If you have a private student loan, you may be entitled to student loan relief now without filing for bankruptcy: student loan defense to repayment.
Unlike federal student loan, private student loans provide additional defenses to repayment and non-bankruptcy options that can be useful in challenging the loans and potentially defending against the collection efforts of the private lender. We refer to these non-bankruptcy options as student loan defense to repayment.
Most of these defenses require the right set of facts and circumstances, so they are used less frequently than the bankruptcy options available to private student loan borrowers. However, our experienced student loan defense lawyers can ensure that each of the student loan defenses available to private student loan borrowers is examined and used when appropriate.
What is student loan defense to repayment?
Sometimes, the best way to deal with student loan debt is by filing for bankruptcy. If your student loans are dischargeable in bankruptcy, this may give you the best result. On the other hand, sometimes a bankruptcy is not necessary or not in your best interest. In that case, we would consider student loan defense to repayment.
Student loan defense can take on many forms. For example, if you have very little consumer debt and/or less than $50,000 in private student loan debt, we may be able to settle your student loan debt without filing for bankruptcy.
Other times, we are reacting to collection efforts of the loan company. If you have defaulted on your student loans, you may have been sued by your student loan lender. In this case, we may be able to look at several different legal defenses. In other words, our student loan defense to repayment may be based on a technical legal issue. This may be a defective assignment, expired statute of limitations, infancy issues, or other legal argument.
Has your student loan been transferred or sold?
Private student loans generally change hands several times over the course of the loan term, meaning there will be different lenders that own your student loan debt over the years of the loan. This presents a problem for the private lenders who own the debt further down the line. The lender will have to prove that they own your private student loan debt and therefore, can collect on your debt.
This challenge essentially requires the private lender to show, through evidence such as contractual agreements, how they came to own your student debt. If your private student loan has changed lenders ten times, then the lender will have to show proof of each of these transactions to support their ownership of your debt. There may be times, especially in cases of multiple transactions, where at least one of the transactions along the way will have no documentation or the documentations has been lost or misplaced.
If a private lender cannot prove that they own your student loan debt, then it will be very difficult for them to legally collect on said debt.
How long has it been since you defaulted on your private student loan?
Another defense to a private lender’s collection efforts on your private student loan debt is the statute of limitations, which is generally found in every state. This statute represents the maximum time after a default on a debt in which a lawsuit may be brought by the private lender to collect the debt. For example, the statute of limitations on collecting private student loan debt in this type of circumstance in Pennsylvania is 4 years.
This defense is most relevant when a private lender attempts to collect through a lawsuit filed in state court. Additionally, this defense has been eliminated for federal student loans.
How old were you at the time you obtained your private student loans?
The defense of infancy is another potential student loan defense to repayment of your private student loans. Private student loans require the borrower to have reached the age of majority when entering into an agreement for said loans. A minor does not have the legal capacity to enter into contracts; therefore, if a borrower was a minor at the time the agreement for private student loans was entered into, said student loans may be unenforceable. In Pennsylvania, the age of majority is 18 years of age.
Has there been an unreasonable delay in the private lender demanding payment?
Another student loan defense to repayment of private student loans is the defense of laches. This defense can mirror that of the statute of limitations argument or even be limited by it. The defense of laches relates to an unreasonable and harmful delay in a private lender demanding payment for private student loan debt. As a result, the defense of laches argues that the delay may make a possible recovery of private student debt unenforceable. Laches is a little used defense, but in the right circumstance, it can be effective.
Can I settle my student loan debt without filing bankruptcy?
Yes! There are cases in which a demand and settlement offer can be made to a private lender asserting the arguments that would be made in bankruptcy for a private student loan discharge. In some cases, private lenders are willing to work with private student loan borrowers outside of a bankruptcy to come to an agreement that would prevent them from having to argue their case in an adversary proceeding.
We would typically suggest this course of action where bankruptcy does not make sense for you. For instance, someone with very little consumer debt and/or with less than $50,000 in private student loan debt may be a good candidate for a settlement offer without filing for bankruptcy.
In most cases though, this is only an option for private loans. If you have federal loans, you may want to consider student loan forgiveness or administrative discharge of student loans.
Our top student loan lawyers have extensive experience negotiating with private lenders to settle private student loan debt for a fraction of the total loan amount.
Contact a student loan defense lawyer
Bankruptcy is not the only option for challenging private student loan debt or a private lender’s ability to collect on private student loan debt. There are several defenses and non-bankruptcy options available to private student loan borrowers. These options require a specific set of facts and circumstances that can be tough for a borrower to argue on their own.
Our experienced student loan defense lawyers can help you identify useful options and present the best arguments for defending against the collection efforts on you private student loan debt or discharging your private student loan debt.
We are a debt relief agency. We help people for relief under the U.S. Bankruptcy Code.
