealt with without resorting to court. There is no reason to hide from it. We are always harder on ourselves than anyone else will be, he may find that a meeting will not just help regularise his debt situation, it means he is taking back control of a problem that has been hanging over his head for ages, it is empowering to act, it disenfranchises us to sit back and let the world do it to us.
The arrears do make a big difference if they are not counted in the outstanding balance but it isn't an insurmountable difference. He needs time to address this and it will take time to pay down but once he has started managing it, the positive feedback will be beneficial.
As I've already said. The best approach is to sit together with him and plan what ye can do, what ye can afford and what ye would like to achieve. Write it down. Then, with your support perhaps, he contacts the CU and sets up a meeting to discuss the loan and the arrears. He sets out what ye have discussed and attempts to negotiate with them. After each meeting, document what was discussed. File it and keep it, that way if the worst every comes to the worst, you can always demonstrate to a judge exactly what you did to resolve this. Hopefully it won't come to that and it will be easier than he anticipates, however undoubtedly, he'll come up against blocks along the way.