Would a state debt collection SOL applyto a defaulted private student loan?

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Would a state debt collection SOL applyto a defaulted private student loan?

The loan in question was taken during 1982-1986 via 4 promissory notes. The original bank folded in 1989 and a PHEAA repayment schedule disclosure statement issued/signed when a bank in TX acquired the loan. It was subsequently sold again. The current debt holder wrote to me in 04/04; I responded with a request for certain documentation. Debt holder responded in 05/04. Last payment made in 08/96. I did not respond and heard nothing from debt holder until 09/10 at which time I sent a request for debt validation. Can debt holder sue/garnish, etc.?

Asked on October 27, 2010 under Bankruptcy Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A statute of limitations does apply against subsequent assignees or transferees of a note--they cannot start the statutory period to sue over by buying the note (or the business, etc. which itself  owns the note), but instead, the statutory period will determined from when the action or event giving rise to the cause of action occured. On a note, that is when the default occured, or when an installment was not paid when due (which is usually sometime after the last payment actually made).

They can try suing you; you can then raise the statute of limitations for a promissory note (it should be the one for a written contract) as a defense, if you believe that the actual default occured long enough ago that the statute has since run.


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