Can I Just Ignore My Private Student Loans Passed the Statute of Limitations?

Question:

Dear Steve,

I took out two private student loans around 1995/1996 for veterinary school. I did not complete my degree and was paying on the student loans until I was laid off from my job as an automotive engineer in 2009.

I contacted the creditor and was unable to negotiate any kind of temporary low-income payment plan or to get any help at all.

I filed for bankruptcy in 2010 and it was discharged in 2011. I have not made any payments on the loan since around 2009. In looking at some articles, it appears that the statute of limitations should be over (I am in Michigan). The total on the loans is about $17,000.

I now own my own business, an LLC, so I don’t have a paycheck that anyone can garnish. I have a mortgage and a home equity loan that just about cancels out the equity in the home, and on top of that, I have about $100K in federal student loans that are in IBR, and my income is low so I don’t have to pay on them right now.

I just received a letter from a law firm in Kentucky stating that they are taking over the collection of the loans. I have not made any payments since 2009. I am in Michigan and saw that the statute of limitations is 6 years.

I would like to write them a letter to ask for validation of the debt, but also was wondering if I can tell them that the statute is expired for collection. Please let me know what direction you can give me on this. Thanks so much!

Meg

Answer:

Dear Meg,

This is an easy one for me to answer. Don’t do a darn thing here before you consult with or hire an attorney who is licensed to practice law in Michigan.

The expiration of the Statute of Limitations (SOL) is a defense you have to raise if you are sued and it does not prevent the collector from attempting to collect.

The tricky part here is you don’t want to accidentally do anything that can restart the clock on the SOL.

Here is a list of attorneys in Michigan who are part of the National Association of Consumer Advocates and who say they specialize in debt collection.

I think the expense of attorney representation, in this case, can prevent you from stumbling into a bigger mess.

Please let me know how it goes for you by updating me in the comments below.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.