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Gerald, Esq
Gerald, Esq, Lawyer
Category: Legal
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Experience:  30 years of experience
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Reading your article about SOL on Private loans, my lender

Customer Question

Customer: Reading your article about SOL on Private loans, my lender just informed me this morning that they have expired when I was calling to make my monthly payment.
JA: Thanks. Can you give me any more details about your issue?
Customer: I am trying to understand what happens next? Is it considered loan forgiveness and will I get a huge tax bill this year? I filed BK to lower my interest rate on my student loans 8 years ago. But I just don't understand because I have still payed every month after my bk was discharged
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Submitted: 1 year ago.
Category: Legal
Expert:  Roger replied 1 year ago.

Hi - my name is ***** ***** I'll be glad to assist.

Federally funded (and federally subsidized private) loans are not dischargeable in bankruptcy, so filing really wouldn't do a lot to relieve you of the debt. Was there some specific language or agreement from bankruptcy court that would allow you to get rid of some of this debt?

Expert:  Roger replied 1 year ago.

Usually, the biggest help with student loans is a chapter 13 consolidation, which would lower payments and reduce your monthly obligation/increase cashflow.

Customer: replied 1 year ago.
These are not federal, they are private. I didn't get out if the debt with my bk, only lowered the interest rate from 22% variable to 5 fixed.
Customer: replied 1 year ago.
You are not answering my question at all, you are totally off topic.
Expert:  Roger replied 1 year ago.

I'm just trying to understand what your situation is....but I'll be glad to opt out and allow someone else to take over if you like.

Customer: replied 1 year ago.
Well you aren't, this is it helpful
Customer: replied 1 year ago.
I did not ask you to send me is new lawyer
Expert:  Gerald, Esq replied 1 year ago.


Thank you for using Just Answer. I want to provide you the best service I can. Please feel free to ask any follow up questions you have.

I am an attorney with 30 years of experience, including substantial experience in student loan collections. I hope to provide you information that will help you in resolving your question.

I am sorry for any confusion in answering your question. This mode of communication sometimes is not as easy as we would hope.

I want to make sure I fully inderstand your question. Are you asking whether the reduction of interest is considered income for tax purposes (like a loan forgiveness

I want you to be comfortable and satisfied with my attempt to assist you.

Please note: Information given is not legal advice. Only your local attorney can give legal advice. I can't establish or accept an attorney-client relationship with you. All posts are available for public viewing.

Customer: replied 1 year ago.
No!!!!!!!! I make payments every month on my student loan, I just called to make my payment and she told me that the SOL expired and any payment I make going forward is considered voluntary. My question is this considered debt forgiveness that will result in increasing my taxable income?
Expert:  Gerald, Esq replied 1 year ago.


Thank you for the clarification. Also thank you for your patience. I wanted to confirm this before responding.

Unfortunately, debt that is "cancelled" as a consequence of the running of the Statute of Limitations is considered taxable by the IRS.

However, you will not declare this as income on your return until you receive a 1099C form from the lender. The 1099 C form alerts the IRS that the debt has been cancelled and why. In regard to debt cancelled due to the Statute of Limitations the code indicated will be Code C. Code C is for:

"Code C — Statute of limitations or expiration of deficiency period. Code C is used to identify cancellation of debt either when the statute of limitations for collecting the debt expires or when the statutory period for filing a claim or beginning a deficiency judgment proceeding expires. In the case of the expiration of a statute of limitations, an identifiable event occurs only if and when your affirmative defense of the statute of limitations is upheld in a final judgment or decision in a judicial proceeding, and the period for appealing the judgment or decision has expired."

You can read more about this in detail here:

It is the obligation of the lender to issue you the 1099C. If they do not you should contact them.

I hope the information I have provided is useful to you. I want you to be comfortable and satisfied with my attempt to assist you. Please, if you have ANY follow up questions, feel free to ask. Please note that I am generally unavailable Friday evening through Sunday.

Please do not forget to give me a positive rating. It adds nothing to your costs but it helps me greatly. Thank you.

If you are dissatisfied with my response PLEASE let me know before giving me a negative review so that I may try to be of better assistance. Or if you prefer, let me know and I can “Opt Out” and your question can be re-posted without additional cost to you. I will be fair to you and only ask the same from you.

Good luck.

Please note: Information is educational and not given as legal advice. Only your local attorney can give legal advice. I can't establish or accept an attorney-client relationship with you. All posts are available for public viewing.

Expert:  Gerald, Esq replied 1 year ago.

One important point:

Even if you did not receive a Form 1099­C, you must report canceled debt as gross income on your tax return unless one of the exceptions or exclusions described later applies.

Good luck.

Kind regards,