I Tried to do the Right Thing With My Private Loans and Was Sued Instead


Dear Steve,

I went to a for-profit school, over 10 years ago and in the process took out private loans. Since then, I have been contacted by a debt collector who I wasn’t aware I did not have to pay (the debt was over 10 years old and was beyond the statute of limitations).

Unfortunately, I, not knowing my rights, in an attempt to do the “right” thing, tried to make payments on this debt and was slapped with a lawsuit a few months later saying I’d “defaulted on my loan” despite the fact that I was making active payments at the time that the lawsuit was brought.

Since then, the debt collection company allegedly served me with a notice of a warrant in debt (which I never received) and then moved to garnish my wages. I defeated the garnishment (at least for now) when I showed up to court and explained to the judge that I was never served with the warrant in debt. The judge however still ruled against me because I admitted that I was making payments on the debt.

Is it likely that the debt collector will come for wage garnishment again? It seems like it would be expensive for them to get a lawyer to do this (especially if they’ve paid cents on the dollar for the debt itself), but I know that it would be easy for them to do so because there is already a judgment against me.

Does it make sense to try to negotiate with the debt collector for an exchange of the judgment settled? Do collection companies even have good reason to do this when they could just move for garnishment (again) instead?

Also if the debt collector tries to do this with another debt, could I just tell the judge that I never signed an agreement with the collections company? And that the debt is beyond the statute of limitations? I never want this to happen again and am trying to protect myself against future debt collector trickery.

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Any help you can provide would be greatly appreciated!



Dear Davie,

I’m not a lawyer and can’t give you legal advice. You would need to talk to an attorney licensed in your state. You can find one here.

It seems to me that when you tried to do the right” thing you put yourself in a tough spot. Essentially you may have restarted the clock on the statute of limitations so you’d have to default and wait all over again.

The fact you were now making payments probably did not bring your loan out of default and now that you had reset the clock, it was a good time to sue you.

Since the debt was renewed with the admission and/or payment what happens next is up to the debt owner. The debt collector is either an agent of the owner or might own the debt themselves.

There is no way to forecast what the owner/collector will do but it would be reasonable for them to go back and seek a garnishment since you were already sued and lost.

Sure, you can go back and attempt to unwind that original suit with an argument of improper service. But they could just properly serve you again. This is why you need to meet with a lawyer and discuss your situation.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

I’m afraid you are applying too much logic with your statement it would be too expensive for the collector to hire another attorney. They will just drop your case into the queue with all the others. For them, it’s a defined business process.

Stopping a lawsuit using the statute of limitations is something you do as a defense, once you are sued. It does not prevent you from being sued. You could also ask the debt owner to provide the debt is valid. Your attorney can guide you through this process.

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Finally, you could still attempt to settle this debt but I’m afraid you are the least qualified person to do this because you are emotionally involved and you have no experience in what they will do or what is a good deal.

You could discuss settling the debt with your attorney or talk to an expert like Damon Day to get some advice and guidance on what to do.

As far as what to do next time, I think you learned that lesson. Don’t make a payment or admit you owe the debt without first talking to an attorney licensed in your state.

Depending on what the loans were used for and the school you attended, there is a chance the private student loans could be discharged in bankruptcy. A lot of new things happening in that field right now.

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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