Hi Steve,
I have a non-federal student loan (Sallie Mae -$12K) and have not made a payment on it in over 5 years.
Apart from trying to negotiate a payment plan when i was out of work and could not afford my repayments, I have had no contact with them.
For the last year or two a collection agency has called my parents and left messages sporadically, but of recent times the volume has increased and tone become less friendly. The loan was opened in Maine however I do not have the original loan contract.
My questions are:
1. I now live abroad. Does the collection agency have any jurisdiction here?
2. One letter sent recently describes an opportunity to settle at a "great savings to me". Through my marriage I may now be in a position to settle. How would you recommend going about this? I am hesitant to call them myself?
3. Does the SOL apply to this loan and if so what happens when it runs out?
4. If we do return to the US one day and this loan is still not repaid, what are the implications for me and also for my wife (non-us citizen)? Is the debt attached to her through marriage? Will this effect her credit?
5. Finally, can you recommend anyone to help (lawyer, etc) me through this from abroad? I am weary of student loan assistance scammers.
Thanks in advance!!
Mike
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Dear Mike,
Thank you for writing me. I think we can get this worked out for you.
The statute of limitations is an interesting animal. I wish it was clear-cut and there was an easy answer but in some places the SOL stops and starts if you leave the state and other factors. Depending on an SOL to save you would require a definitive opinion from an attorney licensed in the state you claim to be a resident of.
That being said, if the attorney finds the SOL has expired then the private student loan could be entirely discharged in a chapter 7 bankruptcy, immediately. That would be the end of it.
So let's say the SOL had not expired or you didn't want to file bankruptcy. You could deal with the lender but you don't want to do anything to restart the SOL clock again accidentally at this point. So I'd think twice before calling. However your mailbox can be a source of pleasant surprises. Sallie Mae is sending out settlement offers to student loan debtors, though not in a consistent predictable way. The offers have been for about 60 percent of the debt and paid in up to three installments. Here are some past articles on this issue.
If you get and accept their offer just keep in mind you will need to keep a copy of the settlement agreement with your other important papers in your life. Keep it safe and at least for the next twenty years. Old creditors have been known to later claim there was no deal.
Also, if you settle the debt then keep in mind if you are not insolvent you may owe income taxes on the forgiven debt above the point you became solvent. I know, it's weird and odd but it's the IRS and sometimes those rules are strange. See these articles for more on this.
Now that you live abroad you should not have any fear of local collections on this issue.
There is no problem with you re-entering the U.S. with the debt. The debt is yours, not hers. It will not impact her individual credit in the U.S. But keep in mind her initial credit in the U.S. will stink simply because it does not sound like she has any U.S. credit being reported to begin with. Ironically, no credit is worse than bad credit. The good news is it is easy to build U.S. credit. See this.
You are probably claiming some state of residence when you file your foreign taxes so I'd look for an attorney who is licensed in that state to discuss this with or a bankruptcy attorney there to consult with for free. One place to look is NACA.net for an experienced consumer advocate attorney. I would not ignore the bankruptcy option. It would be the least expensive and fastest way to put this issue behind you forever with the protection of the law.
However, if you wanted to discuss your situation further with someone who is not an attorney, one person I am very impressed with is Damon Day. He is an independent debt coach and is not affiliated promoting any company or solution. I've personally mentored him for years. He's probably one of the best people I've seen with the skills and abilities to both understand consumer debt and creatively strategize how to deal with the situation. I'm always impressed with his approach. Besides, Damon always calls me for advice when he runs into unusual situations.
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