Student loans (Nelnet/DoE) included in BK CH 7, still showing 120 days late

[Anonymous]

First post to the community, I thank you for your responses ahead of time.

A little background to the reasoning for my post:

May 2017 filed BK7 after some strong financial hardship. Aug 2017 Discharged No-Asset. Since then in an effort to rebuild my credit I have purchased a car through sub-prime, opened 3 CCs (Discover, First Premier, Cap one), also 1 installment account with Snap-On Tools. I have not missed a payment on anything since the discharge and kept my balances within reason.

I had 5 student loans to account for a total of 1 year in school. As rare as it may be, they were included in my bankruptcy. I recently realized that even though they are discharged I have 120 days late as the status on all 5 Nelnet loans. They show $0 balance and discharged. It is dragging my credit score down drastically and keeping me from building my credit. I am currently in contact with Lexington Law to try and get it resolved. Do any of you have experience with this situation or suggestions on fixing it?

Thank you

[Anonymous]

First off, you are one lucky duck! I'm sure you know that already, lol! Congrats on getting them included.
As far as removing the 120 day lates,I'm sorry I cannot be more helpful on that. The only thing I can recommend is that although the lates are from the discharged student loans, I would recommend asking for this to be moved to the FICO scoring or rebuilding topics. They are very helpful in suggestions such as getting lates removed.
Hope this helps!

[NC_Mtg_Loaner]

Very interesting.   I always thought that govt. insured student loans were the only loans that couldn't be included in a Ch. 7 BK.

Anyway, you should consider yourself fortunate.   Now, if they were included in the CH. 7 then the creditor is in direct violation of the Fair Credit Reporting Act or your Ch. 7 Bankruptcy rights if they are reporting any derogatory information and I would think you could easily straighten that matter out once you bring it to their attention.

Nonetheless, even if they were allowed to report those lates, that derogatory history will quickly be in your past and have less and less impact as time goes on and that history is replaced with your good history that you are currently placing in there with your new accounts.  Just be sure you are managing those properly in order to maximize your score.

[Anonymous]

Thank you, I will do so. I appreciate it!

[pizza1]

Lates are still lates, regardless if you filed a BK or not. If the lates were there PRIOR to filing, then they are reporting correctly, unless you can prove you were in forbearance/defferment during that time period prior to your BK file date.

What they CANT do is report any lates AFTER your file date.

Also, yes, as rare as it may be, Fed school loans can be discharged in a BK IF your attorney can show/prove to the trustees/judge that continuing the payments and taking on the debt after the BK will undoubtedly prove a continued hardship.

[Anonymous]

How does one know if their student loans were discharged in BK? I noticed they were listed on BK but thought that was because I had to be forthright with all my debts.

My credit report only shows transferred and $0 balance which is probably due to being accepted into disability discharge. Im in the 3 year waiting for that.

[RobertEG]

Is the "status" being referred to as 120-late the current status, or is it the payment rating status?

Payment status reflects the status prior to the account being paid, not the current status.

Lates that occured prior to BK are not required to be deleted based on the BK discharge.

BK terminates any continued reporting of delinquency status, but does not erase delinquencies that occured prior to the discharge.

When did the delinquencies occur?

[Anonymous]

Just a FYI... you may want to speak with your attorney because student loans usually aren't forgiven in Ch 7 UNLESS you filed separate paperwork to the courts (I can't remember what the form is called) to prove undue hardship. Even though they are listed on your Bankruptcy petition, they are NOT forgiven even if your chapter 7 is finalized.
If you did go through that extra and had a hearing specifically for the student loans, then I would still contact your attorney to see why they are reporting like that.
I tried to include my student loans in my ch 7 bk as well, attorney said there's very, very little chance of getting them included because the courts almost never grant it. So even though I listed them, they were not included.
On a positive note, I was able to set up a consolidation loan, monthly payments I could afford, and now they are helping me build my credit. And, my other loans (Perkins) are being cancelled at 15% a year thanks to their loan forgiveness program.
Hope this helps!

[Anonymous]

Also, on my credit report, they did show discharged even though they weren't. I was told it would take a few months for them to start reporting again, and if I would not have been making payments, when they reported again, it would show delinquencies.

[Anonymous]

Kathyups: Since you consolidated, the loans will show up as a single, new credit line with ~100% utilization.
The upside is that it is separated into portions for the purpose of benefits; the subsidized amount in that loan retains the subsidized loan repayment benefits.
The delinquencies may or may not be removed. There is no guarantee however some people have luck either automatically or through a CB dispute (though technically it's not disputable).
Good luck with your new journey.