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Student Loan/Chapter 13


Student Loan/Chapter 13

I had three student loans with Citibank.  All payments were made.  All payments were on time.  The loans were paid off early.
In December of 2001, I filed a Chapter 13 BK.  The BK was paid off and discharged.  When I filed the BK, my three student loans were included.  I was told to include all debts, regardless of whether they were in default.
Since that time, instead of three student loans on my credit report, there are six.  They all have Citibank's name on them.  Three of them are in the negative category - status IIB/Never Late.  Three of them are in the positive category - status Paid/Closed, Never Late.
I called Citibank this week and asked them why there are six accounts instead of three, and why three of them are negative.  I was told that their records had been purged, and they could not tell for sure, but that the loans had "probably" been purchased by the "guarantor", which I assume is the government.
I was never notified of any such purchase.  Payments were always made directly to Citibank.  There was no change in payment address, payment schedule, or payment amount.  In other words, since Citibank continued servicing the loans as they had always done, I do not believe this to be true.
I have written a letter asking Citibank to remove the three negative accounts.  I now fear they may just remove the three positive accounts and am wondering if I should have just left it alone.  Who knows? Maybe they will remove them simply because their records are purged.  Did I do the right thing in asking for the negative accounts to be removed?  Anyone else ever had the same student loan report twice?
Message 1 of 12
New Contributor

Re: Student Loan/Chapter 13

Here is the bad news:
Federally backed student loans are "special kind of debt"
They can NEVER (under any circumstances) be discharged by BK
They have no SOL.
They can be collected on at anytime forever until paid.
They can seek to garnish your wages without a court order.

Think of Federal Student Loans as the "mob" of debt.

When Citi marked the loan as in BK they simply wrote it off as bad debt for Citi. Essentially Citi washed their hands of it but the loan will NEVER go away until paid. Sorry your BK lawyer didn't let you know this up front. Eventually a CO will pick up the SL and run with it. Not only will the new accounts report late but then a Collections record for each SL will be added.
Message 2 of 12

Re: Student Loan/Chapter 13

I appreciate that you took the time to answer my question CreditMizer, but I'm not sure you read my post carefully.
I did not attempt to have my SL debts discharged, but I did list them.  I listed them as debts because I understood that I was legally required to list all my debts.  I was not allowed to "favor" one debt over another by listing only those I wanted to discharge, or include in the payment plan.  I had to list them all.
Citi could not possibly have washed their hands of my loans because they continued servicing the loans by accepting the payments.  I continued making my SL payments on time, every time, until they were paid off.  I even paid them off early.  So, why would a CO pick up the student loan and run with it?  There is nothing to "run with".  Why would the new accounts report "late"?  They were never late.  Why would a collections record for each SL be added, when they were never in collections and there is no amount due?  There is no collections account listed on my CR.
My question is, why does Citi list each loan twice on my credit report, one IIB and one in good standing, instead of just listing each loan once as either IIB or in good standing?  And will Citi remove the baddies if I ask them, since there was no negative payment history at any time?
Message 3 of 12
New Contributor

Re: Student Loan/Chapter 13

If you paid the student loans in full then it likely is just a mistake. Citi incorrectly reported the loans are dishonored (likely due to you reporting them in BK).

It's not your fault but SL should automatically be re-affirmed (agreed to pay) durring BK process. Likely a clerk made mistake and status of included in BK was sent to Citi. Citi saw this as your refusal to pay. They marked it as bad debt, collected guarantee from federal goverment, and fed sold loan to CO.

Bad news is simultaneously the loan was contuing to be paid by you and eventually was paid off.

This can be easy or hard depending on how much proof you have.

How did you pay loan? Can you prove the loans were paid off? Does citi show record of loans being paid off?

If you and citi can reconstruct payment record then that's good news. You can request citi remove the 2 in BK accounts from credit report.

You can advise them the account was incorrectly & illegally sent to collections.

It will be a paperwork mess but should end up with no negative mark on your CR.

If for some reason neither you nor citibanks records can prove you made any/all payments after BK it will likely get ugly. without proof Citi will likely continue to indicate you stopped paying on debt in BK and they legally collected guarantee and sold off the debt.
Message 4 of 12

Re: Student Loan/Chapter 13

Thanks CreditMizer.  I believe I understand what you are saying.
My auto loan for example was reaffirmed.  I continued making my car payments to the loan company for the duration of the loan until it was paid off.  The maker of the car loan, did not list the loan as IIB.
Citibank did not send my loans to collection and they did send me a letter in 2006 when my loans were paid off, stating such.  I still have that letter.  Citibank agrees that I made all my payments on time and that the loans are paid off.  There is no collection account showing on my report and I have no reason to believe that one will ever appear.
But Citibank did list the loans as closed, IIB, $0 balance - all three of them.  Then, they opened up three new accounts, which all show a perfect payment history.  So now I have three loans listed as IIB with a $0 balance, and three different loans listed as paid as agreed, $0 balance.
But I'm not sure what to dispute.  Should I dispute the three loans that show IIB and state that the loans were reaffirmed and should not be reported as IIB?  Or should I just ask them for GW and ask that the three loans reported as IIB be removed?  Regardless of the outcome, these negative items are due to fall off of my report in 11/2008 (as stated on my report).  Maybe I should just leave well enough alone?
Message 5 of 12
New Contributor

Re: Student Loan/Chapter 13

I would dispute the 3 that show Include in BK. That is easy to do. Most online disputes have option "not included in bankruptcy".

I would talk to citi first to ensure their records are straight. If they are ask them to report to CRA that there are
1) only 3 accounts
2) they were paid in full - never late.
3) oepend on date xxx and closed on date yyy.
4) never in BK.

If you get nowhere with citi then dispute with the CRA directly. Make sure nothing in their system shows as IIB. If it does then when CRA validated with Citi they will say "yes included in BK" and it will be 10x harder to get removed.

Other thing to take look at (minor issue) is you said they opened "new accounts" what is date opened on those? It should show original date otherwise it is "shortchanging" you on account age.
Message 6 of 12

Re: Student Loan/Chapter 13

I got a letter yesterday from Citibank asking me for a copy of my credit report and a letter of explanation.  I had already provided a letter of explanation, but whatever.  At first, I was put off by the request, but I figured I'd better comply if I want to get anything done.
I mailed off a new letter of explanation asking them to remove the three accounts from my reports showing IIB.  I blacked out everything they don't need to see, and sent the two pages from my credit report showing the negative accounts, and the positive accounts.
Also, just FYI, the date opened for the three new positive accounts is 1995, same as the three accounts that show IIB.
We'll see what happens here in 30 days or so.  I'll keep you posted.
Message 7 of 12
New Contributor

Re: Student Loan/Chapter 13

Hang in there Upson. After having a BK back in 2000 I went through similar stuff. Incorrectly reported accounts, wrong dates, wrong statuses. The problem with the system is that there is no penalty or liability on the CRA or the creditors if they put wrong info in your report.

If it were up to me wrong info in report would be considered a form of libel and once you proved it was incorrect you could claim $1,000 in damages per instance. If you are wrongly denied credit you can claim $10K in damages. If not fixed within 30 days you could sue for $50,000 per instance.

Almost overnight 99% of the problems involving CR would disappear. Of course that will never happen because the creditors and CRA have such a powerful lobby.
Message 8 of 12

Re: Student Loan/Chapter 13

I wanted you to know that I received a letter from Citbank today that states:
"We have submitted an update to all three National Credit Reporting Agencies to have the inaccurate reporting updated to the correct reporting status of your loans on your credit profile as your loans were not discharged in your bankruptcy."
I appreciate your help with this.  Until you helped me, I didn't know exactly what to dispute.  I knew that what they were reporting was not correct, but I didn't realize that in fact, the loans hadn't been discharged as was being reported.  I never actually got a letter from anyone that reaffirmed the loans, but I always knew that they could not be discharged and I continued to pay them every month until they were paid off.
Since they were so old, and due to fall off this November, it probably won't be much of a FICO bump, but we'll see.  It can't hurt.
Message 9 of 12

Re: Student Loan/Chapter 13

Well, I was wrong about the size of the credit bump I would get from this deletion.  My EQ score just jumped 18 points!  Thanks to CreditMizer, I'm officially in the 700 club (by 1 point)!
Thanks again!
Message 10 of 12