SOL and collection agency questions

[phat2009]

I have written before about this but I had a student loan with TERI that was serviced by AES. While in school, AES flip-flopped several times regarding whether deferment forms had been received/oh wait yes it is in an in-school deferment/oh wait no, our representative told you the wrong thing and we need another form -- and they kept conveniently losing multiple forms sent to them verifying that I was in school which should have caused the loan to be deferred. They eventually defaulted the loan because they "had not received the correct form in time" -- it was a huge battle with them and a total nightmare.

I tried several times to correct the situation with TERI to no avail, as they never returned my phone calls and then went into their BK which meant no one was helping me out/taking calls. Sometime later, I heard from a collection agency. I wrote to them, AES, TERI, and the bank that provided the dollars, etc., trying to explain what had occurred. No one wrote me back and I heard nothing for quite a long time, almost two years, until I was again contacted by a collection agency. I wrote to everyone again explaining what happened (and in fact was still in school at the time). No one responded again. (What ever happend to the fact that these folks have to deal in good faith?? Is completely ignoring the in-school student good faith??)

Now, again two years later since I last wrote disputing this whole thing, I am being contacted by a new collection agency. They want me to contact them and work out a deal, so they say. I filed for Chp. 13 and received a discharge in Feb of 2007. No student loans were included/no special hardship hearing on them, although they were notified about the BK (probably means nothing but stating it in case). It was actually after the discharge that AES screwed up this loan and put it in default. So, if they defaulted the loan in 2008, is there any SOL or any other defense I have to these people suing me? If so, does the SOL go by where I currently reside, or where the loans were taken out/borrowed? Should I respond to these folks given that every time I have tried to work this out in the past no one has responded to me? I am curious if they are just looking for me to respond at all just so that the SOL -- if indeed it is relevant -- starts over again, but I don't know if that can even occur if I am constantly denying that this loan should have ever gotten to a default stage. Thoughts on that would also be appreciated.

Lotta stuff in there so my apologies -- but I truly appreciate any help!!

[AngelinaCatHub]

Partial response. California SOL is 3 yrs on written agreements. http://law.findlaw.com/state-laws/ci...ns/california/

I don't think it is dischargedable though. Student loans are hard to get discharged except in rare cases. 'Hub

[malf1204]

I thought there was no SOL on student loans??

[phat2009]

Thanks for the partial -- loan was not made in CA, though, so not sure how that factors in.

Also, I am definitely not looking to see if it is dischargeable in BK, because I know it cannot be and it was not part of the BK proceedings other than they received notice I had filed at the time (which was predefault) -- instead, I am wondering if there is any other remedy available to me now, whether SOL or ???

[AngelinaCatHub]

I thought there was no SOL on student loans??

It isn't.

Thanks for the partial -- loan was not made in CA, though, so not sure how that factors in.



Also, I am definitely not looking to see if it is dischargeable in BK, because I know it cannot be and it was not part of the BK proceedings other than they received notice I had filed at the time (which was predefault) -- instead, I am wondering if there is any other remedy available to me now, whether SOL or ???

What I know is not a lot about Student Loans. Only a very critical hardship case "may" get one discharged. I know a guy about 66 years old, who is haveing his SS levied on a 30yr old Student Loan. Best I can do for you on that subject. 'Hub

[TomTea31]

If you filed chap 13, doesn't the student loans go into automatic deferment just like in chap 7? As far as I know, even if the loan was not in good standing at the time it still goes into deferrment

[AngelinaCatHub]

If you filed chap 13, doesn't the student loans go into automatic deferment just like in chap 7? As far as I know, even if the loan was not in good standing at the time it still goes into deferrment

Tom I believe you are correct. Good thing about that is I think they are priority debts and would be paid in the 13. If not paid off in the plan, they may survive or even lengthen the plan. I'm not an expert on 13s as they are so much different than 7s. 'Hub

[AngelinaCat]

Hi phat2009: Since your student loan situation is so convoluted, I first looked up TERI and got their webpage that really didn't say anything. Then I 'googled' the question: "Are TERI loans dischargeable?" I got a whole page full of links, which may or may not prove useful:

https://www.google.com/search?source=ig&hl=en&rlz=1G1ACEW_ENUS370&=&q=are+TERI+loans+dischargeable%3F&oq=are+TERI+loans+dischargeable%3F&aq=f&aqi=&aql=&gs_sm=3&gs_upl=3574l21453l0l22361l29l29l0l0l0l0l0l0ll0l0

[AngelinaCatHub]

Default Re: Can You Discharge a Teri Private Student Loan in Bankruptcy

You didn't give us the name of your state as requested when you post.

However, generally student loans cannot be discharged in bankruptcy.

Private Student Loans
USC TITLE 11 > CHAPTER 5 > SUBCHAPTER II > § 523

(a) A discharge under section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt- ...

(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor's dependents, for-

(A) (i) 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
(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or

(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual. ( This was added in 2003 & includes all student loans (including private student loans) that were taken to attend a college or university in the US. )

Your best bet is to talk to a bankruptcy attorney. You can usually get an initial consultation for free.

http://www.expertlaw.com/forums/showthread.php?t=79048

[NoMoreCards]

The OP stated "I filed for Chp. 13 and received a discharge in Feb of 2007"

If the OP isn't going after "undue hardship", the best bet might be to start making payments, since BK won't help.

Many people (including myself) are paying back student loans. I personally would rather make payments then be hounded for years and years while interest and fees made the non-dischargable debt much, much higher! The will get their money, and for most people the fight just isn't worth it in the end. IMHO

[phat2009]

Thanks for the posts.

Yes, the loan automatically should have gone into deferment pending the BK. But, AES did not do this. Instead, they were trying to collect on it against me during that time. My discharge was 02/07, and already I was writing to the collections folks in 05/07, telling them about the automatic stay and my in-school status because all that fell on deaf AES ears. After these initial collection agency letters, AES finally listened somewhat about the automatic stay, but then gave me the run-around respecting whether they did or did not receive an in-school deferment form. First they claimed they did not receive the paperwork, then they did receive it, then oh wait we did receive back the form that we sent you to have signed but our rep told you the wrong thing about the loan being properly deferred and as it turns out we sent you the wrong form so let's try again, then oh we did not receive the new paperwork your school tells you it sent to us so let's try again, oh we received the new-new paperwork your school sent to us but it got here one day late and now you're too late and missed the deadline, so we are defaulting you.

It was after all this that I then tried to deal with TERI directly to correct the situation but shortly thereafter TERI filed for BK and never assisted. Next, a collection agency tried to collect, and I tried to explain how the loan never should have been defaulted because I was in school at the time and AES screwed up the paperwork, all to no avail and no response for like 2 years. Then I heard from a second collection agency, and again tried to explain I was still in school and the loan should have not been defaulted, to no response. Another two years goes by, now I am hearing from a third collection agency.

So, my question is not about discharging this as part of my original BK, but about whether there is any SOL or other defense I now have? From my perspective, the loan was improperly defaulted due to AES (first screwing it up by not placing it into the automatic stay, then sending me the wrong forms, and telling me it was in in school deferment status then flip-flopping that it was not because ooops they had sent me the wrong form, then using all that time ticking away that they screwed it up against me to say I missed the deadline by one day of getting the right form into them and defaulting me), and never should have gone to collections. They failed over and over to try to rectify the situation that they caused, despite the fact I continued to be in school. They also repeatedly ignored my letters and requests to fix what AES screwed up.

So, my question has been, is there anything in SOL law, good faith dealing, etc., that -- even though this is a student loan -- works in my favor here? Or, am I stuck because it is a student loan, which means they can mess with me all they want, and improperly default me all they want without having to spend one second trying to realistically look at the situation they caused and right it, because it is a student loan and they have no worries about having to deal fairly with students because they still get to collect it no matter what?

I am sure that this has caused excesive fees to me that never should have occurred because I was in school and all AES had to do was what it was supposed to from the start. THEY erroneously put it in collections during a pending BK, THEY told me it was fixed /deferred properly when apparently it wasn't because THEY, they later determined, sent to me the wrong in-school deferment form, I am quite sure THEY lost the new form my school insisted it sent them, and when a fourth form was then sent, but received one day late, THEY took no responsibility for their mistakes, leaving me holding the bag after it was THEY whose screwups expended down many of the months of time they give the student to get the form in "on time."

And, if there is any SOL or other defense available to me for this situation, does it go by where I live now or where I did when the loan was created (I'd rather not say the state of creation so I cannot be identified, and I can figure out what that SOL is if it seems it applies).

Again, thanks for any assist.

[KeithDoxen]

Your state's statute of limitations WILL apply to these private loans. Don't listen to what anyone else says on this. I've researched this issue thoroughly but I don't have time to provide any citations or arguments at this time. Rest assured that there are a ton of people who will tell you that private student loans have no SOL. They're wrong.

Now, if you are currently living in California, that is the state in which you will be sued over the debt, which means that the laws of California will apply with regard to the SOL. Unfortunately, in a very recent California case, the court ruled that a 6 year SOL applies to private student loans, because the court decided that promissory notes are actually negotiable instruments and thus fall under the UCC 6 year SOL for such instruments. So the answer is, yes, the SOL of your state does apply to your private student loan, but the SOL has not yet run with regard to your loan in the state of California.

[phat2009]

Thanks Keith

Thanks Keith -- I know you had answered some questions for me before on this one and it is greatly appreciated. From when does the SOL start to run? the date it was defaulted? Also, if you know, should I ignore these losers, or do I respond but continue to advance what I always have, that they improperly defaulted the loan? Thanks again! Your contributions are totally appreciated on here!!

[KeithDoxen]

Thanks Keith -- I know you had answered some questions for me before on this one and it is greatly appreciated. From when does the SOL start to run? the date it was defaulted? Also, if you know, should I ignore these losers, or do I respond but continue to advance what I always have, that they improperly defaulted the loan? Thanks again! Your contributions are totally appreciated on here!!

Starts to run from date of default. Your argument that they improperly defaulted the loan is not likely to garner you any success because a) they probably had some provision in the contract that allowed them to default the loan under those circumstances and b) the original lender has already been paid by TERI, the guarantor, which means that the loan belongs to TERI now and won't be going back into its non-defaulted status no matter what happens. Honestly, if they haven't sued you yet, and if they don't appear serious about suing, and they don't, might as well just wait out the SOL in your state. I'm presently waiting out mine too. It's been 2.5 years since default and no one has sued me, nor does anyone even call me about this debt anymore. If you don't have assets you'll often go 5-10 years before anyone tries to sue you over private student loan debt. Once the SOL has passed, there are some "aggressive" credit repair techniques you can use to get rid of the debt once and for all. I can chat more about this with you in a private message if you like.

[HHM]

Keith is right, private student loans are subject to STATE SOL rules, and yes, in CA, that appears to be 6 years. But keep in mind, the chapter 13 will toll (pause) the SOL from running. As Keith stated, the improper default is probably a non-starter and TERI has the right to collect.
At this point, you send C&D letters.