I filed for Bankrupcy in Feb, 2012. For all intents and purposes, the process went pretty well. I had a fresh start, and things look good for the future.
I hold two Student Loans, one through Direct Loans, another through Citibank (private student loan - recently transferred to Discover). I took out the Citibank loan in 2001 and had approximately $5,200 remaining. The Direct Loans was a Parent Loan for my daughter, at about $46,000. These were included in the petition.
Knowing that Student Loans cannot be forgiven in Ch 7, I continued to pay both loans - both of which were never were past due. Payments were sent electronically (on-time), to both lenders through my bank. Payments continue to go to both lenders.
There appears to be no issues with the Direct Loan, I am receiving statements from them and payments are being applied.
However, on the Citibank loan, my last statement was recieved in February. Despite not seeing any statements, I continued to pay my regular amounts - it had been set up that way for years through my bank.
In May, soon after discharge, I started receiving collection letters from a Collection Agency stating that the full $5,200 was due. They were particularly agressive, calling me at work - despite requesting them to stop, threatening wage garnishment. When I asked why the loan was charged off, they said it was in the contract - they could call the loan if a BK was filed. When I asked why I was not contacted about this prior to charge-off, they said they were not allowed to call due to the BK. I received absolutely no correspondence from Citibank prior to this.
During this time, I continued to make payments to Citibank. The loan would be current if the collection company were not involved. The collection agency is now threatening Legal Action unless I pay in full.
I continue to make payments to Citibank, and have never been late. They are cashing the checks, however, I have no way of knowing where that money is going. The calls and letters continue from the collection agency.
Why was Citibank able to charge-off a loan that was not past due? I feel backed into a corner, I just cleared my debts - and now another huge one is looming? To me, this does not seem legal. What ( if any ) recourse do I have?
Long story...looking for help.
This is more common with car loans - the finance company contracts establishes bankruptcy as a default. With car loans the way you deal with that is to reaffirm the loan in bankruptcy. To do that now you would need to reopen your case.
If I were you I would ask my attorney. This sounds like a mess being manipulated by the lender. While they couldn't communicate with you they could and should have communicated with your attorney.
I had a similar experience with a car loan I was required to pay off by my divorce decree. I actually finished paying it after filing BK but before discharge, so didn't reaffirm. The lender eventually took it off IIB reporting.
I don't have an answer, but I'm handling defaulted student loans after just getting discharged from BK, so this information might help you (at least if Citibank says it had no choice in what it did).
I let my loan default while I was trying to pay hundreds of thousands of dollars in medical debt. Finally, when the loan went to collection, I bit the bullet and filed for BK7. Once I stopped making payments on credit cards and the debt, I had money free to make student loan payments. I made a payment electronically to the pre-collection holder of my loan, AES (the collector was DCS) using the information from my previous online payments to them. I expected I'd get a statement after my first payment, but didn't. I called and was told that AES could not collect from me or contact me during the BK and that they felt like they shouldn't even be TALKING to me. I did get the CSR to verify that they had received the payment, and she gave me a better address to send it to when I paid online. She also told me that DCS had turned the loan back over to them as soon as I filed.
While I was in my automatic stay, I made 2 more payments to AES. Never heard (or expected to hear) from them. My BK discharged yesterday and I called AES today. They acknowledged the payments made during BK and told me the only way to start making payments again was to rehabilitate the loan. They asked (in a perfunctory way) if I could make a down payment, and when I said no, they settled for the $500 a month I've been paying for the last few months (well over the 1% minimum I've read about on these boards). After 9 consecutive payments the loan will be rehabilitated.
So while my experience tells me that Citicorp was right to say they couldn't contact you during the automatic stay, the fact is that AES did not send my loan back to collections. They did credit my payments while I was in BK. I'm not WORSE off now, the way you are.
If you used an attorney during your BK, I would call and ask about this situation. If you didn't, or don't feel comfortable calling, I do think you need to speak to another lawyer or some kind of consumer agency. There are penalties for violating federal credit law, and that might make this worth taking up by some lawyer.
Oh and I agree that Citibank or the collector should have called your attorney when they couldn't contact you-- I called the MCVCIS number to get the status of my BK, and it gives the name of the lawyer and the lawyer's phone number, twice. Anyone checking your account would've gotten that information (if you were represented).
Thanks. I have contacted the attorney, she said to tell them I've been making payments, which I did.
Probably need to be more forceful with the attorney as things heat up with the collection agency. I'll keep the board posted, as I think that I am not at all being treated fairly as it was my intent to pay all along.
Personally, I would let the attorney handle the collector.