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Statute Of Limitations On Student Loan Debt | Federal vs. Private Loans - YouTube
Channel: The College Investor
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- If your student loan debt is in default,
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meaning you haven't made any payments
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within the last 270 days, now
is the time to address it.
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If you don't want to get
sued, your wages garnished,
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or have collectors call you,
this is the time to address it.
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However, statute of limitations may apply
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which could help you
get out of legal action.
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In this video, we're going to be talking
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about how statute of
limitations works with federal
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and private student loans
and what you can do about it.
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(light music)
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Hey guys, it's Justine
with the College Investor,
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Investing and Personal
Finance for Millennials.
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Now, if you have student
loan debt in default,
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that pretty much means
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that you haven't been
making payments on it
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and it may have just been put
on the back burner for you
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and there are some things,
some key things that you need
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to know about how student
loan default works
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with statute of limitations.
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So first, what is statute of limitations?
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It's the amount of time that
a creditor has to sue you
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if you've been in default.
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Okay, once that statute of
limitations has been reached,
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creditors can't use the legal system
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to get you to repay that debt.
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Now, you still owe the
debt, you just can't be sued
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or have your wages garnished
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once that time allotment has passed.
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So statute of limitations
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can also be referred to as time-barred.
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So that amount of time
after it has passed,
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then your debt is time-barred
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and you don't have to technically worry
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about getting sued or
having your wages garnished
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after that time has passed.
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Okay, so how does statute of limitations
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affect federal student loans?
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Well, it doesn't because
there aren't any limitations
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which means federal student
loan debt never expires.
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You have to make a plan to
either get it out of default
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or risk getting sued or
having your wages garnished.
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On the flip side, statute of limitations
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on a private student loans
works a little bit differently
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in which there are statute of limitations
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and it can vary from state to state.
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Now, some states will have
the statute of limitations
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for as little as three years.
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Others may have that debt
still listed as active
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for up to 15 years, which means
in that 15 year time span,
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if you're not doing any type of payments
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on those private student loans,
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those collectors and
creditors can go after you
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and request that you make payment.
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So if you have private student
loans that are in default
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but you think statute
of limitation applies
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and those debts are time-barred,
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then you can consult a bankruptcy
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or consumer advocacy lawyer
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to help you understand your options
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and whether or not your
debt truly is time-barred
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and what your next steps are.
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And one other important
thing you wanna know
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about statute of limitations
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and this thing called zombie debt,
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yes, zombie debt is a real thing.
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So if you have a collector
who's calling you
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about a past debt, old debt
that you haven't touched
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in years, if you agree to make a payment
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or make a payment right then and there,
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it is going to basically bring
that debt back from the dead
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and it's going to be
listed as active again
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and you're gonna be on the
hook for those collector calls
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and getting them to
make you repay the loan.
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And what all that means is
those collectors and creditors
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now have legal authority to
come after you for that debt.
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Instead, your solution would be
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to request a debt verification letter
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and enlisting the help of a lawyer.
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So if your student loan
debt is in default,
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make sure you answer all
lawsuits against you.
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If creditors are bothering
you about your debt,
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make sure that you
understand whether or not
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it's time-barred and don't
agree to make any payments.
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You can contact a lawyer to
come up with a settlement plan
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if you have private student loans
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and come up with a plan of action
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to take care of it in a timely manner,
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then you can send a
cease and desist letter
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via certified mail.
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If you have federal student
loans that are in default,
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this is the time to bring
them out of default.
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So there are plenty of
income-driven repayment plans.
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Even if you don't make a ton of money,
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they can work with you to
come up with a monthly payment
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that fits your budget or you can look
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into federal student loan forgiveness,
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and then look at that as a way to get rid
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of your federal student loans.
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Either way, you absolutely
have to address it
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because it doesn't go away.
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Remember, collectors can and will call you
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even after statute of
limitations has passed.
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Now is the time to make a plan of action
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for your student loan
debt that is in default.
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Bring it out of default
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so that you can move on with your life.
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If you want more information
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on how to manage student loan
debt, be sure to check out
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all of our free resources
at thecollegeinvestor.com.
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