Collections Post Discharge for Previous Debt

[Johnworker1]

I had my Chapter 13 100% discharged 10/8/2023 (hooray) and have been quietly trying to rebuild my credit with 3 credit cards and a financed used car. I recently received a collections letter dated Nov 8th from Transworld Systems for National Collegiate Student Loan Trust but has Bank of America as the original creditor. It states as of Dec 1, 2010 I owe 24,409.81 plus 3,893.66 interest minus 3,643.07 (previous payments?). My original Bankruptcy attorney is MIA (long story) and I have been in bankruptcy since 2010 through 3 filings (longer story) minus a few months between one being thrown out and filing again.

I happen to find the original Bank of American Education Maximizer Loan Request/Credit Agreement Instructions and it was a private loan I applied for in 7/2004 for 15K from Bank of America. I graduated in 2008 but can't recall if I was in repayment or forbearance. My federal student loans I was current on until filing for BK in 2010 where they all went into forbearance automatically (just started repaying).

How should I handle this matter? Is it possible that this is beyond collection because of statue of limitation (definitely haven't paid it since 2010) or because it was a school related loan is it exempted? Should I ask the collector for verification or should I dispute and on what grounds. Or if liable (worst case) should I make a payment arrangement with collections or try to get the original creditor to accept my terms?

[justbroke]

I don't know if anyone can really help you except a consumer attorney. My understanding is it's 10-yeras SOL for Illinois, but the Chapter 13 likely "tolled" the clock. I can't say how Illinois law specifically tolls during a Chapter 13, but generally debt is tolled when in a Chapter 13. For example, in some States the clock still runs but expires during the Chapter 13, the law pushes the SOL along with the Chapter 13 plus something like 6 additional months. This is so that creditors aren't completely frozen out due to the bankruptcy.

Since your several bankruptcies likely tolled the SOL on that debt to the discharge date plus 6 months; this could be a valid and collectible debt. While your bankruptcy attorney may be MIA, you may need a consult on this particular case. I just don't have any personal experience in this area so can't really tell you what happened to me.

Now, let's talk about a collection letter. Did they report you to the credit bureau? That would be a separate issue and I would think that if the "first date of delinquency" is in 2010, then it should no longer be reported after 2020 despite any tolling. But that's how I have understood the credit bureau reporting rules.

[Johnworker1]

I don't know if anyone can really help you except a consumer attorney. My understanding is it's 10-yeras SOL for Illinois, but the Chapter 13 likely "tolled" the clock. I can't say how Illinois law specifically tolls during a Chapter 13, but generally debt is tolled when in a Chapter 13. For example, in some States the clock still runs but expires during the Chapter 13, the law pushes the SOL along with the Chapter 13 plus something like 6 additional months. This is so that creditors aren't completely frozen out due to the bankruptcy.

Since your several bankruptcies likely tolled the SOL on that debt to the discharge date plus 6 months; this could be a valid and collectible debt. While your bankruptcy attorney may be MIA, you may need a consult on this particular case. I just don't have any personal experience in this area so can't really tell you what happened to me.

Now, let's talk about a collection letter. Did they report you to the credit bureau? That would be a separate issue and I would think that if the "first date of delinquency" is in 2010, then it should no longer be reported after 2020 despite any tolling. But that's how I have understood the credit bureau reporting rules.

No this hasn't shown on bureau yet. I just received the collections letter and have to Dec 18th to contest it. I never received a bill from the creditor in all these years and actually forgot about it.

[justbroke]

This is just me thinking... I wouldn't respond to the letter and inadvertently restart the SOL. I can't advise you on whether the debt is collectible or not. An Illinois consumer attorney is likely best at figuring out of the SOL has run (even with the tolling of the intervening bankruptcies).

[NwodGniog]

I agree with Justbroke on this. Private student loans do have a statute of limitations, so if they sue you, you might be able to use your state's SOL as an affirmative defense when you file an answer to the lawsuit and it would then allow you to prevail in court. But it might have been tolled. This is worth the fee to speak to a local consumer attorney about this and see what they have to say about it.

[Johnworker1]

Thanks to both I have recontacted the attorney who helped me sort out my previous Chapter 13 fiasco.

[Johnworker1]

The attorney told me to dispute the debt by citing the statue of limitations. He say he thinks the statue of limitations applies but he also said the collectors probably will think that it is tolled if they were paid anything out of my bankruptcies. Since it has been 3 bankruptcies over 13 years I don't have all the paperwork to verify but I believe they weren't paid (at least in the last one) so we will see.

[Johnworker1]

I disputed it on grounds of statue of limitations via their website with the statement (attorney approved):

“This debt referenced #18830583 is barred from collection by the statue of limitation.”

About 3 weeks later I get a packet from the collections company with copies of the original paperwork for the loan and an itemized list of interest and balances throughout the years. I noticed there were no payments from me listed back until 2010 at least (I was in previous BK plane). Interesting also nothing was stated like it is verified collectable debt or anything to convince me that it is undisputable debt just that paperwork. I wonder if it is just a bluff to see if I voluntarily send in payments or it is bonafied debt.

[justbroke]

I don't know. They may believe it was tolled for an additional 30 days, but if they haven't filed anything then the clock is ticking on the debt. Or, you somehow reset the SOL clock. I won't speculate as to what the creditor is thinking but if this is barred by the SOL then you have an affirmative defense. You raise the defense on your answer. You "may" then have a claim, if they sued after the SOL, for a violation of various debt collection laws (State and/or Federal).

Unfortunately I cannot answer the question for you. They believe the clock is still running. If they sue you then assert the appropriate defense at that time.

[Johnworker1]

I don't know. They may believe it was tolled for an additional 30 days, but if they haven't filed anything then the clock is ticking on the debt. Or, you somehow reset the SOL clock. I won't speculate as to what the creditor is thinking but if this is barred by the SOL then you have an affirmative defense. You raise the defense on your answer. You "may" then have a claim, if they sued after the SOL, for a violation of various debt collection laws (State and/or Federal).

Unfortunately I cannot answer the question for you. They believe the clock is still running. If they sue you then assert the appropriate defense at that time.

I have not heard anything back from them and my bankruptcy attorney says this it out of his specialty and he has referred to me to one who deals with student loans. I will wait to hear from them. I'm hoping they are just bluffing and trying to get me to voluntarily pay. They haven't asserted their demands for the balance since I disputed it so here I go again into uncharted waters lol