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Private student loan default & wage garnishment

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Should I dispute my student loan and the amount due which may provoke a judgment and wage garnishment in OH?  Because I am planning on filing bankruptcy on a ton of medical bills and I cannot pay $33100 for the private student loan---not even a portion of it right away (maybe in a year I could pay a third by saving 600-800 a month).  But I am disabled and have a small part time job where I am getting paid $500 net after taxes per month.  Can anyone confirm what the statute of limitations for a judgment in OH is?  Why is this information not available to the public and you have to talk to lawyers to get one answer while another gives a different answer?  I have talked to lawyers and they all suggest settling and making some kind of payment plan that in 3 or 4 years would pay off the loan---what I have read of debt relief agencies in this forum and on the OH Attorney General's Office online scares me in surrendering my hard earned money to some trust that could disappear!  Please help....

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When did you take out the loan? We're you living in Ohio when you took it out? When is the DofD? Who was the OC?

From what I googled pn Ohio private student loan SOL, contract SOL is 8 years, but the courts see PSLs as commercial paper, which is 6 years. There were some changes to SOLs in Ohio a few years ago, so when you took it out could affect SOL. Also, SOLs for these loans depends usually on what state it was taken out in.

How long ago you defaulted, and who the OC was (as well as the CA) could help gauge the likelihood of a lawsuit. They have to sue you before getting a judgement and garnishment.

Finally, a PSL can be included in bankruptcy. There have been misconceptions that they can't, because it's a student loan. PSLs are not federally guaranteed, so they cam be discharged, like a private loan. A bankruptcy attorney would be able to advise you on your situation.

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Hi Tralston,

 

I took out the loan in 1996 in Washington, D.C.  I was not living in OH when I took out the loan.  The original creditor was Key Bank, serviced for many years by AES until 2016, when Key Bank took back the loan and after I disputed the validity of the loan (because I thought the repayment term was over--20 years), I never heard from them again until this Credit Agency sent me a letter in the mail from NY where they are located.  The default happened when I was living in the state of NY, right before I moved to OH.

 

I had no idea that a Promissory Student Loan (is that PSL) can be included in bankruptcy.  Thank you for pointing that out.  I will call back a bankruptcy lawyer and see what they say.  I think I just read online that loans taken out from non for profit schools (mine was) cannot be discharged in bankruptcy....if I find the link I will post it in here.  Thank you for responding.  I hope there is something I can do to protect myself from the worst---wage garnishment, interest charges etc etc.

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9 hours ago, Ambrcat14 said:

 I think I just read online that loans taken out from non for profit schools (mine was) cannot be discharged in bankruptcy....if I find the link I will post it in here.  Thank you for responding.  I hope there is something I can do to protect myself from the worst---wage garnishment, interest charges etc etc.

Generally speaking, the loans that are not subject to a discharge through BK are those which were federally-guaranteed.  A private loan would generally fall into the same category as any other debt.  The nature of the school is not, to my understanding, an element in the BK equation. 

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You are correct Centex. There are some schools who will also give out loans, and those are considered like federal loans, but that's not what this one sounds like.

IMO, AES is one of the most inept servicers. If you had a 20 year repayment term, how is there still a balance? Do you have any records still of this loan, especially the original contract, and paperwork from the end of the term?

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I keep forgetting to save the links where I read the information but I found an article on google scholar that stated that if you get a tax break for interest on any loan then it's considered a student loan and is nondischargeable.  I would like to find out why you both think this loan is dischargeable.  How do I find out if it is federally guaranteed for example, Centex, thank you for the information.  Tralson you're right about the balance issue on this loan---in twenty years, I didn't even touch the principal amount.  I do have records of this loan, the original contract and a record of a charge off by Key Bank. 

 

The loan promissory note says I should repay this loan plus interest in full in 240 months, plus if there is interest left over that they would increase the monthly payment amount owed.  It is my understanding of the promissory note.  I spoke with lawyers about this and they don't seem too concerned about the amount not being accurate because they say interest and collection efforts would tack on a lot more if I let this go into default and collected by a collection agency.  Plus all these consumer lawyers just sound interested in cutting a deal with the CA, not litigating or providing any info about the SOL

 

The FDCPA states the following about adding interest, fees or expense "incidental to the principal obligation":

§1692f. Unfair practices

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

 

The FDCPA also states that:

§1692i. Legal actions by debt collectors

(a) Venue

Any debt collector who brings any legal action on a debt against any consumer shall—

(1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or

(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity—

(A) in which such consumer signed the contract sued upon; or

(B) in which such consumer resides at the commencement of the action.

The lawyers in OH keep telling me the venue is for OH (probably bc they want to make money off this and take my case) and another lawyer in DC told me the jurisdiction was DC but "it depends" whether the DC SOL was up already (3 years, which I am past for DC).

 

My question is whether I could use the DC SOL to argue that the CA can no longer bring an action against me since the SOL of where I signed for this loan is up....sorry for the long account.....I'm really unable to keep paying on this loan after becoming disabled.  I am a shell of a person now with all of these loans, medical debts and as I keep getting older, I worry so much about the future.  TIA

 

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I also don't know if the OH SOL of written contracts prior to 2012 (I signed the loan in 1996 and the promissory note says that if I sue Key Bank that it must be in OH) has a SOL of 15 years versus 8 years that it was changed to in 2012 by the governor. 

 

Tralston, you mentioned, " From what I googled pn Ohio private student loan SOL, contract SOL is 8 years, but the courts see PSLs as commercial paper, which is 6 years. There were some changes to SOLs in Ohio a few years ago, so when you took it out could affect SOL. Also, SOLs for these loans depends usually on what state it was taken out in. "  Does it mean that my SOL could actually be 15 years because I signed the PSL in 1996?  Could DC SOL of 3 years wipe away their ability to sue me or take legal action?  Thank you!  TIA!  Otherwise, I would be stuck with legal action threats for 15 years plus if they pass judgment, 15 years of the threat of judgment!

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Doc's SOL might trump Ohios. New York's might as well, since that's where you lived when it defaulted. Someone with more experience on that might be able to answer.

As for whether your loan is a private or federal student loan, did you get it through the school, or did you go directly to Key West to get it? The best way to know for sure, is to get on the nslds.edu site. It will list all of the federal student loans you have, and their status. If this loan is not on there, then it's a private student loan. If it's a private student loan, then it's the same as any other debt.

As for it being dischargeable or not, again, a bankruptcy attorney can advise you on your specific circumstances. We can only tell you that there's a possibility, one with a higher likelihood of being dischargeable if it's private.



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Hi Tralston,

 

Thanks very much for your input.  I hope DC's SOL trumps all of them. 

 

To answer your question about whether this is a private loan, it is not listed on the nslds.edu site.

 

I spoke with a couple of attorneys in OH and they both said the private loan is not dischargeable in bankruptcy unfortunately. 

 

If there is any loophole about the loan being dischargeable, I haven't found it yet but plan on talking with a DC lawyer on Monday--I'll let you all know what she says.  Idk.  There are so many ways this could go.  Crossing my fingers.

 

Thanks very much again

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18 hours ago, tralston3838 said:

When did you take out the loan? We're you living in Ohio when you took it out? When is the DofD? Who was the OC?

From what I googled pn Ohio private student loan SOL, contract SOL is 8 years, but the courts see PSLs as commercial paper, which is 6 years. There were some changes to SOLs in Ohio a few years ago, so when you took it out could affect SOL. Also, SOLs for these loans depends usually on what state it was taken out in.

How long ago you defaulted, and who the OC was (as well as the CA) could help gauge the likelihood of a lawsuit. They have to sue you before getting a judgement and garnishment.

Finally, a PSL can be included in bankruptcy. There have been misconceptions that they can't, because it's a student loan. PSLs are not federally guaranteed, so they cam be discharged, like a private loan. A bankruptcy attorney would be able to advise you on your situation.

Sent from my SAMSUNG-SM-G890A using Tapatalk
 

Tralston, the name of the Credit Agency is Capital Management in Buffalo, NY if you have heard anything about them...date of default was the end of 2016, I'll look up the exact date.

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20 minutes ago, tralston3838 said:

Check the courts around your Old NY address.

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Thank you Tralston, what do you suggest I look for in the court system, thank you

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It has been too many years since I had to deal with deductions, but I don't recall the 1040 instructions drawing a distinction between private and federal loans with respect to deductions for interest paid. 

 

That being said, and as pertains to anything you read, whether on Scholar or any other site, is that regulations can often depend on important things like dates of the loan.  It is the same in some respects as with criminal law in that something keyed to one date may not be applicable to something occurring on a different date even if the facts are the same in all other respects.  Knowing the date allows you to then be able to review what the law was on that date.  Changes made after that date may or may not be applied in a retroactive fashion...

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Thank you Centex, that's a good point.  I will and should look into it;  will keep you all updated.

On 12/9/2019 at 11:57 AM, centex said:

It has been too many years since I had to deal with deductions, but I don't recall the 1040 instructions drawing a distinction between private and federal loans with respect to deductions for interest paid. 

 

That being said, and as pertains to anything you read, whether on Scholar or any other site, is that regulations can often depend on important things like dates of the loan.  It is the same in some respects as with criminal law in that something keyed to one date may not be applicable to something occurring on a different date even if the facts are the same in all other respects.  Knowing the date allows you to then be able to review what the law was on that date.  Changes made after that date may or may not be applied in a retroactive fashion...

 

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On 12/9/2019 at 11:57 AM, centex said:

It has been too many years since I had to deal with deductions, but I don't recall the 1040 instructions drawing a distinction between private and federal loans with respect to deductions for interest paid. 

 

That being said, and as pertains to anything you read, whether on Scholar or any other site, is that regulations can often depend on important things like dates of the loan.  It is the same in some respects as with criminal law in that something keyed to one date may not be applicable to something occurring on a different date even if the facts are the same in all other respects.  Knowing the date allows you to then be able to review what the law was on that date.  Changes made after that date may or may not be applied in a retroactive fashion...

The dates that I took out my loans were 1996 and 1997; I've tried looking this up but the amendments to the Higher Education Act where this is mentioned are really complicated...there are other acts as well; not too sure I understand how the laws changed.

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