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Was My Wells Fargo Private Student Loan Really Discharged in My Bankruptcy? – Linda

“Dear Steve,

In 2007, I filed Ch 7 bankruptcy and I was told my private student loan w/ Wells Fargo was not discharged.

Move ahead to Sept 2009. I was served papers from a local debt collection lawyer in CO about collecting this debt. I negotiated a settlement and am awaiting to see the final paperwork concerning the settlement prior to giving the collection lawyer any money.

Well, I decided to check my credit report last night to see how this debt was listed, and to my surprise, both Experian and Equifax stated the debt was discharged in bankruptcy and the balance due was zero. My question is, is the collection from the lawyer legit? How do I know if this was really discharged in Ch 7? Should I proceed w/ the settlement (which is about 50% of the original balance)?

Thank you,

Linda.”

Dear Linda,

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Interesting situation and I can see how it could be very confusing.

Private student loans can’t be discharged in bankruptcy but that doesn’t mean it wasn’t listed in the bankruptcy and then ended up being reported as included in a bankruptcy.

I seriously doubt the loan was discharged but it is easy enough for you to check. All you need to do is contact your bankruptcy attorney and discuss the situation with them. Maybe they will tell you by some technical miracle it was actually discharged. Don’t bet on that lucky outcome yet.

If the bankruptcy attorney confirms that the loan was not discharged, regardless of what the credit report says, then the settlement offer sounds like a good offer.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

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P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

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Steve Rhode

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.

9 Comments

  • I am also going through the same situation right now and it is frustrating. I have the majority of WF student loans and then a smaller actual federal student loan. During BK my federal loan automatically went into forebearance, where-as WF actually slapped on LATE FEES because my dad is a co-signer. I get discharged from BK and come to find out now I owe a bunch of money to WF.

    My lawyer honestly does not know what is going on and never advised me on an adversary proceeding during my BK case. Chapter 7 is vague on only saying “most” student loans are not dischargeable. I am not paying WF anymore until this gets figured out.

  • A charge off is merely an accounting function. The loan is still collectible. But I assume your attorney wanted you to not pay right now and find out who buys the defaulted loan. They’ll contact you.

  • my private student loans say charge off on credit report with 0 balance, my lawyer advised not to pay them, I need to know if this is the end or will they haunt me?

  • my private student loans say charge off on credit report with 0 balance, my lawyer advised not to pay them, I need to know if this is the end or will they haunt me?

    • A charge off is merely an accounting function. The loan is still collectible. But I assume your attorney wanted you to not pay right now and find out who buys the defaulted loan. They’ll contact you.

  • If this private loan originated before the 2005 law change, it could very well be discharged in BK. Lenders like Chase and Wells Fargo have loans from that time period that could be attacked on the “qualified education loan” front. Back then, none of those loans were certified by educational institutions. They were dispersed to circumvent the allowable max that students could borrow.

    Those loans do have a statute of limitations as well.

    • In regards to your response, what if I had taken out 4 private student loans with Wells fargo in 2004 (through their consern loan program). However, I consolidated those 4 loans with Wells Fargo in 2006. Can these be discharged in a chapter 7 bankruptcy, since they were actually taken out in 2004 but only consolidated in 2006?

  • I have the same situation going on. My report says balance zero included in Bankruptcy. I have been paying them but now wonder if I should be. Not to mention paying and on time and not getting credit for it. Interested in what you might have found out. We were discharged in June 09 and now of course I cannot get my lawyer to call me back.

    • Mary,

      It really doesn’t matter what the credit report says. The overriding document is the statement from the student loan servicer. If they are not reporting it to the credit bureaus you can bring that to their attention but just because the bureau reports $0 you get no benefit from that.

      Steve

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