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Need Advice Dealing with Private Student Loan Suit

Hello Everyone, Long time lurker, first time poster. Im esqmeansnothing03/04/15
Are you now free from any debt? adamdancy01/10/18
Sorry meant to say loan was taken out over 10 years ago. An esqmeansnothing03/04/15
Obviously, get legal advice, but here's some general informa onehell03/04/15
Debtorboards are useless when it comes to private student lo keithd03/04/15
There is emerging case law in some states now regarding cred loblawyer03/05/15
The loan went into default 2 years ago which is well under t esqmeansnothing03/04/15
To what end? Sounds like you lose, but the question is, " jeffm03/05/15
jeffm is right. Filing a response when you have no defense o onehell03/06/15
I believe the loan was sold off to another company. Wouldn' esqmeansnothing03/06/15
Now there's something. You can deny knowledge that they are bigsal03/07/15
If it has been sold to another company, that means it was bo cattleprod03/07/15
Cattleprod, is there anyway to contact you off site, through esqmeansnothing03/16/15
I know I'm late to the party, but here's what I've been seei b25shooter04/27/15
If its NCSLT or EduCap that is suing you, you definitely hav harrysach04/27/15
Rejoice that you are judgment proof. crank04/28/15
Do not let them get a default judgment. If they file for one darth04/28/15
Yeah that's totally illegal what they do to you, but in orde iliich11/11/18
A payday lender from Delaware that won't sue after 10 years billcarson11/11/18
esqmeansnothing (Mar 4, 2015 - 3:45 pm)

Hello Everyone,

Long time lurker, first time poster. Im being sued on a private student loan taken out 1 year ago. The debt was not discharged in BK. During BK P attorney violated automatic stay and tried to get default judgement but rescinded it. Now P attorney is going full force. How should I handle it? Can't afford to pay anything, been unemployed a long time. Should I plead or let it go to a default judgment?

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adamdancy (Jan 10, 2018 - 12:02 am)

Are you now free from any debt?

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esqmeansnothing (Mar 4, 2015 - 3:46 pm)

Sorry meant to say loan was taken out over 10 years ago. Any advice will be appreciated.

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onehell (Mar 4, 2015 - 4:01 pm)

Obviously, get legal advice, but here's some general information about options you might want to discuss with your lawyer:

(A) Do another bk, but this time a chapter 13 bankruptcy, which will limit the loan payments to whatever is provided for in the chapter 13 plan for the duration of the plan with no discharge of this at the end. People have been known to live in back-to-back 13 plans, colloquially referred to as doing a "chapter 26."

(B) Work something out with the creditor. The older the debt gets the more willing the creditor or a subsequent note-buyer may be to settle for substantially less than what is owed. Often half or less.

(C) Simply continue to default, judgment or no judgment. A private student loan is the same as any other unsecured debt with the sole exception of it being mostly discharge-proof in bk, and the older it gets the less it impacts your credit. Moving to a state with little or no wage garnishment and using prepaid debit cards in lieu of banks for a few years often results in creditors giving up. This is something I call the "lay low strategy." Default has a lot of consequences, but those consequences depend a lot on state law and are often quite survivable, especially with private loans. (Obviously, you have to appear if served with a subpoena to appear for a debtors exam but as long as you comply with that you don't get jailed for not paying debts.)

Again, all these are state-law particulars to be discussed with counsel.

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keithd (Mar 4, 2015 - 4:21 pm)

Debtorboards are useless when it comes to private student loans. It's mostly full of Boomers who will just attack you for being well educated and not able to pay your student loans back.

When did the loan default and when was your last payment? Private student loans are still subject to your state's statute of limitations. If this is an old loan, it's possible that the suit against you may be time barred. This will have to be raised as an affirmative defense, of course. Also, don't let the contract worry you with its choice of law provision, saying that all terms of the contract are governed by the laws of some state with a really lengthy SOL. It's pretty much the case everywhere now that courts will apply the forum state's SOL to contracts, in spite of choice of law provisions, due to SOL being procedural and not substantive law.

So, TL;DR, if you live in State X, and State X has a statute of limitations on written contracts of 5 years, and you defaulted and last made a payment on your private student loan 6 years ago, the suit is definitely time barred, but you're going to have to be the one to raise that as a defense. This actually might scare the plaintiff away as they might realize it's a lost cause and drop it or try to settle.

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loblawyer (Mar 5, 2015 - 1:50 pm)

There is emerging case law in some states now regarding credit card debt in which the court will apply the SOL of the original creditor's state. This has been used to apply the DE 3 year statute in a situation where the debtor's state SOL is longer. Think it has to do with the credit card agreements stating DE law will be used which is backfiring on some collectors and debt purchasers later. Not sure how applicable it is here but might be something worth looking into.

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esqmeansnothing (Mar 4, 2015 - 4:29 pm)

The loan went into default 2 years ago which is well under the SOL of my state. I had it deferred for a very long time before going into default.

Should I just submit an answer denying everything due to a lack of knowledge, go into discovery and demand they produce evidence of the loan such as original signature, etc.?

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jeffm (Mar 5, 2015 - 6:34 pm)

To what end?

Sounds like you lose, but the question is, "How much?" Call opposing counsel. Ask them to draft a judgment that you will agree to if he/she can provide you with the proper judgment amount, together with calculations showing you how they arrived at that amount. If you are satisfied the amount is right, and if you have no chunks of money to try to negotiate with, sign the judgment, and let it be.

Move to Texas. We don't garnish here (except for child support).

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onehell (Mar 6, 2015 - 10:15 am)

jeffm is right. Filing a response when you have no defense only raises the costs of litigation and those costs and the other side's atty fees could be assigned to you. In my state, for example, fee shifting is statutorily automatic in all breach of contract cases to discourage precisely that kind of behavior. And atty fees aside, costs always shift.

And by the way, you can't just claim lack of knowledge when you do actually have knowledge. If you deny things without a good-faith reason to deny them, that can be sanctionable too.

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esqmeansnothing (Mar 6, 2015 - 1:11 pm)

I believe the loan was sold off to another company. Wouldn't it be prudent to go to discovery, and make them produce documents such as original/certified loan application with signature, etc?

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bigsal (Mar 7, 2015 - 10:53 am)

Now there's something. You can deny knowledge that they are the owners of the debt, right?

Is there an arbitration agreement on that loan?

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cattleprod (Mar 7, 2015 - 11:35 am)

If it has been sold to another company, that means it was bought at a much lower fraction of the original face value.

Was anything about this stated in the lawsuit? Such as the date transferred from original creditor to the new junk debt buyer?

I would respond to the lawsuit and deny everything due to lack of knowledge. Demand in discovery to see the contract of the purchase between the original creditor and the junk debt buyer.

I had sort of a similar situation from a college credit card many years ago. $5,000 defaulted debt, bought for $300 by some collection attorney / junk debt company. They sued me, I just denied everything and demanded copies of contracts. When I found out they paid $300 for it, i offered them $300 to buy it from them. I also demanded full deletion of everything negative about this trade line from my credit files. They agreed.

Once you know what they paid for the junk debt, you know what they will likely walk away with. These junk debt buyer are looking for easy low hanging fruit. If you put up any fight, you make the debt very unprofitable for them.

If the plaintiff knows that you are unemployed and broke, and you should tell them that very clearly, then they are just pissing away money on their lawyer.

File pro se, deny everything based on lack of knowledge. Offer to do mediation, alternative dispute resolution, whatever your court encourages. In that process, make them very aware you are broke and they are wasting their time.

I would not give them a free judgement, I would go through the motions of a reply. It is very easy to get these cases to a stalemate with a simple reply denying knowledge. They don't want to pay for discovery and trial and it will take 12 months to get there anyways. Quite often no further action is taken and the court automatically dismisses the case after 12 months of no activity.

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esqmeansnothing (Mar 16, 2015 - 4:00 pm)

Cattleprod, is there anyway to contact you off site, through an email to go into more detail?

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b25shooter (Apr 27, 2015 - 1:40 am)

I know I'm late to the party, but here's what I've been seeing on the student loan debt side of things. The private student loan lenders are generally not pursuing collection when/if the debtor looks to be in truly bad shape already. So, if the debtor has judgments against them, or below 550 FICO, or tax liens, the lender is just walking (in SOL states, this is good). I've actually considered advising someone up to their ears in private student debt to get some tax liens (can be local, as with county assessor), let their debt go, and totally stop communicating with their lender(s). I do agree though, if it's too late and you're in litigation, don't give them a default. Through your dying hands only.

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harrysach (Apr 27, 2015 - 5:02 pm)

If its NCSLT or EduCap that is suing you, you definitely have valid defenses. They both have a hard time proving ownership or the right to sue on behalf of the lender. The only way to find out though is to start litigating. I've had multiple clients get dismissals once I enter an appearance.

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crank (Apr 28, 2015 - 3:19 pm)

Rejoice that you are judgment proof.

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darth (Apr 28, 2015 - 10:21 pm)

Do not let them get a default judgment. If they file for one, show up to the hearing.

I did the opposite of all that and the entertaining result is here:

http://jdunderground.com/all/thread.php?threadId=89138

I'm kicking myself now 8 years later, because my debt would be gone by now if I'd just negotiated the original debt, rather than ignoring it all and letting them get a default with exorbitant costs and fees attached.

Judgment proof is good. But you may not always be.

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iliich (Nov 11, 2018 - 7:23 am)

Yeah that's totally illegal what they do to you, but in order to be able to prove that they are wrong, not you, you have to maintain positive credit balance. And it could lead to you to even more debts, so you just have to be cautious. If money problem becomes urgent, you can go with https://www.delawarepaydayloans-de.com/ and be totally cool about that - these guys won't sue you under this conditions, they do it way better with loaning.

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billcarson (Nov 11, 2018 - 9:49 am)

A payday lender from Delaware that won't sue after 10 years of deficiency.... ahahahahahahahha.

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