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**KeithDoxen** · 01-20-2011, 02:59 PM

Here are your questions, followed by my answers:

1. I understand collectors can't contact me by law during bk proceedings, can they contact a cosigner?

You said they contacted your cosigner in Sept 2010, after discharge. Contacting either you or the cosigner is fair game after discharge given that these are student loans, and are thus not discharged via bankruptcy.

2. I have filed and was turned down for a "charge-off reversal" and the reason given was, "If you had taped the conversation with the servicer, we might have ruled in favor of your side." Should I try for another review?

Sure, what's the harm?

3. Any recommendations on where to go from here?

You're really asking the same thing in Question 3 and 4, so see Question 4 for my answer.

4. I was told by different people that the loan went automatically to charge off due to the chap 7, then told by another person that the loan went to charge off because of missed payments. I caught up on all the back payments bringing the loan "current" as of Dec 2010 as a show of good faith while it was still in charge off but it didn't do a damn thing for me. Should I make the Jan 2011 payment?

Ultimately what happened is this. The lender took a look at your situation, saw that you had a cosigner, and decided that your cosigner was probably a better bet to squeeze the 15k out of than you, a bankrupt individual who has just been liquidated of assets. If you read your loan contract, you will almost certainly find a clause that says that the lender has the right to charge off the loan if you file bankruptcy. This is a clause that exists in many private student loan contracts, meaning that what the student loan company did is probably well within their rights. They also had the right to let the clock run out on the loan while you were going through the bankruptcy process. The automatic stay while you were in bankruptcy prevents collection action, but doesn't stop the clock on the loans going from "current" to "defaulted."

I realize that this is all due to the fact that the bank misled you about what would happen when you filed for bankruptcy. You may want to keep bugging them, calling lots of different reps and speaking with as many "supervisors" as you can, hoping that you'll find one who will honor their original statement. Either way, what they really want is their 15k, and even if they don't take you out of default, if you agree to a reasonable payment plan, you may be able to get them to at least back off your cosigner.

**gml120** · 01-21-2011, 08:57 AM

Thanks for the response

What you said is what I came up with as to what happened. Obviously not pleased about it, but I guess that's what you get with these vultures. Do you have any suggestions for how to go about setting up a reasonable payment plan? When I talk to them all they say is, sorry all you can do is pay the whole amount. They won't even report to the credit bureaus that I'm making payments, the chargeoff will stay on both our reports for 7 years, even if I waved a magic wand and handed over the full balance today. I started a possible settlement option (for 80%) but the faxes I got were extremely shady looking! I canceled it the next day. At this point since I can't access my account to even see how they are calculating what I owe, fees, loan balance, etc.. I can't even be sure if what they are telling me is in fact the actual balance since the last correspondence I got was way back in Feb 2010. I requested them to send me some kind of bill or statement with amt owed showing this information they said they can't do it, I would have to call them every month to ask what my payment should be that month and I had to pay by phone (yep, with an additional fee). Also, I thought about just giving up and waiting for the sol to run, but those sneaky bastards have a clause in the promissory note saying all terms defer to Ohio, which is 15 years.
The strange thing about this whole thing is that they aren't bothering me or my cosigner at all. The only phone call initiated on their end was the one call to her. I guess this is normal to try to make us forget about it and rack up whatever interest? Also, since I get 5 people on the phone and they tell me 5 different things, should I start recording these conversations? I mean like half the time I call they tell me I haven't sent payments since Feb last year. I remind them Oh yes, I paid almost $1200 in Nov and Dec, they still can't "find" the payment, I need to dig up the conformation numbers, they put me on hold for a half hour and then its like Oops! Yep, there it is! It's insane! You get a receipt when you buy a coffee at McDonald's but I can't get them to verify I gave them $1200 without alot of bullshit. I guess I'm kinda lost on how to deal with this kind of idiocy. Any suggestions on how to make it seem to them that reinstating my loan is a benefit to them?

One more thing: Is a private student in chargeoff still under the umbrella of protections? I mean being that it's a defaulted loan am I now protected under the FDCPA, entitled to verification and all that good stuff?

**KeithDoxen** · 01-21-2011, 03:23 PM

Also, I thought about just giving up and waiting for the sol to run, but those sneaky bastards have a clause in the promissory note saying all terms defer to Ohio, which is 15 years.

If you are sued over this debt, it will be in your state of residence, and the court will apply the SOL of your state, which is four years in Pennsylvania, the provisions of the contract notwithstanding. This is a pretty standard choice of law issue. There is case law to back this up.

I think it's pretty clear what you tell them: that you don't have any assets, you've just been liquidated because of the bankruptcy, and if they sue you, they aren't going to get a dime, given your lack of assets and the fact that there is NO WAGE GARNISHMENT in the state of Pennsylvania. Liked that one, didn't you?

At some point, someone will tell you that "this is a student loan!" and thus they can garnish your wages, and there is no SOL. Don't listen to them. This is a private student loan. The government is not involved. Therefore, there is an SOL, and they cannot garnish your wages.

After you tell them about your lack of assets, and about their inability to garnish your wages (if that comes up), suggest to them that you can afford a small monthly payment, and that's it. Tell them that you'd like to rehabilitate the loan, or alternatively, that you'd like to make this small monthly payment if the loan cannot be rehabilitated. It is quite possible that the guarantor has now paid the balance in full to the lender, meaning that rehabilitation may be off the table even if they wanted to give you a break. In any case, make sure they know that they get a small payment each month that you can afford, or they get nothing. If they won't work with you, hang up and call them back in a week. Then in a couple of weeks. Eventually they may come around.

The cosigner of course complicates things because as far as I know, he or she may have a boat that they can go after if they sue. You don't want your cosigner to lose his or her boat. Keep that in mind as well.

**gml120** · 01-21-2011, 08:36 PM

If you are sued over this debt, it will be in your state of residence, and the court will apply the SOL of your state, which is four years in Pennsylvania, the provisions of the contract notwithstanding. This is a pretty standard choice of law issue. There is case law to back this up.

From my promissory note: "Governing Law, Choice of Forum - I understand and agree that (i) you are located in Ohio, (ii) that this Note will be entered into in Ohio and (iii) that your decision on whether to lend me money will be made in Ohio. Consequently, the provisions of this note will be governed by federal laws and the laws of the state of Ohio, without regard to conflict of laws rules."

I took this to mean I have to follow Ohio's state rules about the sol and wage garnishment. I hope by what you said "the provisions of the contract notwithstanding" I am totally wrong!

Also, if I indeed make a small payment per month (to keep them at bay), will it restart the clock on sol? Or is that date calculated from first delinquent payment, I've heard both.

Now that I start thinking about it, say for argument's sake a judgment is passed on my cosigner under the PA laws. If there is no wage garnishment, what do they have the right to do? Can they put an attachment on her bank accounts? Can they seize property like a vehicle? Or her house? I think PA is a homesteaded state, I'll have to look that up.

Thanks as always for any help and advice, you're really the only one I've talked to that actually understands the situation

**KeithDoxen** · 01-21-2011, 09:42 PM

I took this to mean I have to follow Ohio's state rules about the sol and wage garnishment. I hope by what you said "the provisions of the contract notwithstanding" I am totally wrong!

You are totally wrong. I wouldn't recommend paying for three years of law school to learn about "choice of law" issues, but as someone who did, I can assure you that the courts of your state will apply your state's SOL, and your state's consumer protection laws, regardless of what the contract says.

Also, if I indeed make a small payment per month (to keep them at bay), will it restart the clock on sol? Or is that date calculated from first delinquent payment, I've heard both.

You will likely restart the clock if you pay them anything.

Now that I start thinking about it, say for argument's sake a judgment is passed on my cosigner under the PA laws. If there is no wage garnishment, what do they have the right to do?

Take his or her crap until they satisfy the judgment.

Can they put an attachment on her bank accounts?

Yes.

Can they seize property like a vehicle? Or her house?

They will probably put a lien on these things, but there will be a bare minimum of protected assets in your state that cannot be touched.

Thanks as always for any help and advice, you're really the only one I've talked to that actually understands the situation

That's because 95 percent of attorneys in the bankruptcy and creditor/debtor law fields are clueless about student loans. When I filed my Chapter 7, my attorney came out and told me not to ask him about student loans, and that he was just going to list them like any other debt and that they wouldn't be discharged. Attorneys are terrified of student loans. These massive student loan defaults are relatively new, which is probably the reason for the cluelessness. But this is the tip of the iceberg, so the pros better study up. As for you, I'd recommend doing what I did: educate yourself on these issues. I am willing to answer any questions that I can of course.

**phat2009** · 01-22-2011, 08:25 AM

Hey Keith thanks for all of your helpful posts!!

Sorry to steal the space but I have an SOL/COL question, too.

I had posted a while back on a private loan I had. I disputed it being placed into default, because the servicer, AES, got all messed up during my BK, and ultimately did not properly handle an in-school deferment form it received following the BK discharge. They tried to say it was defualted due to the BK, but then the story changed to I did not get them an in-school deferment form in time triggering the default, which I did timely get to them, and they even acknowledged receipt of the form but erroneously stated the loan was ineligible to be placed into in-school deferment. That was what started the mess. This was followed by protests from me and more forms, that they went on to claim never got to them and then finally got to them but too late, so they defaulted it. All while I was in school still post-BK discharge, and they had another loan of mine showing this that was not defaulted.

Anyhow, some collection agency about a year later post BK discharge contacted me regarding that loan. I eventually wrote certified return to AES and Well Fargo who made the loan and the collection agency and also TERI, who was involved in the making of that loan, too. Only heard back from AES who said I did not get them the form in time, triggering the default, and they did not hold the loan anymore so they cannot help me. I wrote back again to all with my proof including their letter showing they received said form but erroneously said the loan was not eligible for an in-school deferment. Did not hear back from any of the others, still have not heard back from the collection agency, and it is almost a year now.

My question is, if my BK was discharged in 02/07, does the SOL run from that? Does the SOL go to the state I had filed the BK filed in, or where I lived once it was finally discharged/where I live now (which is same place I lived upon discharge). I see you are telling this person that if he were sued, that the COL says it goes by the state he is in, so I believe it is the same for me.

Also, when would the SOL run from? the BK discharge?? or did I refresh that when I wrote my letters? Again, I was in school during the whole time this was going on post BK, so 02/07-05/10, trying to fight them to put it into in school deferment status like all my other loans that did not get screwed up. I did graduate, though, last spring. But I have not heard from anyone about teh loan since about 02/10. Do you know the SOL in CA by chance?

Thanks again so much, your answers are terrific. I wish you could open a practice and represent all of us (LOL if there was something we could do, that is), because you deserve the business!!

**KeithDoxen** · 01-22-2011, 09:46 AM

Phat2009:

Okay, here's the lay of the land with regard to your AES loan. The reason that AES is telling you to essentially buzz off is that when a private student loan like yours defaults, the guarantor pays the balance in full to the original lender. The lender, which sounds like it was Wells Fargo, and the servicer, AES, no longer have anything to do with the loan, so your repeated contacts with them are a waste of time. TERI is the non-profit guarantor of your loan and the likely owner at this point. The collection agency is probably representing TERI.

So if you are sued, you will be sued by TERI.

Luckily for you, there is a case that is tailor made for your situation. It's a case that was decided in your state of California in 2008. Please take the time to read TERI v. Yokoyama. http://scholar.google.com/scholar_ca...=1&oi=scholarr

In the Yokoyama case, the California court applies a 6 year statute of limitations to the private student loan that Yokoyama was being sued over. So it is probable that if you are sued in California on these loans, the SOL will be 6 years. I say that it is "probable" because the SOL for written contracts in CA is 4 years, but as you can see from the case, the court applied a different, longer SOL in the case of a student loan.

If you are sued, you will be sued where you live. The SOL of the state in which you live will be applied, because SOL is considered procedural law and not substantive law, and therefore provisions in your contract that attempt to negate your own state's laws will not apply.

The SOL usually starts running from date of last activity on the account, and is generally tolled by bankruptcy, so if you defaulted while in bankruptcy and haven't paid anything since default, the SOL will probably have started running on the date of discharge, since the bankruptcy essentially "froze" the clock while it was ongoing. You will want to find the appropriate state statute in California to make sure that this is correct, and to learn what sorts of activities restart the SOL. In some states, acknowledging the debt does restart the SOL. California's laws will tell you what's what.

Thanks for the vote of confidence. If I were licensed to practice law in all 50 states, I could certainly garner a lot of business from this site. LOL.

**phat2009** · 01-22-2011, 05:49 PM

Keith:

I read the case and thank you for sharing it and for your post. I will poke around and see what it says concerning the SOL and restarting it. I think I also have to figure out when, exactly, they put it into default, because I think it was after the BK was discharged given they flubbed the in school deferment forms -- if one goes by that as a rationale for the default, I have been given both stories..... But, I find it weird that the collection agency has not tried to contact me since I wrote to all these turkeys a year ago. TERI itself was in BK for a while, so when I was trying to clear this up with them, they never returned my calls or letters trying to have it get out of erroneous default. It is crazy -- if they screwed me out of a say rightful ability to cure a default because they would never call or write me back, and at some point after their own BK shipped it off to a collection agency without ever working with me beforehand, then how is that fair. These guys know everything is on their side and no one is watching or doing anything for the students, so they get away with it all.

Anyhow, thank you again. You are extremely helpful to so many of us on here and it is greatly appreciated!!!

**gml120** · 01-23-2011, 05:29 AM

phat2009,
Sounds like we're in similar boats. Keybank, too, is making no effort to call me. It is almost more nerve-wracking than having CA call every 15 minutes, definitely eerie! Also, wouldn't a copy of your enrollment at school with dates prove that TERI is in error? Judging from my own experience I doubt even if you sent them a copy, certified mail, that they would even admit to seeing it, but as a defense in court? Seriously though, get the copy of the damn promissory note. It's a wealth of information! There is probably a line in there saying something like "We don't have to contact you for any reason, not to let you know you're going into default, not even to just say hey". Keybank considers it a "courtesy" to initiate a call or letter to me about anything regardless of how important it is. And almost just like your situation, loan DEFAULT could have technically been avoided with 1 or 2 five minute phone calls with a person who had a brain a long time ago. That's what really chaps my ass about all of this. Even if I was at fault for believing bad information, does the penalty really have to be default?? Let me rehab it, let me make 2 years of on time payments, tell me how much to write the check for to make up for late fees to bring it current, but just don't check the box that says default because of a miscommunication. These loans are worse than sub-prime mortgages. Keith, represent me! Let's start a class action!

I'll be posting here as I get new information concerning my charge off reversal: attempt #2.

**phat2009** · 01-23-2011, 11:10 AM

hey gml:

Oh ya, tried all that. AES screwed this up and TERI did nothing to try to allow me to fix it before sending it off to collections. AES claimed it went into default when they did not get an in-school form that my school sent, then when my school re-sent it, they claimed it was "too late." Actually, a total of three forms were sent to AES. The first they replied with a letter stating the loan was not eligible for an in-school deferment. They were wrong. I had called over and over. At one point, I was even told that the account was put into in-school deferment, that they corrected the mistake they made when they had replied the loan was not eligible for an in-school deferment. Then time would pass and I'd get a "your loan is in arrears" letter, and would call again. Oh, the agent you spoke to misadvised you, we are soooooooo sorry, and we need a new form. I was told I had sent the wrong form months back, which was a form THEY SENT ME to have filled out and approved by the school. I had my school send a new form, which they then claimed they never got. Then I send a third form, and they claimed it was received "too late," and they kicked it over to TERI as a default. I even asked them to notate the file about all that had occurred and indicate that although the clock was ticking that a third form would be received any day, and they refused to and defaulted it -- I bet the form came the very next day or may even have been there but they had not processed it yet.

So the whole thing was MY FAULT because of the months of my trying to get them to put it in in-school deferment? Their wrong form, their misinformation = MY fault?? I then tried numerous times to get someone at TERI to return calls and letters, to no avail. Then, like a year went by, and I heard from the collection agency. They laughed at me stating I could not show at that point all my phone calls, and told me it went into default due to the BK. Oh, ya, I still have all my cell phone records, so bring it on. The collection agency told me I had to deal with AES, and AES first stated yes, they defaulted the loan due to the BK. But, then a letter came giving me the whole we did not get your in-school deferment form in time crud and, anyway, since they no longer have the loan, they cannot help me. Ya, how about telling the lender you screwed up causing the loan to go into default?? It is totally ridiculous the run-around and baloney that they can give you. I had asked that the collection agency and AES provide me with the promissory note, but they never did. I also copied my letters to the Dept of Education, asking them to investigate the matter, but never heard from them, either.

No one listens to the student, and no one helps. They can say and do whatever they want, and they are never checked on it. It is totally outrageous how these lenders are getting away with all of this and no one is checking them. I tried over and over to get this account straight -- funny how none of my other loans had any problems. It is so infuriating what they are getting away with. I have seen other complaints about similar conduct of AES online at other sites and pointed those out in my letters, hoping DOE would take note, but nope, nothing from them. It does seem like we need Keith to the rescue for a class action. Improper defaults and emotional distress, not to mention damages due to bad credit reports, etc., and anything else we can throw in there.

**gml120** · 01-25-2011, 02:47 PM

Well, they denied my petition to overturn the charge off again......no real surprise. However, the reason why they charged off in the first place has changed yet again and is even more interesting than the last excuses. Now they are telling me that although my loan was in fact in a bankruptcy stay for me, it was NOT in a stay for my cosigner. Is this possible? We are not listed on the loan as joint, and she had nothing to do with my bankruptcy. 2 questions for my law guru Keith:

1. Can the same account with me (person who filed ch.7 bk) be in a protected from collections bk stay, and at the same time be starting the clock on missed payments for my cosigner (not involved in bk at all)?

2. Is Keybank, NA required to notify a co-signer if the loan is going to default to allow them to rectify the solution before charge off?

I have put in calls to the FTC and the office of the OCC in the state of PA, both of which couldn't answer these questions but are going to start an inquiry into the situation. Thought I'd give it a shot to post the question on here because you are a wealth of knowledge

Thanks again for all the good info so far!!

**KeithDoxen** · 01-26-2011, 06:22 PM

Originally posted by gml120 View Post

1. Can the same account with me (person who filed ch.7 bk) be in a protected from collections bk stay, and at the same time be starting the clock on missed payments for my cosigner (not involved in bk at all)?

2. Is Keybank, NA required to notify a co-signer if the loan is going to default to allow them to rectify the solution before charge off?

The bk stay doesn't really prevent the clock from running as far as these student loans go. Collections activity must cease during the stay, but the clock can continue running, and the loan can go from being current to delinquent, delinquent to in default, etc. Once the loan defaults and the stay is lifted they can go after you and the cosigner, so it's not as if you two have separate clocks or anything, as it's a single loan we're talking about.

My gut instinct is that they don't have to notify the cosigner that default is approaching, but don't quote me on that.

**gml120** · 01-27-2011, 11:48 AM

Thanks for all your help. After 3 months, 5 days, some odd hours of hard research I have come to the conclusion that until the US Government or my PA state government passes new laws, I am 100% screwed. I set up a payment plan with Keybank collections department to keep them at bay (hopefully!) until something I cannot control happens. When I start to rebuild credit, the first thing I'm going to do is apply my ass off and/or beg, borrow, and barter everyone I know to make a settlement. I considered myself an intelligent person, I stand corrected. In the face of this lack of regulation, I am confident in that there is nothing I can do to repair this situation. By the way, your gut instinct is right on the money - there is no requirement for them to notify the consumer of any action, except of course to serve suit. Sadface, sadface, sadface....

**gml120** · 02-16-2011, 10:15 AM

Update: My cosigner was approved for a home equity loan with the help of her husband. I'm sending the certified check to the bastards today and will be paying her the amount I used to give KeyBank towards a "real" loan. No surprise no banking institution would do anything for me except laugh. I will post again when and if I get conformation that my entire situation with Key is finally settled. Note: The best settlement offer I got from them was $15000. The entire amount owed was $17k and change. The difference between settling and paying the whole amount adds up to "charged off, settled" vs. "charged off, paid in full" respectively as annotated on our credit reports. According to the 10 or so financial advisers I talked to about this, the latter annotation is the lesser of the beast. Does anyone know the odds of getting the bureaus to remove the entire listing after a time?

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