I’ve Never Paid My Private Student Loans and Want to Get It Off My Credit Report

By on October 5, 2017

Question:

Dear Steve,

I know I am not the first in this situation. In 2005-2007 I took out private student loans before I realized that you could file FAFSA and it would do the work for you. After that realization I took out Federal Student loans. My federal student loans are in good standing, however my Private loans are in default – totaling about $65k. They have been defaulted for a decade. I’ve never made a payment on them because the bank wouldn’t work with me on an affordable payment plan. According to my credit report the accounts were closed and sent to collections in February of 2013.

My question is will these private student loans ever fall off my credit report? Or how do I get them removed? And if I’ve never made a payment when did the statute of limitations start, when I opened the loan or when it was sent to collections? Could you give me a more general idea of what it all means? Thank you!

Alaina

Answer:

Dear Alaina,

Thank you for reaching out to me for help.

The Statute of Limitations (SOL) can be tricky. It’s not as simple to determine when it starts and stops by looking it up on the internet. The only way to get a definitive answer about when the SOL is up on your private loans would be to talk to a licensed attorney in your state. Things like moving out of state, which state may be considered the primary state in the agreement, or a host of other things can start and stop the SOL clock.

Even then the SOL is not an erasure of your private student loan debt. It simply means if the debt is past the SOL and you are sued, you could raise it as a defense that you should not be sued.

The SOL does not prevent either the collection of the old loans after the SOL or you being sued once it expires.

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It also gets tricky when you understand you could accidently restart the SOL clock if you acknowledge the debt, admit to the debt, or make a payment or payment arrangement.

Being in default on private student loans is not the end of the world and can lead to some resolution. See Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan.

If you are in default on the loans and working with a knowledgeable student loan attorney or then inquiries from the collector can become the starting point for negotiations and a settlement.

Once you deal with the defaulted private student loans you can then focus on rebuilding your credit.

The private student loans should fall off your credit report no latter than 7.5 years from the time the account last went into default. But falling off a credit report does not mean the debt is magically eliminated.

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About Steve Rhode

Steve Rhode is the Euro-Video and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

7 Comments

  1. Sarah

    October 21, 2018 at 6:05 pm

    What about those of us nearing our SOL but have found that the private lender is trying to add loans never taken out by the student? I’ve been trying to get them to verify two loans I have never heard of and the credit bureaus are a joke. In fact the private lenders haven’t verified a single loan they claim is mine. The credit bureaus do not have accurate information and I can’t get them to fix any mistakes. I’m leery of sending a credit bureau anything since I can’t talk to anyone or hold anyone accountable. I can’t even afford to talk to an attorney about the credit bureaus and their inaccurate information. Since starting a new job I’ll have to wait until my first paycheck and to do further research on credit bureaus. I can’t come up with some of the absurd proof they demand because it has been too long. Who keeps a bill for gas or electricity 11 years later?

    The debt settlement attorney I have hired with my last savings to help me get rid of the private loans advised me not to pay a penny unless they can prove the loans are verified. The problem is the private lender hasn’t responded any other way than by selling the loans to a shell debt settlement company, begin harassing calls and sending harassing letters. The lawyer then sends yet another “cease and desist” order and makes another loan verification request. In October of 2019 I’ll be able to discharge these loans and walk away. I only wish I hadn’t made a single payment and been able to get on with my life sooner. I’ll gladly state this was the best money ever spent on a lawyer in my life. The problem being lawyers in the first place so I’m not happy I had to resort to this.

    I’d also like to point out that federal loans are just as bad or worse. You can’t get any of them to apply payments properly and they’ll instead do whatever they want with it and apply your whole payment to interest only instead of splitting the payment as you told them to do. I don’t see why a bank and the fed thinks it’s fair to for them to commit fraud on house mortgages but when someone can’t repay all of their loan the predatory lenders get preferential treatment. One of my classmates graduated and didn’t pay back a single penny and advised me not to as we watched our jobs get sent overseas to cheap factories while we struggled to find unpaid internships. Some of our work was even given to the disabled at a steeply discounted rate to help fill a fake “skills gap” so the industry in Hollywood could cut even more corners.

    We need reform for colleges and lenders. This insane assumption to hike taxes in order to make higher education “free” is a fantasy that will never happen. Why not make all student loan interest tax deductible instead of the low $2,500 amount? I paid over $6,000 in interest alone one year foolishly thinking I’d make a dent in my student loans. I wasted $3,500 that I could have kept for emergencies and for my Roth 401K. I kick myself thinking that if I just worked hard enough I’d pay it all off.

    • Steve Rhode

      October 22, 2018 at 10:13 am

      Reform is absolutely needed. It is all out of control. Vote for political representatives who say they will take action.

  2. Alaina

    October 9, 2017 at 5:16 pm

    Glad I’m not alone! When did the 7 years start for you? That’s where I’m fuzzy. And how do you the credit bureau? This is all foreign territory to me.

    • Steve Rhode

      October 9, 2017 at 6:12 pm

      Technically it begins on the start of the last period the delinquency began.

    • Jeff

      October 13, 2017 at 9:42 am

      If you have not made any payments and the loans are 10 years old, then they are past the age for being reportable 9if they are still showing on your credit reports). My advice is to go to each of the credit bureau’s websites and get their addresses for disputes. Send a letter to each of them (do not use the on-line dispute system) stating that you want the student loan info removed since they are past the seven year limit for reporting negative info. When you get their response, they should show that the info was removed. If not, don’t be afraid to push back. Send them a follow up letter. Sometimes it takes more than one attempt. Don’t be intimidated by them.

  3. Jeff

    October 9, 2017 at 9:25 am

    I was in this almost exact situation. I began disputing the loans with the credit bureaus after 7 years and they were all deleted. This is because negative info cannot be reported longer than 7 years. Also, I’m currently working with one of the attorneys previously mentioned in this blog. He has re-opened my bankruptcy from 2008 and expects to have all my private loans discharged.

  4. Alaina

    October 5, 2017 at 6:13 pm

    SOL question asked.

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