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My Sallie Mae Private Student Loans Hang Over Me Like a Dark Cloud

Question:

Dear Steve,

I originally borrowed a lot of private loan money from Sallie Mae (7 different loans). Unfortunately, they all defaulted once I decided to stop paying (because my minimum/interest-only/salary-based payments did nothing).

I paid a company to help me get collection companies to validate the debts, which they couldn’t, so I was never sued. Finally, I paid off the federal loans I had, but these seven loans defaulted, and it’s been 7+ years since my last payments towards any of them.

What do I do now that the statute of limitations has passed?

Since the loans defaulted and after I finished paying the debt validation company, I have saved a lot of money, as if I were still making loans payments, once I started making enough money with my job.

I probably have enough money to pay the original loan amount back, but then I’d be left with no money. I feel the weight of these defaulted loans hanging over me every time I think about them.

I understand that the money technically is still owed to Sallie Mae/Navient, but they cannot enforce payments past the statute of limitations.

If they sued and we had to go to court, that could potentially validate the debt since I would be claiming that I do not have to pay MY loans.

It hangs over me like a black cloud if I sit around and do nothing. So now that my loans are past the statute of limitations, what do I do now that my loans are past the statute of limitations?

Devin

Answer:

Dear Devin,

The issues surrounding the Statute of Limitations (SOL) are confusing and can be a technical nightmare.

There are issues that can start, pause, and stop the calculation of the SOL. The only way to know for certain would be to have an attorney that is licensed to practice law in your state, review your specific situation.

SOL issues do not prevent you from being sued but you would have to raise the issue as part of your defense.

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I completely understand the dark cloud feeling. You feel as if you are in the clear but the debt situation was never really closed for good.

You are now in a difficult spot because if you make a payment on a loan it could bring the others back to life and start the SOL all over again.

The issue surrounding the collection company not validating the debt is interesting. The collection company only has a duty to validate the debt if the creditor they are working for wants to bother with it and there is a benefit for them to pursue this. They may just decide that it is no longer a priority for them and dump it into the lower priority hopper.

It would be interesting to know who actually still holds your old defaulted student loans.

Here is what I would advise:

  1. Talk to an Attorney: One place you can find an attorney that specializes in debt collection issues is here. You might want to take a current copy of your three credit bureau reports with you to the appointment. Go to AnnualCreditReport.com to get them for free.
  2. Become Educated About Dealing With SOL Issues: Ask the attorney to advise you on how to best deal with any future collection activities on those debts. You don’t want to inadvertently start the SOL clock over again. The triggers are different in various states.
  3. Armed With Facts: Now that you have been advised on what the actual status of your accounts are based on the laws of your state, and you are aware of what not to do to inadvertently activate the SOL, you may feel much more comfortable letting these old debts rest quietly. It will give you confidence and clear the clouds above.

Sincerely,


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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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