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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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i went to a university in 07 when i was 17. my scholarship

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i went to a university in 07 when i was 17. my scholarship situation got messed up and i ended up having to leave early. now the account is closed and charged off. My question is is there a way to dispute this since i was a minor at tne time i went and the time i left the universtity? they have it on my credit report as an education loan, but i never agreed on any loan terms or anything like that. It was money owed to the bursars office and i was denied a fee waiver. Now im trying to repair my credit and go back to school and i want to get this settled once and for all. The seven years that it is supposed to be on my credit report is up in about a years time. But i dont want this to keep haunting me even after that. All the lawyer offices I call want $120 to 200 just to talk to them. what is the best way to handle this situation or maybe settle this account even tho it is charged off. would this still be on my report after 7 years? they have not sued me and stopped trying to contact me years ago, but i dont want to apply for credit cards and loans with this on my report.
Hello,

Under Indiana Code 34-11-2-9 a written contract for the payment of money must be sued upon within 6 years of the date of breach (date when a payment becomes due and payable and it is not paid). The same is true for a contract not in writing (oral): six years. IC 34-11-2-7.

Your facts suggest that you can no longer be sued on the debt, as long as you raise the statute of limitations as a defense, if you are sued. Note that there is no statute of limitations for a true student loan -- so, if there is language in your original scholarship agreement under which it would be converted to an educational loan if you did not remain in school for a specific length of time, then your liability for the debt will never expire.

Assuming that the debt has already or will soon expire(d), then once the debt reaches the seven year mark, you can file a dispute letter with each of the three credit reporting agencies (CRAs), and demand the removal of the claimed debt. 15 U.S.C. 1681c(a)(4). If a CRA refuses to remove the negative entry, then you can sue each CRA for actual damages or $1,000, whichever is greater. 15 U.S.C. 1681n.

Any debt collector that attempts to impose a negative entry that violates the above-stated conditions can be held liable, in the same manner as the original creditor. This means that if the original creditor sells the debt to a debt collector after it is deemed no longer collectible, then from the date of sale or charge to profit or loss, whichever is later, the debt must be removed no later than seven years later.

There are no ways around these laws -- other than to wait out the time limits, and complain/sue if the credit report entries are not removed.

Please let me know if I can be of further assistance.
Customer: replied 3 years ago.

do I have a resonable reason to dispute the report? seeing as i was 17 at the time? I do not owe for my scholarship, only the tution, room and board to the school. would any lawyer take my case or would they just tell me to wait it out? Also if the account is charged off, would the school i owe barre me from going to school there until i pay?

Do I have a reasonable reason to dispute the report? seeing as i was 17 at the time? I do not owe for my scholarship, only the tuition, room and board to the school. would any lawyer take my case or would they just tell me to wait it out? Also if the account is charged off, would the school i owe barre me from going to school there until i pay?

A: A minor may disaffirm a debt for other than necessaries. Room and Board are clearly necessaries. Tuition is arguably not a necessary. But, none of this will matter to anyone other than a judge. The creditor would have to sue you, so that you could defend your position and obtain a favorable judgment. You can't sue the creditor for declaratory relief on a debt that has already been incurred -- and even if you could, the cost of that lawsuit would make your debt to the school seem trivial by comparison. Declaratory relief cannot be obtained in a small claims court. You have to sue in regular civil court, and that means lawyers and big money for legal expenses.

Re the school prohibiting your return until the debt is paid, that's entirely possible -- and entirely legal.

The only other option would be personal bankruptcy. That would wipe out your debt obligation entirely, but you would have the bankruptcy on your record for the next 10 years (though, most people's credit starts to improve within about 2 years after the bankruptcy is discharged).
Customer: replied 3 years ago.

what i meant by disputining was the contract part. they called it an eduacation loan on my credit report, I was wondering how effective disputing this to a credit bureau would be on the basis that i was a minor. could i dispute the tuition but not the room and board? also once the 7 years is up and this comes off, will any of this show up on my credit report?


I mean any of lt as in the account was charged off and delinquent.

what i meant by disputing was the contract part. they called it an education loan on my credit report, I was wondering how effective disputing this to a credit bureau would be on the basis that i was a minor. could i dispute the tuition but not the room and board?



A: The CRAs don't care about your being a minor. A CRA is not a court. All the CRA will do is to attempt to validate the debt with the debt collector. If the debt collector states that the debt is valid, then it will remain on your account, and you will have to sue both the debt collector and the CRA. At that point, a judge may decide that the debt is not an education loan. But, the CRA will not attempt to make this distinction.

 

So, the answer to your question here, is that unless you intend to actually sue the CRAs and the debt collector for violation of 15 U.S.C. 1681n or 1681o, then your dispute will almost certainly fail.

 

In my opinion, your status as a minor, at the time of the original transaction, is probably irrelevant. The issue is whether or not the tuition, room and board represent an educational loan, because if they do, then the debt is not dischargeable, regardless of your status as a minor.

 

also once the 7 years is up and this comes off, will any of this show up on my credit report?

 

A: Yes, even if it is an education loan, it will be deleted after 7 years.

 

Hope this helps.

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