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  1. #1
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    Nov 2017
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    Default What Statute of Limitations Applies to Loan Collection if You Move Out of State

    My question involves collection proceedings and statute of limitations in the States of: Michigan, NY and Georgia

    My wife and mother-in-law cosigned on a private student loan in Michigan back in the early 2000s for my wife to attend school in Georgia (they applied online). Due to unfortunate circumstances, the loan went into collections in 2006. However, they had made a payment arrangement and were paying regularly. My wife was already living in Georgia when it was in collections and my mother-in-law moved to New York in 2014 while it was in collections.

    The loan was sold to another collection agency back in 2011 and my wife inadvertently missed a payment back in October 2015. Since then she has not made a payment as we learned through our web research that we could send a letter to the collection agency requesting original documentation that they owned the original loan. Since October 2015, the loan has been sold repeatedly and no one has been able to furnish original documentation that they own the loan. Every time we request original documentation, they send copies of old faxes then disappear and we then hear from a new collection agency or law firms acting on behalf of the collection agency months later. However, my mother-in-law is concerned about how long this whole process will take and based on my research I understand that the SOL would dictate the amount of time a debt collector could legally sue. What I am not aware of and cannot find information on is which state's SOL would take charge here.

    Again:

    - the private student loan originated in Michigan, for use to attend a Georgia college
    - my wife has not lived in Michigan since the loan was originally opened
    - my mother-in-law, the other cosigner, relocated to NY in 2014
    - last payment made (as part of verbal agreement) was in October 2015

    I would really appreciate if anyone can explain to me which state's SOL take charge here. Also, I read somewhere that Georgia's SOL may actually be 4 years for private loans, but the majority of my research shows it is 6 years, like the other two states. So I'm hoping someone can clarify and confirm what is Georgia's SOL. Thanks in advance!

  2. #2
    Join Date
    Oct 2016
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    4,301

    Default Re: Two Cosigners Live in Different States from Where Original Loan Originated

    The state of jurisdiction would likely be where the loan was originated which sounds like Michigan in this case. It is also likely on the original loan documents.

  3. #3
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    Nov 2017
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    Default Re: Two Cosigners Live in Different States from Where Original Loan Originated

    They applied for the loan online while living in Michigan. Lender address shows as Ohio.

  4. #4
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    Default Re: Two Cosigners Live in Different States from Where Original Loan Originated

    I'm still betting MI but is there any verbiage that says words to the effect of, "Any action brought hereunder, including those to enforce this agreement or any provision hereof shall be in accordance with the laws of the State of XXXXX?

  5. #5
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    Default Re: Two Cosigners Live in Different States from Where Original Loan Originated

    I checked, but did not find anything to that effect.

  6. #6
    Join Date
    Mar 2013
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    18,340

    Default Re: Two Cosigners Live in Different States from Where Original Loan Originated

    What's the dollar amount of the remaining debt?

    Also keep in mind that the SOL is typically tolled (stops running) when one leaves the state of origin.

  7. #7
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    Nov 2017
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    Default Re: Two Cosigners Live in Different States from Where Original Loan Originated

    ~$40K

    Can you elaborate on the SOL being tolled and what is/are the implication(s)?

  8. #8
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    Default Re: Two Cosigners Live in Different States from Where Original Loan Originated

    Quote Quoting Kash0509
    View Post
    My wife and mother-in-law cosigned on a private student loan in Michigan back in the early 2000s for my wife to attend school in Georgia....
    One or both of them, your wife and/or her mother, are borrowers on the loans. It is possible that they are co-borrowers, or for one to be the borrower and the other a co-signer.
    Quote Quoting Kash0509
    I would really appreciate if anyone can explain to me which state's SOL take charge here.
    There may be an effort within the loan contract to impose a choice of law provision that extends to the statute of limitations. If so, it would be necessary to review that language to determine what state's law it attempts to impose, and whether the provision is likely to be enforced by a court.

    Otherwise, as statutes of limitation are normally regarded as procedural laws, the statute of limitations that is applied will be that of the forum -- the state in which the lawsuit is filed -- unless that state has a borrowing statute that applies the out-of-state limitations period to the loan. Last I checked, Georgia did not have a borrowing statute.

    Georgia's limitations period for written contracts is six years. Depending upon the full facts, that period may have started to run as late as October 2015 (the date of the missed payment, with there apparently being no subsequent payment), or possibly and earlier date.

    Tolling provisions potentially extend the statute of limitations. If a state provides that some or all of the period of time you were out of the state after a claim accrues is not counted toward the limitations period, then the statute will toll the limitations period for that amount of time.

  9. #9
    Join Date
    Sep 2010
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    Default Re: Two Cosigners Live in Different States from Where Original Loan Originated

    The CORRECT answer is that the statute that applies is the one in which court the case is filed in. Many states however have borrowing statutes that may modify the time when other states are involved. Of course you have to bring the case in a court of appropriate jurisdiction. Not enough information here but often you get the choice in of either where the transaction took place or the residence of one of the parties.

  10. #10
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    Mar 2013
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    Default Re: Two Cosigners Live in Different States from Where Original Loan Originated

    Quote Quoting Kash0509
    View Post
    ~$40K
    Well, your wife and her mother can choose to just ignore it and hope nobody files suit before whatever appropriate SOL runs out.

    Or, they can just both file bankruptcy (if it's dischargeable) and be done with all the angst.

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