are TERI private loans dischargeable?

[student2011]

are TERI private loans dischargeable?

[justbroke]

Any student loan is dischargeable, but the default is that they are non-dischargeable. The only way to have a student loan discharged in a bankruptcy, is to file a complaint to determine dischargeability. You would need to prove that there is no expectation that you'd "ever" be able to repay the loan. That typically means a severe disability or the inability to ever make enough to repay over your lifetime.

Now, the law does not differentiate between TERI, or Federal or any other student loan. Any loan for education is non-dischargeable. The key language in the law (11 USC 523(a)(8))..

an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or

TERI is a "national, not-for-profit corporation that provides education financing and information services." They would be non-dischargeable by default. Only a complaint to determine dischargebility would let you know for sure.

[student2011]

Thank you for your info.

SOL in texas is 4 years. So does it mean after 4 years TERI cannot take me to court for a private student loan default?

[KeithDoxen]

Thank you for your info.

SOL in texas is 4 years. So does it mean after 4 years TERI cannot take me to court for a private student loan default?

Yes they can take you to court. A statute of limitations gives you an affirmative defense. You move to dismiss based on the suit being time barred because of the statute of limitations. If you have no idea what any of this means you really need to talk to a lawyer. You can probably find one that will give you a free consultation.

[student2011]

"Private Student Loans have a SOL of 4 yrs from date of last payment here in PA and also must come off your Credit Report after 7 yrs of Date of last activity. Wells-Fargo took me to court for 2 private Student loans that I had not made a payment on since 6-2001 that I owed them a total of over $24,000 on. In court I brought up the SOL defense and the judge asked the attorney for wells Fargo the date of last payment I had made on these accounts, Well guess what, He didn't have it..... But I did. Judge ruled in my favor Debts out of SOL.......I owed them nothing.

So the lesson here is...Keep all your paperwork, Don't believe anyone that's tells you Private Student Loans don't have a SOL because they do. I'm living proof of that ( the sol would depend on what state you signed the loan papers in, most states are 4 yrs ) and if after the sol has expired and your are sued make sure you show up at the hearing to contest the suite and if it's out of sol the judge has to rule in your favor, that's the law. It saved me over $24,000 I had no attorney... just myself...and all I said was these 2 loans are out of the SOL of 4yrs here in PA, your honor.

I had a lot of people tell me that there was no SOL on Private Student Loans, Wells Fargo, Attorneys, People on the internet but the judge here in Central PA told me there was and he was the only one that mattered. That was over a year ago..... have not heard from wells Fargo since.... would love to....they would be in defiance of a court order and these 2 loans are no longer listed on any of my credit reports either."

[treehugger1]

In your case, Wells Fargo is a for-profit entity.

[justbroke]

SOL in texas is 4 years. So does it mean after 4 years TERI cannot take me to court for a private student loan default?

student2011, there are two different things working here. One is the bankruptcy law and the other is non-bankruptcy law. Your initial question asked about discharging private student loans in bankruptcy. I believe that I answered that question above; showing that they a TERI loan is non-dischargeable simply because it is from a non-to-profit company.

You then repost something, that I don't know where it came from since there's no citation, about someone else getting a dismissal in a non-bankruptcy lawsuit. This was for Chase, a for-profit company, and the loan was really dated and it was in Pennsylvania. That case was based on a Statute of Limitations (SOL) defense in the lawsuit; that is known as a non-bankruptcy case.

Now, whether you have an SOL claim under Texas non-bankruptcy law is a matter that you would need to research much closer. You would need to know your last "activity" date on the loan and meet the statutory requirements under Texas law. It would be an affirmative defense to why they can't collect, so you would need to wait to be sued.

Now, I think a smart private student loan creditor would sue you before the statute of limitations expired. Once they have a judgment, good for 10-20 years, they can then be sure that it won't be discharged in any bankruptcy (in the next 10-20 years).

If you're really looking to try to defend a lawsuit in a non-bankruptcy court for a non-profit private student loan, I might suggest that you retain counsel or at least get a free consult with a few.

[HHM]

"Private Student Loans have a SOL of 4 yrs from date of last payment here in PA and also must come off your Credit Report after 7 yrs of Date of last activity. Wells-Fargo took me to court for 2 private Student loans that I had not made a payment on since 6-2001 that I owed them a total of over $24,000 on. In court I brought up the SOL defense and the judge asked the attorney for wells Fargo the date of last payment I had made on these accounts, Well guess what, He didn't have it..... But I did. Judge ruled in my favor Debts out of SOL.......I owed them nothing.

So the lesson here is...Keep all your paperwork, Don't believe anyone that's tells you Private Student Loans don't have a SOL because they do. I'm living proof of that ( the sol would depend on what state you signed the loan papers in, most states are 4 yrs ) and if after the sol has expired and your are sued make sure you show up at the hearing to contest the suite and if it's out of sol the judge has to rule in your favor, that's the law. It saved me over $24,000 I had no attorney... just myself...and all I said was these 2 loans are out of the SOL of 4yrs here in PA, your honor.

I had a lot of people tell me that there was no SOL on Private Student Loans, Wells Fargo, Attorneys, People on the internet but the judge here in Central PA told me there was and he was the only one that mattered. That was over a year ago..... have not heard from wells Fargo since.... would love to....they would be in defiance of a court order and these 2 loans are no longer listed on any of my credit reports either."

There is a caveat to this...if the student loans are returned to the Department of Education (meaning the DOE was the guarantee entity), they can still garnish tax refunds and SSI without a judgment and there is no SOL for that.

[student2011]

"TERI filed for bankruptcy on April 7th, 2008. The First Marblehead Corporation, a for profit company, runs the collections for both the Citizens Bank and Bank of America loans . AES is only the servicer and does not know or pretends to not know the ramifications of the TERI bankruptcy on your loans. This goes for all TERI loans that were issued. TERI is only a guarantor, not a lender. The First Marblehead Corporation also issues asset backed securities (ASB-TRUST) to investors on the open market that contain billions of dollars worth of student loans. Your loans may have also been bundled within one of their TRUSTS. In fact most Bank of America loans, I believe, have been bundled. Your statement from AES may say National Collegiate Trust...That is a product of FMD.

TERI was not able to fulfill their role as guarantor on student loans...thus the bankruptcy. TERI is a nonprofit organization. Upon default (failure to pay or file bankruptcy), your loan would normally be paid by TERI, and if you filed for bankruptcy yourself, you would owe a non-profit entity the value of your loan. Student loans issued by the U.S. government or non-profit organizations have the ability to survive bankruptcy in the United States, unless you are able to fulfill the requirements of "Undue Hardship". There are no rules or standard tests provided by the U.S. Government to prove you are under hardship...basically the judge decides if your situation is credible.

In the TERI bankruptcy, TERI rejected all the guarantee contracts to your loans. This means no non-profit organization is involved and now these loans theoretically can be discharged in any bankruptcy court within U.S, without proving "undue hardship" (Extremely hard to prove, basically you need to be paralyzed from the neck down)."

"TERI has essentially removed themselves from the student loan guarantee business, leaving the loans unguaranteed by a non-profit. This does not mean your loan will automatically be discharged. Upon default, your loan will become owned by the bank whom issued the loan or a trust if it was securitized by First Marblehead. Also, you must past the hurdle of proving your loan is not a "qualified education loan."

You need to read up the definition of "qualified education loan" at the IRS or Department of Ed. Essentially, if your school was not a Title IV or expenses were not part of the schools "Cost of Attendance" or you simply were not an "eligible student", then you don't have a "qualified education loan."


What does it mean by "issues asset backed securities (ASB-TRUST) to investors on the open market that contain billions of dollars worth of student loans?

Is there any bankruptcy court info on "........... VS. TERI" Student loans after 2008?

Is TERI still in BK chapter 11?

Who replaced TERI as a guarantor? No one? Then, those TERI's student loans have no guarantor?


Thank you!

P.S. Not easy to find a lawyer who knows about these things.

[HHM]

I really wish you would cite the source for this info, you come in asking a question, but sounds like you are not open to any answers and keep quoting material from unnamed, unlinked sources. What exactly do you want to know?

In the TERI bankruptcy, TERI rejected all the guarantee contracts to your loans. This means no non-profit organization is involved and now these loans theoretically can be discharged in any bankruptcy court within U.S, without proving "undue hardship" (Extremely hard to prove, basically you need to be paralyzed from the neck down).

This analysis sounds VERY THEORETICAL, really, more hypothetical. Just because an entity no longer exists or files bankruptcy, does not mean the contractual obligations go poof. The borrowers obligations do not go away because TERI filed BK, those contracts become property of the estate and remain collectible. Also, the analysis relates to when the loans were issued (i.e. borrowed), the fact that a guarantor agency went belly up does not magically change the "status" of the loan.

Also, keep in mind the playing field of student loans. there are really 3, (sometimes 4 players).
1. Borrower (the student)
2. Lender (the entity that actually loaned the money)
3. The guarantor
4. the servicer.

The Guarantor has a contract with the lender/servicer. If the student loan goes into default, then after certain events, the lender has the right to return the loan to the guarantor and the guarantor pays the lender. Then the guarantor goes after the borrower to try to recoup its loss. (it is really no different than insurance). It sounds like TERI must have been under-capitalized to absorb the losses and pay the lenders on their claims.

Bottom line, someone has the right to collect these debts (will they, who knows), were the debts discharged in bankruptcy, 99% certain they WEREN'T. As with any issue with student loans, the BURDEN IS ALWAYS on the debtor to prove the loans were discharged, it is not the burden of the student loan lender/servicer/guarantor/collection agency etc to prove the loans were not discharged. Hence, if you did not file an AP to determine dischargeability, the loans are NOT discharged.

[justbroke]

Just as HHM, I am lost in the weeds due to the un-cited information provided. I don't know your real question since the original question was "are TERI private loans dischargeable?" From everything that I know, they are non-dischargeable.

Also, you won't find many attorneys specializing in discharging student loan debt, since almost all student loans are non-dischargeable in bankruptcy.

Additionally, I found your source for the most recent un-cited quote. You left off the part which HHM already figured... "This has yet to be tested in a bankruptcy court, due to the recent TERI filing.". The article isn't written by an attorney and was not written as an opinion or a memorandum of law in any court proceeding.

Source: Regarding Student Loans and deferment issues for former St. Christopher's students -- external site.

[GIn]

Is there any bankruptcy court info on "........... VS. TERI" Student loans after 2008?

Prouty v. The Education Resource Institute, 08-05233 (Bankr. D. Kan. Aug. 20, 2010) Doc. # 73:
For the foregoing reasons, Debtor’s motion for summary judgment is denied. The debt
she owes to TERI as co-signor of the student loans will be held nondischargable unless
Defendants fail to prove that the debt is for “an educational . . . loan . . . made under any program
funded in whole or in part by a . . . nonprofit institution,” or Debtor establishes undue hardship.

http://www.ksb.uscourts.gov/index.php?option=com_content&view=article&id=1006%3A08-05233-prouty-v-the-education-resource-institute-doc--73&catid=53%3Ajudge-somers-opinions&Itemid=63&showall=1

[justbroke]

Prouty v. The Education Resource Institute, 08-05233 (Bankr. D. Kan. Aug. 20, 2010) is actually an excellent case.

[GIn]

It would be interesting to see if TERI came back and proved all of the elements of its case and the debt was considered non-dischargable.

[student2011]

Great Article

Thank you, GIn. Great case. Great find!

Seemed like Prouty's lawyer did not do much homework. Very weak case for the client.

GIn;545066]Prouty v. The Education Resource Institute, 08-05233 (Bankr. D. Kan. Aug. 20, 2010) Doc. # 73.