topic Re: statute limitation private student loans in Student Loans

statute limitation private student loans

Anonymous — Sat, 21 Apr 2012 13:41:39 GMT

I have a question I hope someone can help me with. When I was in college I took out 2 private institutional loans through my university, one in 1997 for $1000 and one in 2000 for $7000. I graduated in 2002, and immediately consolidated all my federally-subsidized loans. I have been paying on them ever since, and have never missed a payment. However, it appears my two private loans were not included in my consolidation.

Fast forward 15 years. In April, 2012, they appeared on my credit report as a "charge-off, 0 balance, date of charge-off 3/12/12". DH and I are saving to buy a house in the next six months, and this just dropped my fico score from 720 to 612 overnight! In the past 15 years, I have never received a bill from my old University, nor have they attempted to collect, nor have these been listed on my credit report before. In short, I had no idea these were not consolidated and were still outstanding.

I looked at my promisory notes, and there is no federal guarantee on these loans. I also checked with the National Student Loan Database, and they are not listed in my file.

My questions, then are several:

1. If the loans are truly private, aren't they subject to a state's regular statute of limitations for loans, and therefore past the date which they can report to my credit report?

2. If I have had no activity on these loans for 15 years, and thereoretically defaulted 10 years ago, why are they listing the date of activity as "3/12/12"? This in effect puts these charge-offs on my credit report until 2019.

3. I would like to dispute these. Does anyone have advice as to the best method?

Please know that I am not one to avoid my obligations. If I truly owe these loans, I will work out a plan to repay them with my university. However, I do not want a 15 year-old debt popping up to prevent us from buying a home.

Thank you for your advice.

Re: statute limitation private student loans

pizzadude — Sun, 22 Apr 2012 03:10:41 GMT

1. If the loans are truly private, aren't they subject to a state's regular statute of limitations for loans, and therefore past the date which they can report to my credit report?

The Statue of Limitations is the period of time in which legal action can be brought against you for unpaid debt. I would look into the SOL for your state for written contracts to see where you stand on this, my understanding is that private student loans would be considered written contracts. The credit reporting time period ( CRTP ) should be 7.5 years from the DOFD of the account, which is the first time that you became deliquent prior to the accounts being charged off or sent to collections. Based on what you have said it sounds like the DOFD for these loans would have been in 2002, if you made no payments since then....is that accurate ?

You should check to see if there is a DOFD reported ~ what CRA are you looking at ? If you pull your Equifax report there should be a DOFD, the reports from Transunion and Experian show an estimated drop~off date. Even though you defaulted many years ago, it sounds like they kept the accounts open and didn't charge them off until now, but they would still have to report a DOFD if they are reporting them as charged~off now. This is a very strange situation, it sounds they are reporting you as being retroactively deliquent for the past 10 years ! IMO even though the charge off event happened this month, the deliquencies preceeding should preclude it from being reported.

3. I would like to dispute these. Does anyone have advice as to the best method?

In order to determine the best approach for this, can you provide some additional information ~ who is the creditor reporting this charge~off, is it the university ? Are the loans being reported as installment accounts or as collections now ?

Re: statute limitation private student loans

Anonymous — Sun, 22 Apr 2012 13:25:05 GMT

Pizzadude, thank you for your reply. Here is some information from my Equifax credit file, which will hopefully answer some of your questions.

The student loans in question are not with a collection agency, the charge-off report came directly from Cornell University. The report looks like this:

Type of Account: Individual

Status: Chargeoff

Term Duration: 120 Months

Date Opened: 1997

Date Reported: 2012

Charge Off Amount: $7,095

Balance: 0

Amount Past Due: 0

Scheduled Payment Amount: $86

Date of Last Activity: N/A

Date Major Delinquency First Reported: 04/2012

Months Reviewed: N/A

Date of First Delinquency: 3/2012

No 81-Month Payment Data available for display.

The reports for both loans look identical, just with different dollar amounts in the charge-off column.

Clearly, they have reported my date of first delinquency wrong. As, since I've never paid on these loans, my first delinquency would have occured sometime in 2002 or 2003, not in March of 2012. The fact that they've included no 81 month payment history seems weird, as well. I mean, if they are going to charge-off a loan that has been delinquent for 10 years, wouldn't they have 10 years of negative history?

I also checked my TU and EXP reports, and they are reporting similarly. TU states the date the report will be removed from my file as 3/2019. So it looks like all the bureaus are treating this as a new report, and not a 10 year old debt.

I really would like to dispute these. Any advice on how to proceed would be greatly appreciated.

Thanks!

Re: statute limitation private student loans

IOBA — Sun, 22 Apr 2012 14:45:01 GMT

haytertots - it sounds like the school finally removed the debt from their books in 2012 as a charge off. That they can report for the next 7.5 years.

All of the previously missed payments can only report up to 7.5 yrs.

Have you considered paying the school and asking them to delete the tradeline?

Have you been contacted by any CA? Once the school charges it off, then the next step would be to sell it to a CA.

Re: statute limitation private student loans

webhopper — Sun, 22 Apr 2012 14:47:14 GMT

@Anonymous wrote:
Pizzadude, thank you for your reply. Here is some information from my Equifax credit file, which will hopefully answer some of your questions.
The student loans in question are not with a collection agency, the charge-off report came directly from Cornell University. The report looks like this:

Type of Account: Individual
Status: Chargeoff
Term Duration: 120 Months
Date Opened: 1997
Date Reported: 2012
Charge Off Amount: $7,095
Balance: 0
Amount Past Due: 0
Scheduled Payment Amount: $86
Date of Last Activity: N/A
Date Major Delinquency First Reported: 04/2012
Months Reviewed: N/A
Date of First Delinquency: 3/2012
No 81-Month Payment Data available for display.

The reports for both loans look identical, just with different dollar amounts in the charge-off column.

Clearly, they have reported my date of first delinquency wrong. As, since I've never paid on these loans, my first delinquency would have occured sometime in 2002 or 2003, not in March of 2012. The fact that they've included no 81 month payment history seems weird, as well. I mean, if they are going to charge-off a loan that has been delinquent for 10 years, wouldn't they have 10 years of negative history?

I also checked my TU and EXP reports, and they are reporting similarly. TU states the date the report will be removed from my file as 3/2019. So it looks like all the bureaus are treating this as a new report, and not a 10 year old debt.

I really would like to dispute these. Any advice on how to proceed would be greatly appreciated.

Thanks!

It seems like the DOFD is wrong on this... you could dispute that.. if you have any paperwork that says the opposite, you should make a copy and dispute this with the Credit Bureaus... Creditors cannot re-age a debt like this. Its against the Fair Credit Reporting Act.

Re: statute limitation private student loans

webhopper — Sun, 22 Apr 2012 14:47:49 GMT

I would definately dispute this, since the Day of First Delinquency is wrong

Re: statute limitation private student loans

pizzadude — Sun, 22 Apr 2012 15:01:53 GMT

Ok, well I agree that the DOFD shouldn't be 3/2012, since you have been deliquent for 10+ years. But can you clarify what state the loans were in when you stopped paying ~ or did you ever submit any payments on them after you graduated ? I'm just wondering if the loans were somehow put into some type of deferrment or suspension status, and that this might have stopped them from being collected on.......Do you have any idea if this might have happened ??

Also, I'm not sure if you live in Jersey now, but the SOL for NJ is 6 years for written contracts.

Re: statute limitation private student loans

Anonymous — Sun, 22 Apr 2012 15:05:24 GMT

Pizzadude:

The loans were originally taken in NY. I moved to WA in 2003. I never made a payment or applied for a deferment on these loans, since I thought they were included in my consolidation.

Re: statute limitation private student loans

Anonymous — Sun, 22 Apr 2012 15:08:19 GMT

IOBA: I agree that it sounds like they finally removed them from their books. But does that supercede the statute of limitations? This sounds like re-aging to me. Also, if a DOFD is 10 years ago, and the statute of limitations has expired, can a collection agency legally come after me for these just because the university finally charged off the debt?

I would love to approach the university about a payoff, but I will need to save $7k cash first. In the meantime, I'd like to dispute.

Sorry for so many questions, I am just really confused where I stand legally and how to approach this.

Re: statute limitation private student loans

pizzadude — Sun, 22 Apr 2012 15:55:19 GMT

@Anonymous wrote:
Pizzadude:

The loans were originally taken in NY. I moved to WA in 2003. I never made a payment or applied for a deferment on these loans, since I thought they were included in my consolidation.

SOL for WA is also 6 years. Maybe since you didn't make any payments, the loans were put into some kind of deferred status ~ does any of your loan paperwork mention this ?

Since the OC is reporting, I would initiate a dispute directly with them challenging their reporting of the recent deliquencies.

Re: statute limitation private student loans

IOBA — Sun, 22 Apr 2012 20:23:01 GMT

haytertots - I know it hurts right now, but no, I don't think it's reaging. I think that they reported the first date of default is wrong, but the first report of major delinquency is correct since the "major delinquency" is considered the charge off.

The CR can not show the last 10 yrs of missed payments, BUT it can show the last 7.5 yrs of missed payments. It looks like the school is not going to add that to your report, which is a blessing.

The charge off is a NEW event - which the school has every right to report to the CB. The NEW event can report up to 7.5 yrs.

The school CAN come after you for the money and so can a CA. Just because the debt is old, and maybe past the SOL, does not change the fact you borrowed the money and did not pay it back.

The SOL is used for taking legal action, not releasing you from the debt/obligation to pay.

Do you have any money you can give to the school?

My suggestion would be to call the school and talk to them. Be polite and courteous, no matter how the conversation goes. Nicely explain that you thought the loan had been consildated with your other student loans. You are surprised to find out it wasn't, but would like to make things right. Offer the school a choice - settle for x amount (whatever you can come up with - maybe 50%) or monthly payments of xx to pay it off within the next two -five years.

If you can settle with them, ask for a deletion of the tradeline.

Re: statute limitation private student loans

Walt_K — Sun, 22 Apr 2012 20:49:13 GMT

@IOBA wrote:
haytertots - I know it hurts right now, but no, I don't think it's reaging. I think that they reported the first date of default is wrong, but the first report of major delinquency is correct since the "major delinquency" is considered the charge off.

The CR can not show the last 10 yrs of missed payments, BUT it can show the last 7.5 yrs of missed payments. It looks like the school is not going to add that to your report, which is a blessing.

The charge off is a NEW event - which the school has every right to report to the CB. The NEW event can report up to 7.5 yrs.

Are you sure about this part? I thought it came off based on DOFD.

Re: statute limitation private student loans

IOBA — Sun, 22 Apr 2012 20:55:19 GMT

Walt_K - all baddies can stay on up to 7.5 yrs from the date that they occured.

Her charge off occurred 03/2012 or 04/2012. The charge off would be a NEW event and that can stay on her report for up to 7.5 yrs.

Most companies will allow about 6 months of no payments before they do the charge off. It's usual for a company to wait ten years to do a charge off. But yes, they can report the charge off that just occurred becuase it just happened.

The school can NOT go back and report the lates dating 10 years ago. The max that they can report backwards is 7 yrs for each late. So they could create a history for the OP that dates back to 03/2002 and say she's had lates every month since then. Which, technically, she has. Then in 04/2012 the late of 03/2002 should be gone. In 05/2012 the late from 04/2002 should be gone. In 06/2012 the late from 05/2002 should be gone. The status of charge off would stay on the report for up to 7.5 yrs.

I hope this makes sense.

I think the OP's best course of action is to call the school and work something out with them for repayment and for deletion of the tradeline. With the loans being that old, the school would probably work with her.

Re: statute limitation private student loans

IOBA — Sun, 22 Apr 2012 20:59:44 GMT

Walt_K - PS - the school can NOT report the OP as being late anymore. As of the date of the charge off, her balance would report as zero.

A CA may come along and start reporting the collection with a balance (loan plus collection fees, plus interest). The CA would be going from the date of the last action - which was the charge off - and can report (I believe) for up to 7.5 yrs from date of charge off.

I don't know how the SOL would apply to a private student loan, but based on what others have shared, it appears the SOL is past so the CA can't take her to court.

This may be one for the Mighty Moderators to chime in. It's definitely tricky with the charge off just happening.

Hopefully the OP can take care of the account before anything else happens.

Re: statute limitation private student loans

Walt_K — Sun, 22 Apr 2012 21:13:06 GMT

@IOBA wrote:
Walt_K - all baddies can stay on up to 7.5 yrs from the date that they occured.

Her charge off occurred 03/2012 or 04/2012. The charge off would be a NEW event and that can stay on her report for up to 7.5 yrs.

Most companies will allow about 6 months of no payments before they do the charge off. It's usual for a company to wait ten years to do a charge off. But yes, they can report the charge off that just occurred becuase it just happened.

The school can NOT go back and report the lates dating 10 years ago. The max that they can report backwards is 7 yrs for each late. So they could create a history for the OP that dates back to 03/2002 and say she's had lates every month since then. Which, technically, she has. Then in 04/2012 the late of 03/2002 should be gone. In 05/2012 the late from 04/2002 should be gone. In 06/2012 the late from 05/2002 should be gone. The status of charge off would stay on the report for up to 7.5 yrs.

I hope this makes sense.

I think the OP's best course of action is to call the school and work something out with them for repayment and for deletion of the tradeline. With the loans being that old, the school would probably work with her.

I'm not an expert in this. RobertEG's posts would be good to search. But I don't think this is correct.

I'm looking at FCRA 605(c)(1). The 7-year period referred to in paragraphs (4) and (6) of subsection (a) [note, paragraph (4) is for collections and charge-offs], shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.

I read this as saying that you count from the date of first delinquency that preceded the charge off. It doesn't say you count from the date the charge off was placed.

ETA: I believe this is also the reason you can't put an old collection on the report. You could say that placing the account with a new collection agency is a new event that can be reported for 7.5 years. I'm pretty sure it doesn't work that way. You go from the DOFD.

Re: statute limitation private student loans

Anonymous — Mon, 23 Apr 2012 01:39:53 GMT

IOBA wrote:

The CR can not show the last 10 yrs of missed payments, BUT it can show the last 7.5 yrs of missed payments. It looks like the school is not going to add that to your report, which is a blessing.

The charge off is a NEW event - which the school has every right to report to the CB. The NEW event can report up to 7.5 yrs.

So, if this is true, you are saying that as long as a creditor keeps a file open on their books, they can incur a "new event" anytime they want, and then report this to the credit bureaus? Please correct me if I am wrong, but this seems in contrast to what was recently quoted from the Fair Debt Collection Act. I thought that the DOFD was used to prevent this, so that debtors can recover from past mistakes in a timely manner, rather than their debts chasing them for the rest of their lives. From what I've read, new activity that can reset the 7.5 year reporting limits have to be initiated from the borrower, in the form of a payment arrangement, etc. In my case, since I didn't know the loan existed, I have made no such payments or arrangements. Also in my case, the creditor waited until there was 10 years of delinquent history to write the loan off and report it as new activity. This means that by the time this finally falls off my credit report, it will be nearly an 18 year-old debt. This doesn't ring true to me.

In your opinions, should I contact the OC & attempt a settlement, or should I seek the advice of an attorney as to the legal grounds for disputing the debt?

Thanks again for all your advice. I'm not sure if I know with certainty where I stand, but your advice is very helpful. It seems mine is definitely an odd predicament.

Re: statute limitation private student loans

IOBA — Mon, 23 Apr 2012 16:17:24 GMT

Walt_K - the wording is open to intepretation, I know. Maybe one of the Mighty Moderators will pipe in.

With the wording you provided, to me, it sounds like the change was the change in profit/loss, and can be reported.

haytertots - IMO, yes, contact the school and work out a payment plan. Regardless what you thought happened 10 yrs ago, the school kept the loan on their books. You definitely want to resolve things with them instead of a CA.

IMO, they can report the charge off for up to 7.5 yrs (for this, since there is no reporting history behind it, I think it's 7 yrs). This is a new scenario that I don't remember reading about before. It's my understanding that they can report, but I could be wrong.

Whether I am right or wrong, the debt exists and they can try to collect forever. The best bet is to contact the school, ask them to remove it from your CR, and pay them directly.

Re: statute limitation private student loans

pizzadude — Mon, 23 Apr 2012 19:40:29 GMT

I think the first thing that has to be straightened out is the DOFD. If the DOFD is really back in 2002 then any collections that come up would be past CRTP and should not show. The CRTP for collections is always based on the DOFD of the original account ~ not the charge~off date or the date assigned.

I agree that the question of the original account reporting is very confusing ~ I would also assume that it would also be past CRTP if the DOFD was changed to 2002, since it would long since be past 7.5 years.

I think the OP's best approach is to dispute the DOFD with the original creditor. I'll also ask one of the mods to give us their option as well.

Re: statute limitation private student loans

Walt_K — Mon, 23 Apr 2012 22:25:04 GMT

@pizzadude wrote:

I think the first thing that has to be straightened out is the DOFD.    If the DOFD is really back in 2002 then any collections that come up would be past CRTP and should not show.   The CRTP for collections is always based on the DOFD of the original account ~ not the charge~off date or the date assigned.

I agree that the question of the original account reporting is very confusing ~ I would also assume that it would also be past CRTP if the DOFD was changed to 2002, since it would long since be past 7.5 years.

I think the OP's best approach is to dispute the DOFD with the original creditor.     I'll also ask one of the mods to give us their option as well.

I also come out on the side that if DOFD is corrected, this should be taken off. FCRA 605(a)(4) says that accounts charged to profit and loss which antedate the report by more than seven years must be excluded. FCRA 605(c) says you count those seven years from the expiration of the 180 day period beginning with the commencement of the delinquency which preceded the charge off.

Based on this, it doesn't matter that the charge off is a new event. You still have to look at how you measure the 7 years for that new event, and you do that by looking at the DOFD.

While waiting for a mod, I would also suggest that OP run some searches for RobertEG and DOFD.

Re: statute limitation private student loans

pizzadude — Tue, 24 Apr 2012 04:36:19 GMT

One of our Mods, Lightnin, found this post: http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Charge-Offs-fall-off-when/m-p/1362841#M183284

I'm would think that it applies to student loans as well.