citibank student loan back after ch7 discharge

[maddog2112]

Well, it`s been a while since I`ve been on the site, but my ch 7 was discharged in dec 09, after converting from a 13. I thought I had discharged a student loan I had cosigned for my daughter that I had been paying on the 13. The loan was originally from citibank, but went to collections LCS during the 13. I`ve been contacted by LCS to try and collect on the balance which I now realize wasn`t dischargeable. I listed it as a private citibank loan, so my lawyer never asked and I didn`t know it would be a problem. Is it true they cannot report the debt to the credit bureaus due to the bk? If this is true, I would rather wait until I can pay the full amount beginning of next year with tax refund. I talked to the collector today, and told him I just don`t have the money to pay. He started talking payments or a settlement in full minus accrued interest, back to 07. The amount owed is $1200. If they can`t report I`ll wait till early next year to pay in full, If they will offer the same deal. What do you guys think?

[KeithDoxen]

This is actually a useful question --- can student loan companies or future collectors ding your credit report with student loan debt that was "included" in a bankruptcy even though it wasn't discharged? Unfortunately, I don't know the answer. Does anyone else?

[nc73]

Don't be silly of course they can report it. Else no one would pay their student loan after bankruptcy.

[aquavir]

I didn't stop paying my Citibank loan until they stopped automatically taking out the monthly payment after I filed Ch. 7 in Nov of '09. A month after my discharge in Feb '10, DCS (Citibank's collection agency) calls me up and tells me that the loan documents state that a Bankruptcy discharge automatically defaults the loan and Citibank sends it to collections and I owe them the whole thing (~$5500); I was about to step into the car for a 2 week trip with the family and said that I wasn't about to send them a check for $5500. They then offered for me to pay a settlement of like $4300. I said I wasn't going to pay that. They said "Ok, give us $2250 now and then $150 a month until it's paid." I said no and told them that I had to go. Two weeks later, I got back from my trip, read the few letters they had sent me and called them up. I told them that I had other debts to pay (like payroll taxes from my company which failed and caused the bankruptcy) and that the IRS scared me a hell of a lot more than they did. I told them that had never missed a payment and I have no problem paying back the loan, but I will send them $200 a month with no "down payment." The person on the phone "talked to her supervisor" and came back and said "yes." She then informed me that I could call at any time if I wanted to be offered another settlement (or pay the full amount if I wanted ).

So that is my Citibank story. As I've realized through this whole bankruptcy process...EVERYTHING is negotiable.

As for the credit history. They told me on the phone that it will hurt my credit but DCS has put nothing on there about the student loan, and I think it shows as "included in bankruptcy" or something.

[KeithDoxen]

I didn't stop paying my Citibank loan until they stopped automatically taking out the monthly payment after I filed Ch. 7 in Nov of '09. A month after my discharge in Feb '10, DCS (Citibank's collection agency) calls me up and tells me that the loan documents state that a Bankruptcy discharge automatically defaults the loan and Citibank sends it to collections and I owe them the whole thing (~$5500); I was about to step into the car for a 2 week trip with the family and said that I wasn't about to send them a check for $5500. They then offered for me to pay a settlement of like $4300. I said I wasn't going to pay that. They said "Ok, give us $2250 now and then $150 a month until it's paid." I said no and told them that I had to go. Two weeks later, I got back from my trip, read the few letters they had sent me and called them up. I told them that I had other debts to pay (like payroll taxes from my company which failed and caused the bankruptcy) and that the IRS scared me a hell of a lot more than they did. I told them that had never missed a payment and I have no problem paying back the loan, but I will send them $200 a month with no "down payment." The person on the phone "talked to her supervisor" and came back and said "yes." She then informed me that I could call at any time if I wanted to be offered another settlement (or pay the full amount if I wanted ).

So that is my Citibank story. As I've realized through this whole bankruptcy process...EVERYTHING is negotiable.

As for the credit history. They told me on the phone that it will hurt my credit but DCS has put nothing on there about the student loan, and I think it shows as "included in bankruptcy" or something.

That's the thing about private student loans. It's such a weird animal. Just like every other unsecured debt except not dischargeable in bankruptcy. My private loans defaulted automatically when I filed for Ch 7 as well. My credit report also says "included in bankruptcy." They've never hit my credit report again, and it's been about a year since default.

[aquavir]

Yeah...it just kind of ticked me off that it went straight to collections. I had never missed a payment. Crazy thing is I'm pretty sure they sold it to the collections company. So instead of getting $5500 + interest for 30 years, they probably got like a few grand. Didn't they ever read "the Goose That Laid the Golden Egg?"

[KeithDoxen]

Yeah...it just kind of ticked me off that it went straight to collections. I had never missed a payment. Crazy thing is I'm pretty sure they sold it to the collections company. So instead of getting $5500 + interest for 30 years, they probably got like a few grand. Didn't they ever read "the Goose That Laid the Golden Egg?"

I thought about that in my case too. I mean, they haven't sold it yet, but wouldn't it be better for them if they just asked me to make monthly payments instead of asking a recently bankrupt individual to pay 100k upfront? They know they're not going to get it, so wouldn't they be better off getting the monthly payments for the next two decades?

The thing is, 20-30 years is a long time. When student loans default, the original lender is paid in full by the guarantor, and then the guarantor tries to collect its money. So the guarantor is probably actually better off taking a lump sum for half the amount than accepting small payments for decades. That's the only thing I can figure out.

[aquavir]

Good point.