Do Student Loans Ever Get Written Off by Their Lenders?

If and when your student loan is written off depends on the lender and other factors. It might never be written off if it’s a federal loan, while a private lender may write it off months after you stop payments. If you’re struggling with student loan debt, Convenient Bankruptcy may help you end your obligation to repay it.

If student debt is holding you back, the student loan lawyers at Convenient Bankruptcy can help you choose your options and next steps. We’ve helped borrowers like you deal with tens of thousands of dollars in student loan debt. Want to talk about the possibilities? Call us at 405-296-0059 or send us a message online.

What Does It Mean to Write Off a Loan?

Writing off a loan means the lender considers it seriously delinquent and is giving up on being paid. The organization removes that expected income from its accounts receivables ledger, and it becomes a loss as "charged off to bad debt" or "written off to bad debt." 

Usually, bad debt is sold to a collection agency for a fraction of its face value. The agency owns it and, within the limits of the law, can try to collect it or sell it to another agency. If the loan is charged off, a collection agency typically owns the debt.

When are Debts Written Off?

Typically, a debt goes unpaid for 120 to 180 days after you become delinquent before it’s written off, but that depends on the type of loan and repayment terms. There’s no specific time or age when student loans are written off. Federal undergraduate loans may be written off due to your death, bankruptcy discharge, disability, or when it’s found your university or college engaged in fraud. Federal student loans are forgiven after 20 years, 25 years for graduate school loans. 

When Can I Be Sued to Collect on an Unpaid Student Loan?

A statute of limitations is a deadline to file a lawsuit. If you have private student loans, the lender has five years from your last full or partial payment to file a legal action to compel repayment. This may be extended due to the COVID-forebearance period, so it’s possible it could be closer to ten years, under some circumstances.  There is no statute of limitations for federal student loans, so a legal action could be filed at any time after your last payment.

How Can Convenient Bankruptcy Help Me with My Student Loan Debt?

When used with student loans, the terms discharge, debt relief, forgiveness, and cancellation are very different ways to end your obligation to repay your student loan. The federal Department of Education uses these terms for many programs, and you should look closely at their terms and conditions.

Student loan bankruptcy discharge is an option your student loan lawyer can help you explore. You would file for bankruptcy as part of the process. Until recently, as a practical matter, that would probably be a waste of time because a discharge of student loans was rarely allowed. But that’s now possible if you also file a successful lawsuit against the Department of Education. You may be able to discharge student loans totally or partially or get easier terms for repayment.

This lawsuit would include a set of financial paperwork called the “borrower-attestation form.” It details your expenses, income, student loan history, and current and future ability to repay your student loans.

The Departments of Justice and Education will consider it and come up with an opinion as to whether you qualify for discharge based on your undue hardship. They would recommend to the bankruptcy judge whether or not you deserve a total or partial discharge or improved payment terms. Your student loan attorney will advocate for you, and the bankruptcy judge will decide.

A non-bankruptcy discharge may be an option if you should be discharged due to highly unusual circumstances. That would include:

• Your school closed while you were enrolled or shortly after you withdrew
• Your school engaged in misconduct or misled you 
• Your school falsely certified that you were eligible for a student loan 
• You are disabled totally and permanently

Your student loan may be canceled if you have a public sector job for a given time and make a minimum number of payments. Loan forgiveness is similar. It’s available to those working for the public and who make a certain number of payments. Loan forgiveness programs are primarily based on how long ago you graduated. 

Your death is a reason for your student loan to be discharged, but you wouldn’t be around to make any more payments anyway. It would relieve your estate of any obligation to pay it, though.

An Oklahoma Student Loan Law Firm You Can Trust

The student loan attorneys at Convenient Bankruptcy can help you choose the right option and take the next steps. We help borrowers like you end their obligation to pay tens of thousands of dollars of student loan debt. Do you want to talk about putting student loans behind you? Contact us by calling 405-296-0059 to schedule a case review with one of our Oklahoma student loan attorneys.