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Student loan from 9 years ago. Time barred?

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Student loan from 9 years ago. Time barred?

My wife signed up with a state University in mid 2010. My health condition deteriorated greatly at the same time so she only attended two days.  I have a chronic rare illness expected to result in death. Because she was young, she neglected paying it or dropping out.  She owed $6200. Her state taxes were garnished the next year or so leaving $5900 owed.  Then we never heard from it again. In fact a year later when it showed up on her credit it was green and good and settled, even though we clearly didn't pay it.

We log into the government student loan website and the loan name and date show up there but just has zeros for everything.

Now, 9 years later, we have received a letter from collection agency EOS CCA stating that they have collected the debt of $5888 and we should pay.  However, it also says

"This is a time barred debt and no legal action may be filed."

If it's a government loan, why does the collection paper we got today say it's time barred?

Can this hit her credit after 9 years if it hasn't already?

Can they garnish her wages?

Should we try to negotiate a settlement?
 

Sorry this is so confusing, if anyone could adivse we'd be grateful.

Message 1 of 14
13 REPLIES 13
New Contributor

Re: Student loan from 9 years ago. Time barred?


@ThackeryBinks wrote:

My wife signed up with a state University in mid 2010. My health condition deteriorated greatly at the same time so she only attended two days.  I have a chronic rare illness expected to result in death. Because she was young, she neglected paying it or dropping out.  She owed $6200. Her state taxes were garnished the next year or so leaving $5900 owed.  Then we never heard from it again. In fact a year later when it showed up on her credit it was green and good and settled, even though we clearly didn't pay it.

We log into the government student loan website and the loan name and date show up there but just has zeros for everything.

Now, 9 years later, we have received a letter from collection agency EOS CCA stating that they have collected the debt of $5888 and we should pay.  However, it also says

"This is a time barred debt and no legal action may be filed."

If it's a government loan, why does the collection paper we got today say it's time barred?

Can this hit her credit after 9 years if it hasn't already?

Can they garnish her wages?

Should we try to negotiate a settlement?
 

Sorry this is so confusing, if anyone could adivse we'd be grateful.


First of all, I'm sorry to hear about your health. It is never easy to deal with these things and adding a chronic condition certainly doesn't help. But you've come to a good place with a lot of folks who will be able to give some advise. 

 

The first thing I would do is see if the loan funds were returned to the lender. You should be able to get this information from the school's financial aid or business office. Since she only attended 2 days they may have returned some of the funds. Federal student loans (if that is what this is) are not subject to statute of limitations, from my understanding. That makes me wonder if this debt is actually to the school and not on the loans. That also would explain why the federal loans on the website show zeros. Does the collections letter list an original creditor and, if so, is it the school or a loan servicer (or something else entirely)?

 

 


Message 2 of 14
New Member

Re: Student loan from 9 years ago. Time barred?

Thank you so much for the incredible reply.

The collection paper says "Client Name: Unversity of NC at Charlotte."

 

Would that not count as federal any longer?

Are they still able to report this to our account?

 

On the federal student loan site it says they are Stafford unsubsidized loans and both say cancelled and the amount says zero at the end. It says cancelled on Feb 2011. Another login of the federal loan servicer "my great lakes" says paid in full and all zeroes.

 

Our credit report shows only one Green Dot for a closed student loan account on February 2011.

 it,and no derrogatory marks.

Message 3 of 14
New Contributor

Re: Student loan from 9 years ago. Time barred?


@ThackeryBinks wrote:

Thank you so much for the incredible reply.

The collection paper says "Client Name: Unversity of NC at Charlotte."

 

Would that not count as federal any longer?

Are they still able to report this to our account?

 

When we log into the federal government student loan site it says completely different amounts. It shows two loans. Both of them were 2750 and 750 respectively. They say they are Stafford unsubsidized loans and both say cancelled and the amount says zero at the end. It says cancelled on Feb 2011.

 

Our credit report shows only one Green Dot for a closed student loan account on February 2011.

 

Can't understand this $5888 amount then.   I know the original amount we owed was 6200 or so, minus the 400 they garnished from her taxes the next year... So 5888 makes sense... But at the same time I don't get it.


Alright this makes a lot of sense. The reason the fedearl website shows cancelled is because when your wife stopped attending, the university was required to return those loans to the government. It is like those loans never happened. That is the good news is. The school, however, still viewed tuition for that term as owed (likely, your wife did not officially withdraw - this is unfortunately common during difficult times and people rarely understand this process as it is complex). 

 

This explains why it would be time barred - unpaid tuition is typically considered a contract debt, not a student loan debt. The other good news is, it is actually time barred and so there are some protections here. If it is more than 7 years since the last time a payment was made (that would be the garnishment, most likely) then I don't believe it can be reported to her credit and since it is time barred, if they happened to sue (highly unlikely as they are admitting up front it is time barred), your wife has a defense: the statute of limitations.

 

If you want to settle this, I would consider starting first with the school and explaining the situation. They may or may not be willing to work with you to reduce the amount because of the situation. Some schools are better about this than others.


Message 4 of 14
New Member

Re: Student loan from 9 years ago. Time barred?

Thank you so incredibly much for explain all of that. I've posted this a few different places and had no answers.

This all makes sense and I greatly hope it's the way you believe it is.

I logged into the servicer of the federal loans which is My Great Lakes and it also shows $0, said paid off.

So it makes sense what you are saying.  

Should I have my wife call the school Monday and just ask them if the loan that is left is a private tuition and not federal loan?

The good news is I think the only garnishment happened around early 2011-2012... So that should put it at just over 7 years.

I can't tell you how relieved I am to hope that they can't either garnish our wages, or hit our credit.

We only have one moderate income.

I have read making any payment on it would revive the debt as a zombie debt or whatever... 

We can consider paying it off, but  I wonder would  they be able to post it to our credit negatively after we paid it off?

Thank you so, so much for the help!!!! I truly can't express it enough.

Message 5 of 14
New Member

Re: Student loan from 9 years ago. Time barred?

... So I'm reading in other people's threads in the past that State colleges have no SOL for tuition fees... If this is true we're in the worst case scenario.
Message 6 of 14
New Contributor

Re: Student loan from 9 years ago. Time barred?


@ThackeryBinks wrote:
... So I'm reading in other people's threads in the past that State colleges have no SOL for tuition fees... If this is true we're in the worst case scenario.

I'm happy to help. On top of my massive student loan debt, I also debt with a tuition debt owed to my first college. It was from a similar situation and I remember how frustrating it was to try to get straight forward information. There is a lot of conflicting information out there on tuition debts because people often confuse them with student loans. I've never seen anything that indicates tuition debts to a state college would be treated as anything other than a normal debt when it comes to statute of limitations. 

 

Now it is time to see about what to do with this debt. I would recommend your wife call the college. She should ask to speak to the business office and explain that you got this letter and you don't know what it is about, you weren't aware you had a debt owed to them and she only attended class for two days due to your medical condition. She should stay calm and friendly and start by just asking if they can 1. verify this debt is real and that the college is the original creditor and 2. explain the charges since she believes she withdrew. 

 

She should plead her case and ask for it it be foregiven or dropped to whatever it would have been had she withdrawn (likely a fraction) so early in the term. If this is successful make sure they update the CA. If you have to pay the CA anything, wait to contact them until you are sure they've received an update.

 

If the college is not willing to adjust the amount due I suggest a solid CYA approach. Reach out to a local consumer debt focused lawyer for a consultation (your local bar association can refer you and many consultations are quite cheap or even free) just to be absolutely sure that this debt is time barred. If it is, you're not legally obligated to do anything about this letter and on the rare chance they do sue, you have an air tight defense. If you are advised that it is not time barred, I'd suggest talking to the CA about payment options.

 

Get some rest this weekend and call the school on Monday. You're going to be alright.


Message 7 of 14
Valued Contributor

Re: Student loan from 9 years ago. Time barred?

I'm sorry that you are ill and I hope you are able to beat the odds.
There was another person on here who had to go through an old school debt and from everything that he had to go through, the above advice is spot on. It covered all the steps that were needed to resolve the debt. In his case I think they decided to take it back, and remove the collection fees (I can't remember).

There are a few things you should keep in mind before you start communicating payment. From my understanding the SOL will depend on a date that you may not be able to easily find. So while it may have been over 7 years since the tax offset, that may not be the date. There are a number of events (which may have happened or sometimes, didn't happen and the CA days it did...they are collection agencies) that can restart the timeline for the SOL, not the least of which would be accidentally admitting the debt belongs to you or entering into a repayment plan. I think SOL varies by state and since it says they can't sue you in the offer letter, that is probably true and you guys are safe from getting sued and a judgement against you.
At this point you have an amount you get someone but the CA had no recourses to collect it involuntary. It becomes your decision what to do. You could ignore it. It's a common thing for people with student loans to walk away from them. Y passed up their opportunity to sue you. Or you could pay it back in full or in part. Again, noting the latter would reset the SOL, important if you decide to break up the payments. I would consult AVVO or a lawyer to confirm this before you talk to the school or the CA.

The only other complication is that you still technically owe the debt. You mentioned they took your state refund at some point. This is not good news. From what I've read this is a possibility with federal student loans but federal student loans typically take your federal refund. However, certain states have made a deal. If you owe money to a state University (often tuition or housing), they will use a state tax offset to get it back. Like the federal loan tax offset, it looks like they don't need to sue you. And I didn't see anything to indicate that there there would be a point in time they couldn't collect this unpaid money. The article I read mentioned 20 years old debt. For the federal loan tax offset I know there is a program to get your offset back of you have hardship. It's at their discretion and it seems it takes months. Maybe there is something similar for these state school deals. I'm really not familiar with all this. I would also check out if there is a possible "forgiveness" for people due to health reasons.
How this helps. Good luck. 🙂
Note: I say you because I'm talking to you, but I understand it's your wife's debt.



Message 8 of 14
New Member

Re: Student loan from 9 years ago. Time barred?

Update, I've talked to three lawyers offices offering to pay for advice on this situation, and all have said they can't assist. Will contact the Barr association once again, but not having too much luck.

 

Sabii thank you greatly as well for your response.

 

If I knew this couldn't affect my wife's credit, is just let tax offset take the money, that way I wouldn't have to create a zombie debt by contacting the CA and it inadvertently being bad for her.

Message 9 of 14
Valued Contributor

Re: Student loan from 9 years ago. Time barred?

You're welcome.
I've gotten some of the best legal advice I could get from AVVO. Sometimes they don't answer your question, but it's free to post, and it's posted anonymous. They have a huge database of questions already asked and answered. They also have profiles for the lawyers where you can see their areas of specialty, ratings, if they have a free consultation and sometimes their hourly rates. I used the Barr referral service and it was a waste of my money.

That sounds like a good strategy. Even when people want to pay it back, many don't touch it it they don't have to because it could backfire. Did the letter list any specific statute or anything as to why they couldn't collect the debt anymore? I wouldn't worry about it much at all.




Message 10 of 14
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