My bank erased my $60,000 student loan

[Demeter]

THIS WAS UNDER OLD RULES--NO DOUBT THEY HAVE STOPPED THAT LOOPHOLE SINCE BANNING BANKRUPTCY RELIEF FOR STUDENT LOAN DEBT.

http://www.theguardian.com/money/2015/jan/29/my-bank-erased-my-60000-student-loan?CMP=ema_565



There aren’t many people in my situation in the United States. In fact, I’ve never met anyone else who can say this: even though I was over $60,000 in debt, the bank forgave my student loans. Until it happened, I was like most other people my age in America, who owe the bulk of $1tn in student loans: throwing away sealed envelopes, ignoring calls from unknown numbers, considering grad school. Wondering when your life will begin – your real life, the one where you can afford to travel home for the holidays or take a vacation. Debt means regularly fantasizing about floods, explosions, and comets – anything that will wipe your slate clean.

It didn’t start out like that. Sure, I graduated from college in 2008 with $90,000 of debt, which included that $60,000 bank loan along with $30,000 in government loans, but I was determined to find work. For three months, I interviewed, temped, and worked part time before landing a “full-time” job at a salon (I made $10 an hour and had no benefits or sick days). My bachelor’s degree and I swept hair, scrubbed heads, and dropped off towels at the laundromat 45 hours a week. It was the same job I had in high school and throughout college. Two weeks into my new position, Lehman Brothers collapsed and the market crashed. Three months after that, I began receiving bills in the mail.

I had two kinds of loans: one bad, one good. My government loans had decent payment plans, low interest rates, and forbearance options. My private loans were accompanied by angry calls and ever-climbing minimum payments. I didn’t have the income to pay the bank what it insisted on. Paying any bill beyond my federal loan would have left me immobilized: unable to save, take risks or survive an emergency. So I paid the government loan and ignored the private one. Six years later, the government loan was paid off. The bank loan took a different route.

Shortly after graduating, I heard somewhere that your debt disappears once the statute of limitations on it runs out. Your credit score would be nil, but you wouldn’t have debt any more. For a long time, I held this thought. It sustained me through spells of under- and unemployment. I don’t know if I actually believed I would be absolved of my debt if I were patient – but after the bank threatened that I either pay $60,000 in full immediately or be sent to collections, my desperation compelled me to find out. I took stock of the situation: since I’d used plastic to purchase clothes for jobs I never landed, my credit score was already in shambles by the age of 21. (Side note: “Dress for the job you want” is stupid advice if you’re broke.) There was also the threat that I’d be sued. I had zero assets and was making less than $25,000 a year, so that didn’t bother me either. Instead of haggling with the bank, I continued to work, advance my career, and dream of collections agencies bursting into flames. By 2013, I was making enough money to start saving. I could have begun paying the loan, but whichever collection agency owned it had lost track of me years ago. I wasn’t exactly on the hunt for them, either.

Then my debt caught up with me, but not in the way I expected. In 2014, I received a letter informing me that the bank was writing off my student loan. Wiping it out. I didn’t owe it any more. $60,000 in debt, gone.

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[djean111]

1. Credit card debt does not disappear after the statute of limitations, they just cannot harass you

any more. They can take you to court, though. If you do not show up they can put a lien on your property, but if you show up and prove the debt is past the statute of limitations, they are out the legal fees and the case is dismissed.
Be careful that your bank does not decide to send you a 1099-C for the amount they have forgiven - you would have to declare it as income. Any debt that is forgiven, over $600, requires you be sent a 1099-C and you declare it as income.

[yeoman6987]

2. Wow! They get you coming and going.

I guess it is 25 percent of the 60 grand too. I hope this individual has some write offs.

[djean111]

3. If you declare bankruptcy, then you do not have to pay income tax.

Then again, you cannot discharge student loans and mortgages through bankruptcy.

[elleng]

4. UhOh,

I'd been paying on a joint line of credit estranged husband refused to pay, I assumed it and agreed on terms with bank. (Husband died, in the process.) I received a 'forget it' letter from bank/collection entity this past year, 'that account is closed.'

Will check my mail. That surely isn't REALLY income to me, but I do understand the theory.

[djean111]

5. They are supposed to mail the notices by Feb 2.

Maybe the bank is not going to send you a 1099-C, maybe there were extenuating circumstances. But - only corporations can walk away from debt, this is America.

[elleng]

6. I check my mail sporadically,

1 or 2 times a month (I don't reside at my official mailing address; am about to change that,) so it may have arrived already. I don't know why Wells Fargo decided to close the account, it wasn't a trivial amount (tho our agreement resulted in what they may have thought was a trivial monthly amount. Was a decent deal for me.) I had no 'extenuating circumstances.' Maybe they did???