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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Consumer Protection Law
Satisfied Customers: 18817
Experience:  B.A.; M.B.A.; J.D.
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Private Student Loan in Collections

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I took out a private student loan from American Education Services (AES) in 2006. The original contract states that the first payment would be due in 2008. I did remain in grad school thru January 2011 but I didn't apply for any forbearance on this loan. I didn't understand the nature of the private loan at the time and thought it had been consolidated with my federal loans. Now I am getting collection notices and the loan is listed as discharged on my credit report. I sent a debt validation letter to the collection agency last month and received no reply. Instead, I received a collection notice from a new collection agency. My question is have they passed California's four year statute of limitations or are they allowed to put the loan into forbearance until I leave school even if I don't request a forbearance.

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I took out a private student loan from American Education Services (AES) in 2006. The original contract states that the first payment would be due in 2008. I did remain in grad school thru January 2011 but I didn't apply for any forbearance on this loan. I didn't understand the nature of the private loan at the time and thought it had been consolidated with my federal loans. Now I am getting collection notices and the loan is listed as discharged on my credit report. I sent a debt validation letter to the collection agency last month and received no reply. Instead, I received a collection notice from a new collection agency. My question is have they passed California's four year statute of limitations

Response 1: Yes. See California Code of Civil Procedure Section 337. However, it does not mean that they cannot collect on the debt. The Statute of Limitations on a debt deals with the time a creditor/collector has to file a lawsuit to collect on its debt or forever barred from bringing up the lawsuit. The creditor may still use other means to try to collect the debt such as telephone calls and letters. However, without the threat of lawsuit, there is really nothing the creditor/collector can do. So, a debtor does not have to pay debts that are passed the Statute of Limitations. Finally, if a creditor files a lawsuit, the fact that the Statute of Limitations has run on the debt is an Affirmative Defense and the debtor must request that the Court dismiss the case because the Statute of Limitations has run on the debt.

The Statute of Limitations on a debt starts to run from the time the debtor stopped paying on the debt. However, the period of forbearance tolls the limitation period. That is, the clock does not run when you are on forbearance.

or are they allowed to put the loan into forbearance until I leave school even if I don't request a forbearance.



Response 2: If you are still in school, you need to inform the lender so that your debt can be put on forbearance. Since your loan has a payment due date of 2008, your loan is considered due even if you are still in school unless you inform the lender of your status so that you can be given forbearance.

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