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Posts Tagged ‘statute of limitations’

What is the Statute of Limitation for a Student Loan?

After some changes to federal laws in 1998 and 2005, the statute of limitation on student loans has been dissolved (with some very limited exceptions), which means that you can no longer have your student loans discharged when you file for bankruptcy. Many people wonder whether they are eligible for a student loan discharge when they can’t afford to make student loan payments, or when they are undergoing some major life changes.

The good news is, the federal government will review your request and grant a discharge of your student loans in some cases. However, you will need to make a solid case and provide supporting documents to have your application reviewed and your loans discharged. Since there is no statute of limitation for a student loan, you’ll have to find other ways to come up with a student loan resolution.

Government’s Definition of Statute of Limitation for Student Loans

The Federal Student Aid office of the U.S. Department of Education defines the statute of limitation for student loans as follows:

By virtue of section 484A(a) of the Higher Education Act, statute of limitations of no kind now limits Department’s or the guaranty agency’s ability to file suit, enforce judgments, initiate offsets, or other actions, to collect a defaulted student loan. Regardless of the age of the debt, statutes of limitation are no longer valid defenses against repayment of a student loan.

Other Options for a Resolution with Your Student Loan

If you’re falling behind on student loan payments or are just struggling financially and don’t think you can pay back your student loans within a reasonable amount of time, you do have some options available. Your options will depend on your specific situation, but in many cases, you can set up a new repayment program directly with the U.S. Department of Education so that you don’t end up defaulting on your student loan.

You may also be eligible to apply for a loan consolidation program or a loan modification program so that your student loan payments become that much more affordable. If your student loan is already in default, you can go through a loan rehabilitation program so that the defaulted loan doesn’t have a significant impact on your credit score and is removed from your credit report within a reasonable amount of time.

You can find more information about how to address your defaulted student loan on the U.S. Department of Education’s Federal Student Aid website here.

Using a Statute of Limitations Law to Eliminate Your Debt

Author: The Money Coach

When debt collectors are contacting you regularly and you’re wondering if you should just pay off the debt to get rid of them, stop! Many consumers don’t realize that the debts some bill collectors are chasing after aren’t the consumer’s responsibility anymore. How is this possible? Because of the Statute of Limitations that exist in every State. Each State has its own set of rules and parameters regarding outstanding debts. Some States don’t allow a debt collector to collect a certain type of debt after a certain period of time, while others limit the amount of time when a creditor can sue you over an old debt.

Here’s how you can use a Statute of Limitations Law to pay off a debt entirely:

Learn about the type of debt you are dealing with. If you have a debt that has been outstanding for several years, you may not recall all of the details of your initial credit agreement. Generally speaking, the Statute of Limitations applies to four different kinds of debts. They apply to oral contracts, written contracts, promissory notes (such as a mortgage), and open ended contracts (e.g. credit cards or other types of revolving credit). In some cases, the type of debt will overlap.
Contact your State Attorney General or the Division of Consumer Protection. These offices can provide you with legal help and advice on whether you are legally bound to the debt the collector is trying to collect on. Figuring out what the Statute of Limitations governs can be tricky, especially if your creditor is in a different state than the one you reside in, or if you have moved after the debt was acquired.
Contact a consumer advocacy group. The National Association of Consumer Advocate is another great resource for finding legal help and professional advice regarding debt collection in your State. This is a neutral third-party source that can help to determine whether you are legally bound to your debt.
Continue reading “Using a Statute of Limitations Law to Eliminate Your Debt” »

How Long Will a Bankruptcy and Foreclosure Appear on My Credit Report?

Author: The Money Coach

When you miss a credit card payment, mortgage payment or end up going into deep debt that you can’t realistically pay off within a reasonable amount of time, you put yourself at risk for bankruptcy or foreclosure. Many people who end up filing for bankruptcy or are dealing with foreclosure find it difficult to apply for a loan or get a credit card shortly after everything has been finalized. This is because information about your bankruptcy and foreclosure will stay on your credit report for several years. In a lender’s eyes, you are a “high risk” candidate and many lenders will simply deny you for a loan because your credit history.

Many people are confused about the Statute of Limitations on certain types of debt. It’s important to remember that the Statute of Limitations has absolutely nothing to do with the length of time that something stays on your credit report.

Bankruptcy and Your Credit Report

Filing for bankruptcy is a drastic measure but sometimes you don’t have any other choice. Bankruptcy information stays on your credit report for up to 10 years. Bankruptcy is a legal way to discharge your debts, but filing bankruptcy will have the most negative effect on your credit score. It’s always in your best interest to make sure that information about the filing are reported to the credit bureaus correctly. Keep in mind that according to FICO, a bankruptcy that is “Dismissed” does not actually lower your FICO score. When your bankruptcy has a “Disposition” status, it will impact your credit rating. When you are able to work on improving your credit rating, make sure that you take steps to dispute any information that is inaccurate or outdated so that it does not show up on your public records.

Foreclosures and Your Credit Report

When a foreclosure gets reported to the credit bureaus, you can expect your credit score to drop by as much as 150 points. In most cases, borrowers who have dealt with foreclosure are granted “subprime status”, which means they aren’t eligible for attractive interest rates in the near future. Like bankruptcy, a foreclosure is considered to be a serious delinquency and will stay on your credit report for up to seven years from the date of filing. Even when you meet a lender’s requirements based on a past foreclosure, an underwriter will still see you as a risky candidate for another mortgage and you may find it very difficult to get the loan you want.

It is possible to have the foreclosure removed from your credit report, but this can be a very lengthy process and will require some strong negotiation skills.

When you have bankruptcy or a foreclosure in your credit history, it’s even more important to make sure you are keeping up with other bills and working towards repairing your credit. You may need to wait several years before your credit score improves after the negative impact from these credit problems, but you will be able to remove them from your credit history completely within seven to ten years.

How to handle harassment by a collection agency

Author: The Money Coach

Q: I have a credit card company that keeps calling me…..they took me to court in Texas and never showed up, but I did. I ask them if I could make monthly payments, they said no. I should pay half or go to court, I went to court. Now they keep calling me about it. This was 2 years ago. I forgot about the debt because they did not show up in court and did not want my money. What should I do now?

A: Don’t pay them anything. Send a cease and desist letter in which you tell them to stop contacting you. Harassing people about debts (old debts, like yours, or current ones) is illegal under the Fair Debt Collection Practices Act.

Also, what happened when you went to court? A judge should have thrown out the credit card company’s complaint or at the very least allowed you to say what amount you could afford to pay.

If they pursue this matter in court again, do show up. You don’t want to get a summary judgment issued against you, and that’s exactly what happens to people who don’t show up in court.

Lastly, find out about the statute of limitations on your credit card debt. After the statute of limitations expires, a credit card company can’t take any legal action against you to force you to pay an old bill.

Related articles

5 Tips if You’re Facing Court Action from a Debt Collector (askthemoneycoach.com)
The Fair Debt Collection Practices Act (FTC.gov)

Ask The Money Coach

Posts Tagged ‘statute of limitations’

What is the Statute of Limitation for a Student Loan?

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Using a Statute of Limitations Law to Eliminate Your Debt

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How Long Will a Bankruptcy and Foreclosure Appear on My Credit Report?

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How to handle harassment by a collection agency

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