Common Defenses to Student Loan Lawsuits

If you're sued for nonpayment of a student loan, you might have a defense to the lawsuit.

If you default on a student loan and the creditor files a lawsuit seeking payment, you might have a defense to the lawsuit. If one of the below defenses applies in your situation, you might not have to pay the student loan debt. However, you must raise any applicable defense in a formal response to the lawsuit, otherwise you'll most likely lose the chance to defend yourself.

Common Defenses to Student Loan Lawsuits

If you're sued for nonpayment of a student loan, check to see if any of the below situations apply to you:

You never agreed to pay the debt. If you are a victim of identity theft, go to IdentityTheft.gov to create an Identity Theft Report. Next, file a report with your local police. Keep a copy of the report for your records. Also, contact the U.S. Department of Education Office of Inspector General Hotline, 800-MISUSED (800-647-8733).

You do not owe the debt or you current on your payments. Review your loan documents, payment records, and credit report for inconsistencies or miscalculations. Also, the creditor might be seeking attorneys' fees or collection costs that are too high or prohibited by law.

The debt has been discharged in bankruptcy. Although it is difficult to discharge student loan debt in bankruptcy, if you succeeded in discharging that debt, then the student loan creditor can’t collect on that debt. (To learn how to discharge your student loan debt in bankruptcy, see Student Loan Debt in Bankruptcy.)

Your loan was canceled because you were unable to finish your educational program due to your school’s closure. If your school closed so that you couldn’t get your degree, you might be able to cancel your loan altogether. However, generally, only federal student loans (not private ones) may be canceled.

If the lender or loan servicer approved your cancellation request, provide the supporting documentation in your response to the lawsuit. If your cancellation request is still pending at the time of the lawsuit, indicate that in your response to the lawsuit and provide supporting documentation. If you have not been sued yet and need time for your loan cancellation to be approved, you might want to request a forbearance. A forbearance stops collection efforts, but interest still accrues.

The student loan creditor waited too long to sue you. Federal student loans have no statute of limitations. However, private student loans are subject to your state’s statute of limitations (time limits on how long to wait before suing) for legal action to collect on written contracts. (To learn more about statutes of limitations, see Time-Barred Debts: When Creditors and Collectors Cannot Sue You for Unpaid Debts.)

The creditor failed to document the debt. In many states, the creditor must attach a copy of the original loan agreement to the lawsuit. If the loan account was sold to another creditor, the debt collector must provide proof, such as an assignment (a bill of sale), authorizing that party to sue in order to collect the debt. If the account has been sold to another party, then that party must prove that it has the right to sue to collect the debt. If the creditor fails to do this, you might be able to petition the court for a more definite statement or to dismiss the lawsuit.

When to Talk to a Lawyer

If you're facing a student loan lawsuit and need information about possible defenses or you need help responding to the suit, talk to a debt relief attorney who deals with student loans.

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