Discover Student Loan Charge Off

[Xyta]

Got a letter saying essentially "Discover is exiting the student loan business, as a result these four loans have balances that have been reduced to $0. The loan status with consumer reporting agencies will show Account paid in full, was a charge off". Here's my questions: 

1) Does this mean that Discover won't sue me moving forward for these loans that had defaulted? (they were private loans). 

2) Will they be "sold" to a debt collector? If they reduced the balances to $0, I guess I don't see how that's possible, but I'm also not naive enough to think that this will just "go away". 

3) Is this account status positive to my credit in anyway, since they chose to reduce the loans (vs charging off in a typical sense?). 

Has anyone else experienced this with Discover?

[pizzadude]

I can only speculate but my guess is that Discover won't try to sue you at this point.  It's certainly possible they might sell the debt off to a CA but I don't know if it's likely.  If the accounts were already defaulted with lates / derogatory notations then I don't think the CO status will hurt your FICO scores much more than they're already being dinged.  

One other consideration, you may receive a 1099 from them for the amount they forgave,

so look for that in the future. 

[Xyta]

yea their letter said they'd be doing the 1099. 

[halah]

Just got the same letter. I think they loans are gone. Ours (I'm the cosigner) were originally with Citibank and some of them were sold to Discover. The loans that stayed Citibank were forgiven about 3 years ago. I'm assuming this letter means the Discover loans are forgiven too, and this nightmare is finally over, but I contacted the attorney we hired to deal with them just to confirm. I can post here again once I get a response.

[Realist]

Discover exited the student loan business.  They sold the line to Firstmark I believe.   You should have recieved communication to this event.

If you did not, I would be concerned.  Loans don't simply vanish or become discharged with for profit institutions.  Reach out, and find out with absolute certainty, if your loan exists, and the terms of it moving forward.  Student loans are the only loans not available for discharge, even through bankrupcty, so it's in your best interest to figure out the situation.

We did the Discover loans interest only program, and it moved to Firstmark.  We then refi'd to another company for a 3-4% less rate after the change.  

[halah]

Just wanted to follow up to say that my loans are, indeed, forgiven. They are reporting with zero balance and "paid in full" as opposed to how they were previously reporting as charged off.

This happened to the chunk of the loans still with Citibank a few years ago. I'm not sure why the companies would do this, but I'm sure it has to do with their defaulted/discharged status. I also have a hypothesis that it might be because the conpanies have lost track of documentation of the contract/promissory note, and therefore would be unable to go to court, so it's not worth the hassle. The ex-spouse I cosigned for attended a program of dubious credibility and never completed a degree program. I had retained an attorney who specializes in student loan debt to fight/settle on them years ago (a few years before the pandemic) and would have gladly settled, but never received a legitimate offer.

Patience has paid off in my case, and I can put the big financial mistake of my life in the past.