My Private Student Loans Have Been Bought and Sold So Many Times. – Alex

“Dear Steve,

I make 15 hr and I have about $150,000 in private student loans and $50,000 in Federal loans. My federal loan payment right now is $32 a month which doesn’t cover the interest but it’s really all I can pay now.

I have defaulted on all the private loans since they offered me no reasonable solution or payment plan. I should add the private loans are spread out between 3 different companies, and now probably 4 different debt collectors.

Just by simple math I would never be able to make the payments requested by them. I have no other debt, I save 10% a month in my work 401K and have about $10,000 in my Roth IRA. I’m ok in the short term but if they come and sue me and garnish my wage, which im not sure how they could since these loans were bought and sold over the last 9 years, and I’m hoping no one has the actual paperwork on them, then they could get 25% of my wages in California and what would be pretty devastating, but still less than my required payments.

If they do this could they also take my IRA and 401k? How do I solve this problem?


Dear Alex,

The would not be able to take money in your qualified retirement accounts. And you are so smart for saving right now. It’s a mistake I see so many making. See The Saddest Avoidable Mistake People Make When Getting Out of Debt.

radarIf the private student loans have been bought and sold that much there is a real potential the paperwork is missing on the loans. Lenders have been so sloppy over the last decade. I’m going to ask a California attorney I know to comment on this question and they might be able to assist you.

The only real solution that exists today is to consider a chapter 13 bankruptcy to get all the payments under control at least for the next five years. We can hope Congress will make private student loans dischargeable again like they were up till 2005.

See also  I'm Unemployed With Private Student Loans. What Can I Do?

Let’s see if this California attorney I mentioned can help you out with those private student loans and challenge the validity of them to see if they are still enforceable or long lost.

Please post your responses and follow-up messages to me on this in the comments section below.


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3 thoughts on “My Private Student Loans Have Been Bought and Sold So Many Times. – Alex”

  1. Hi Alex,
    I am the CA lawyer Steve mentioned. While you can file a Chapter 13, from the limited information provided, it does not seem advisable to file it right away, if ever. Assuming your Chapter 7 was successful and debts were discharged, filing for Chapter 13 within 4 years will not allow you to discharge any debts after your Chapter 13 plan is completed. Complete discharge is only possible if you file the Chapter 13 four years after the Chapter 7, and complete the Chapter 13 plan. Given the amounts involved, I think you will want to wait the four years and attempt a complete discharge. Also, as Steve points out, many of us have high hopes for a law change back to allowing discharge of privately owned student debt.
    The only advantage to a 13 that I can see right now is it will temporarily stop collection efforts. However, as stated above it will still leave you in debt at the conclusion of the plan. Also, the Chapter 13 filing will cost good money right now. Given that there appears to be a very real possibility that the debt may be time barred and as Steve pointed out, unenforceable due to proof problems, I suggest that you take a different approach. What my firm does in these situations (at very affordable rates) is have the client retain us so we can then communicate with the collectors/lenders, insist they no longer communicate with you directly, and seek verification. They may or may not respond. If they sue, we then defend the client, again aggressively seeking valid proof and asserting all available defenses such as the time barred issue. This can all be done at a cost significantly lower than a Chapter 13. At a minimum, contesting the matter buys you time which may be very important. Many times these matters settle, especially given the facts you relayed. If not, you always still have the option to file the 13 and hopefully by that time the law has changed and/or the 4 years has passed. I hope this helps and feel free to call me at (714)769-9151 if I can be of any further assistance. Greg Fitzgerald

  2. I should have stated that I have a Ch.7 Bankruptcy a little over a year ago, so I am assuming I can not file for 13 now correct?


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