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Operation of State Statute of Limitations?


William O Orange
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The Federal Statute pre-empting the operation of state statutes of limitation was enacted in 1991. If a loan was in default before the statute was passed and the state statute tolled limiting actions against the debtor prior to the enactment of the federal law, does the federal law "revive" this barred action?

Compare, if a student loan was discharged in a bankruptcy action BEFORE the federal act banning bankruptcy, the debt is not revived and the debt remains discharged.

If the act does "revive" the debt previously limited by state statute, is this not then an ex post facto law and hence prohibited by the Constitution?

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To my knowledge (having worked with defaults and student loans for over a decade) student loans have never been subject to state statutues of limitations. The Bankruptcy Reform Act set the dischargeability time limits nationally. At one point it was set at 5 years...later it was changed to 7years. It was in October of 1998 that the law changed making all student loans non dishcharable.

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Student loans have been subject to SoL prior to the federal statute pre-empting such state action:

(1) I am personally acquainted with cases where the defendant

successfully had collection efforts barred;

(2) I have in my possession copies of sample letters used by

consumer credit attorneys using SoL as a defense (prior

to 1991)

(3) IF such state statutes were not in operation prior to

the enactment of the federal statute then WHY would the

federal statute expressly pre-empt the operation of the

state statutes? If they were NOT effective, there would be

no need to pre-empt.

If the state SoLs were not effective, prior to 1991, what

statute made them ineffective? :?:

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Student loans have been subject to SoL prior to the federal statute pre-empting such state action:

(1) I am personally acquainted with cases where the defendant

successfully had collection efforts barred;

(2) I have in my possession copies of sample letters used by

consumer credit attorneys using SoL as a defense (prior

to 1991)

(3) IF such state statutes were not in operation prior to

the enactment of the federal statute then WHY would the

federal statute expressly pre-empt the operation of the

state statutes? If they were NOT effective, there would be

no need to pre-empt.

If the state SoLs were not effective, prior to 1991, what

statute made them ineffective? :?:

1)Yes prior to 1998 you could file on student loans. Federal statutues set the SOL.

2)You may have letters in your possession but it doesnt mean that SOL was a valid defense. Laws were being passed frequently during the 90's. The one reference I can find dates back to 1978...

Bankruptcy Reform Act of 1978 - Pub. L. 95-598; November 1, 1978

Section 317 of this Act repealed section 439A of Pub. L. 89-329 that had been enacted by Pub. L. 94-482 and had provided for the non-dischargeability of student loans through the first five years of repayment. The repeal was effective on the date of enactment of this Act. This provision had applied only to Guaranteed Student Loans. Section 523 of this Act established a new student loan provision (to become effective October 1, 1979) that was generally comparable to the repealed section 439A, and applied to all student loans provided the loans were either held by governmental units or institutions of higher education. As such, the new provision as enacted in 1978 did not apply to education loans held by commercial lenders, Sallie Mae, proprietary schools, or private non-profit guaranty agencies.

Pub. L. 96-56; August 14, 1979

This Act amended the (old) Bankruptcy Act to effectively reinstate, as part of the Bankruptcy Act, the provisions of section 439A that had been inadvertently repealed by section 317 of Pub. L. 95-598, making those provisions once again effective through October 1, 1979, when the new section 523(a)(8) would become effective. The Act also amended new section 523(a)(8) to include a larger group of student loans made, insured or guaranteed by a governmental unit, or funded in whole or in part by a governmental unit or non-profit institution, thus including all GSLs, NDSLs, and Health Education Assistance Loans (HEALs). Meanwhile, courts were addressing in numerous bankruptcy cases whether Congress had created a "gap" between November 1, 1978, when it repealed section 439A of the Higher Education Act, and October 1, 1979, when the non-dischargeability provision of the new law, 11 U.S.C. 523(a)(8), took effect. Eventually, the courts of appeal unanimously ruled that the repeal had been inadvertent and would be disregarded. Thus, there was never in fact a "gap," because the courts ruled that section 439A remained in effect after its inadvertent "repeal'" in 1978 through August 14, 1979, when the "repeal" was cured by enactment of the stop-gap provisions of Pub. L. 96-56.

3} Dont know how to answer this....if you maybe wrote it in plain english I might be easier to translate. All I know is, day in and day out students would list their loans on bankruptcies. Why?? Because their attorneys told them to. They assumed that loans would be discharged because they were listed or because they had stupid legal representation. I dont know how many times I had to advise attornies on the laws. They didnt know how to calculate discharability. Case in point. I had one student who was filing on over $40k in loans...this was pre 1998. She and her attorney assumed it was 7 year SOL. They assumed it was from the time she finished school, not when the first payment became due, as is the law. She filed 6 month too early....and this was her only debt. She paid $900 to have a bankruptcy go thru that was not applicable!!

What information are you really trying to find out?? Do you have a loan that you are disputing?? Trying to get out of??

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Nope. I'm asking a question about SoL not disputing a loan or "trying to get out" of anything. 8)

It's apparent that you don't know the answer to my question although you have shared a lot of information for which I thank you. I will ask the question once again, and hopefully in plain English.

First, what I am NOT asking, I am not asking about the bankruptcy law. I do not have a question about bankruptcy law. I am asking ONLY about the applicability of State Statutes of Limitation AND the effect of the Federal law in 1991 pre-empting state statutes.

States have statutes of limitations (SoLs). These statutes prevent suing in courts to recover a debt IF the period for such suits have passed. In my state that is 6 years, but it is different in other states.

Prior to 1991, a debt collector seeking to sue a student loan debtor was barred from using a lawsuit IF the time period had passed. Now with the 1991 amendments to the Higher Ed Act the Feds say that actions are no longer to be limited by state statutes.

Now my question is this, IF a debt had already been in default AND had already been barred by the state statute say for example:

Debt made in 1980, into default in 1982, would be barred

by 1988, 3 years BEFORE the Federal Act takes effect.

Does the 1991 Federal Act "revive" that barred claim? Does the Act therefore act retroactively to passed dates?

And if it does, by follow up question is this: If the Act is effect PRIOR to the date it was enacted, is it not an "ex post facto" law and hence prohibited by the US Constitution? See US Const, Art I, Section 9.

An Ex Post Facto law is "A law passed after the occurrence of a fact or commission of an act which retrospectively changes the legal consequences of the act."

Now, LynninMN, if you don't know the answer to this don't feel compelled to answer. :wink:

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  • 4 weeks later...
Nope. I'm asking a question about SoL not disputing a loan or "trying to get out" of anything. 8)

It's apparent that you don't know the answer to my question although you have shared a lot of information for which I thank you. I will ask the question once again, and hopefully in plain English.

First, what I am NOT asking, I am not asking about the bankruptcy law. I do not have a question about bankruptcy law. I am asking ONLY about the applicability of State Statutes of Limitation AND the effect of the Federal law in 1991 pre-empting state statutes.

States have statutes of limitations (SoLs). These statutes prevent suing in courts to recover a debt IF the period for such suits have passed. In my state that is 6 years, but it is different in other states.

Prior to 1991, a debt collector seeking to sue a student loan debtor was barred from using a lawsuit IF the time period had passed. Now with the 1991 amendments to the Higher Ed Act the Feds say that actions are no longer to be limited by state statutes.

Now my question is this, IF a debt had already been in default AND had already been barred by the state statute say for example:

Debt made in 1980, into default in 1982, would be barred

by 1988, 3 years BEFORE the Federal Act takes effect.

Does the 1991 Federal Act "revive" that barred claim? Does the Act therefore act retroactively to passed dates?

And if it does, by follow up question is this: If the Act is effect PRIOR to the date it was enacted, is it not an "ex post facto" law and hence prohibited by the US Constitution? See US Const, Art I, Section 9.

An Ex Post Facto law is "A law passed after the occurrence of a fact or commission of an act which retrospectively changes the legal consequences of the act."

Now, LynninMN, if you don't know the answer to this don't feel compelled to answer. :wink:

All bills have amendments which is why Regean attempted to employ the "line-item" veto (albeit unsuccessfully). So, as an example, a bill requests $124 million to build 76 enhanced radiation nuclear warheads for the Lance missile system and while the bill's in committee, someone attaches an amendment to provide $1.7 million to study how many times ducks fart in a week and $8 million to give to the France government so that they can give it to French Jewish groups to build private elementary schools for Jewish school children (actual bill with amendments that almost passed).

The bankruptcy reform act had an amendment to it that removed the statute of limitations so SLs have no statute of limitations.

Ex post facto only applies to criminal law. It also applies to civilian laws were penalties exist. That means that the EPA can't put you in jail for 63 months and fine you $1 million dollars for filling in a small hole 10 years ago which they claim to be a "wetland" because a Canadian goose once squatted there for 10 minutes sometime during the last century. It does not apply to SLs.

Were state and federal laws conflict, federal law always supercedes state law, especially were the federal government is concerned.

The only time a state SOL would apply is if the "student loan" was issued by a private lender and not backed or guaranteed by the DEd. These loans do exist but they did not become available until the late 80's. Some lenders, such as CitiBank did issue non-government backed "student loans".

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While I do thank G Douglas Lee for the reply I almost hesitate to point out that it does not answer the question:

The question, again, is once a State SoL has operated and has rendered a loan not-collectable, will a Federal Act abolishing the defense of a SoL, act retroactively? And, if so, does this not violate the US Constitution which prohibits the enactment of ex post facto laws. (An ex post facto law is one that acts retroactively)

Now forgive me but I just don't understand anything about the post on amendments. Yes, many bills have amendments, but no ALL bills don't have amendments. Assuming arguendo that the SoL pre-emption was enacted in an amendment, the question remains. BTW, the statute per-empting the SoLs was the Higher Education Act Amendments of 1991 and not the bankruptcy reform act.

"Ex post facto" applies ONLY to criminal law ? Or to laws imposing penalties? My little copy of the Constitution does not make that distinction. It reads in Art I, Sec 9 : "No Bill of Attainder or ex post facto Law shall be passed". It does not say no ex post facto law as may be applied criminally, or as applied to penalties. It says NO ex post facto law.

So if the Court has ruled that the Founders meant this to apply only to criminal law, what would be the citation to that case decision?

And where Federal laws conflict with state laws, Federal laws ALWAYS supersede State? This would suggest that the States are subordinate units of government while the "Federal" Constitution appears to construct a system of Concurrent Jurisdictions, wherein the federal and state governments each retain sovereignty within their respective realms. I recall a number of decisions where Congress has acted and subsequently the Court has held that it improperly intruded upon a State's authority.

While the Feds rule supreme within their jursidiction, and may pre-empt the States where the feds and states share jurisdiction, surely you would agree that where States rule, then the feds may be rightfully kept out by the Constitution and the courts enforcing that constitution?

Now returning to the question, and I enter here upon uncertain ground, while the Federal government may certainly legislate regarding indebtedness it acquires, does it do so in exercise of its governmental powers or in a private capacity, not unlike any other creditor? Tax indebtedness is inherently acquired in a governmental capacity but, for instance, are home mortgage loans so acquired? When the Federal Govt acquires home mortgage debt by guaranteeing home mortgages, it is not operating in a governmental capacity but as a private entity, not unlike any other insurer or underwriter.

When a US-insured mortgage is foreclosed it must still be foreclosed upon subject to the laws of the State in which the property is located. Mortgage foreclosures are matters of State law. Is this not true? It appears to be true for by observation it appears that federally-insured mortages still are foreclosed in state courts.

So, then, is the US Govt not also acting in a private (also called "proprietary" capacity) when it insures student loans? If so, should it not also be subject to State law and regulation?

And where the State duly legislates for a statutory limitation on actions to recover on debts, a historically State function, should the US Govt, in its private capacity, not be subject to the operation of those state laws?

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