Student Loans and Statute of Limitations

[jeffbaltimore]

The statute of limitations in my state for promissory notes is 6 years. I know there is no statute for federal student loans.

Does the six year statute of limitations apply to personal student loans?

If so, does making a payment reset the statute of limitations for another 6 years and for each payment made thereafter?

[1stStep]

It has been my understanding that non-government student loans are subject to a statute of limitations.

[StudLoanGuru]

Originally Posted by jeffbaltimore

The statute of limitations in my state for promissory notes is 6 years. I know there is no statute for federal student loans.

Does the six year statute of limitations apply to personal student loans?

If so, does making a payment reset the statute of limitations for another 6 years and for each payment made thereafter?

Yes, private student loans do have a statute of limitations, but only for credit reporting and litigation purposes. If you have a defaulted private student loan, and the statute is up, all it means is it drops from your credit report and the loan holder cannot litigate, but technically the balance is still owed and in your name, so you will have collections agencies chasing you down for the life of the loan.

And yes, if you make a payment, the statute starts all over again.

[Vek242]

I believe I have 2 private student loans with Citibank.... I am in NY. which the SOL is 6 years... I have not made a payment for over 6 years.... What is my first step to take this debt off of my credit report? Thank you in advance!!!!

[StudLoanGuru]

Originally Posted by Vek242

I believe I have 2 private student loans with Citibank.... I am in NY. which the SOL is 6 years... I have not made a payment for over 6 years.... What is my first step to take this debt off of my credit report? Thank you in advance!!!!

If your credit report is all you are concerned about and the statute is up on your loan then it will fall off your credit report naturally.

One thing to check though would be whether your state statute laws apply to new reports on your credit report or last payment date. If it is last payment date it should be falling off soon. If they go by the date of a report then it would have been a new report when it defaulted which would have been several months after your last payment, and thus the statute wouldn't have begun until that point.

For example, let's say John has your loan, and his last payment was June 2006. Then after 120 days of no payments the loan defaults. The creditor reports on John's credit report that it is now a defaulted loan.

If the six year statute of limitations begins on last payment date, then in June of 2012 the defaulted mark would be falling off his credit report.

If the six year statue of limitations begins on the last reporting date, then it would would take an extra 120 days, or roughly 4 months, to fall off his credit report.

Hope that helps explain it. I haven't memorized all of the state statute laws so unfortunately I wouldn't be able to tell you which is the case for you.