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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2514
Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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Customer Question

If a priviate student loan is 11 years old in Illinois, can the lender who is in Ohio still try to collect? I filled bankruptcy in 2005 and the loan one month after I filled was charged off. Not only that but the school where the loan was paid closed less then 1 year after the loan was paid.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  ScottyMacESQ replied 1 year ago.

ScottyMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

ScottyMacEsq :

When was the last time that you actually paid on that student loan, and was it included in the bankruptcy or nto?

ScottyMacEsq :

*not

Customer :

It was included in my bankruptcy but according to the loan company, I still owe on the loan

ScottyMacEsq :

And when was the last time that you paid even a penny towards that loan?

Customer :

They claim no payments were received after February 2004

Customer :

The original loan was taken out in 2002

ScottyMacEsq :

Do you have documentation that shows that this was included and discharged in the bankruptcy?

Customer :

yes

ScottyMacEsq :

thank you. First of all, the fact that they say you owe on it does not automatically make it so. If it really was discharged in bankruptcy, then you would not have any further liability on it. You can send them the documentation that shows that it was discharged, as well as statement that you do not want to hear from them anymore pursuant to the "Fair Debt Collection Practice Act".

ScottyMacEsq :

if this had not been discharged in bankruptcy, the statue of limitations for a written contract in Illinois is 10 years from the date of breach.

ScottyMacEsq :

For a monthly repayment, that would be essentially 30 days after the last payment was made.

ScottyMacEsq :

That is, when a payment is due but not made, that is the start of the statute of limitations.

ScottyMacEsq :

so if there was not a bankruptcy, and the last payment was in February 2004, then the 10 years would be up in March 2014.

ScottyMacEsq :

But again, bankruptcy will discharge the debt, making you no longer liable on it.

ScottyMacEsq :

as to a charge-off, that is an accounting procedure, and does not relate to a debt forgiveness.

ScottyMacEsq :

That is, for accounting books to lineup, with assets and liabilities, where it appears that there no longer will be in the money coming in, a company can write off that debt, to make the books add up. It does nothing to whether or not you owe the debt. Bankruptcy, however, of a private loan, would discharge that debt. Only if it was a federally backed loan, would bankruptcy not to discharge that debt, nor would the statute of limitations apply on a federally backed loan.

ScottyMacEsq :

By the way, I apologize for any errors in this answer. I am using a voice recognition program, and while it is accurate most of the time, is not 100% accurate, so if there's something that doesn't look quite right, or appears out of place or not grammatically correct, the reason is likely the software that I'm using. If will try to catch any errors, but if if you need clarification at the end, please let me know.

ScottyMacEsq :

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!

Customer :

The case on my bankruptcy was dismissed on October 2007 due to the fact that the amount being taken out left me into financial hardship and I was having my gas and electric disconnected. This was 6 months prior to the end of my completition of my bankruptcy.

ScottyMacEsq :

So just to be clear, this debt was still discharged?

ScottyMacEsq :

If it was discharged, then they can't go after it.

ScottyMacEsq :

The documentation of the discharge would establish this, and the demand that they cease contact pursuant to the FDCPA would make them stop contacting you.

Customer :

I am not sure but up until that time, I had been paying everymonth on the bankruptcy. I originally filied in January 5, 2005 and was discharged in October 2007

ScottyMacEsq :

If it was included and discharged (check with the bankruptcy court to verify) then the debt's gone, and they can't collect it. The documentation showing the discharge would prove it, and should shut them up.

Customer :

The letter they sent me states that since the case was dismissed even 6 months prior to the competition of the filing, the entire amount plus interest is due.

ScottyMacEsq :

Did you have a bankruptcy attorney assist you in the filing of bankruptcy?

Customer :

yes

ScottyMacEsq :

But you stated that you have documentation related to discharge... what is this documentation that you ahve?

ScottyMacEsq :

*have

Customer :

The paperwork showed the bankruptcy, but not the discharge

Customer :

Does the bankruptcy have to be completed in order for it to be discharged?

ScottyMacEsq :

Yes.

ScottyMacEsq :

That does make a lot of difference.

ScottyMacEsq :

A final discharge means that the debt is no longer due.

ScottyMacEsq :

But no discharge means that the debt is still there.

ScottyMacEsq :

in that situation, you will need to either stall, threaten to reopen the bankruptcy case, or work with this debt collector.

Customer :

I need to end this, but can I continue with you

ScottyMacEsq :

As you know bankruptcy can relieve liability, and as such that collectors are more likely to work with you if they think that you're going to file bankruptcy. Furthermore, the statute of limitations runs of 10 years, and so if you can stall for 10 years, that would be good...

ScottyMacEsq :

(sorry, stall to next year so that 10 years is up)

ScottyMacEsq :

Once you rate the answer, it will close out for the time being, but you can come back and ask follow up questions.

ScottyMacEsq :

That will allow me to assist other customers in the meantime.s

ScottyMacEsq :

*meantime,

ScottyMacEsq :

Are you there? Please note that I am still here, awaiting your response.

ScottyMacEsq :

Hello?


 

ScottyMacEsq :

Should I continue to await your response, or may I assist the other customers that are waiting?

ScottyMacEsq :

My apologies, but I must assist the other customers that are waiting. If there is something else that I can help you with, please let me know. If not, please rate my answer. Please note that I do not get any credit for the time and effort I spent on this (or any question) unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!.

ScottyMacEsq :

I'm sorry that you felt that this was poor service. Can you explain why you feel that way?

ScottyMacEsq :

Please don't "shoot the messenger" here. I believe that I have answered your question, but if you have any other questions, please let me know. If not, and you have not yet, please rate my answer. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX good luck to you!

ScottyMacEsq :

I'm sorry that you feel this way and did not give me the chance to explain any misunderstanding that you have regarding this. I will opt out to allow someone else to assist you further.

Expert:  Terry L. replied 1 year ago.
Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.

I have to add some information. Educational debts are not always dischargeable. the bigger issue here is that you did not get a discharge, your case was dismissed for lack of payments. Therefore, any amount that was not paid, will be due, including any interest that may have accrued. (chapter 13's often only pay 10cents on the dollar)
So, in theory 90% of the loan would still be due, with interest.

The laws have changed now too, making it even harder to discharge student loans in bankruptcy.

So, unless you paid off the entire pre-filing balance owed to the loan company, they are fine in collecting on the unpaid balance.

Let me know if you have any questions.
thanks
XXXXX XXXXXders

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