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  1. #1
    Join Date
    Sep 2018
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    1

    Default If There Are Two Different Promissory Notes Representing the Same Loan, Are They Void

    My question involves too many promissory notes and collections in Colorado.

    I originally took out 6 loans (FFELP, both gsl and sls) in the late 80's. I consolidated in 1996 by filling out a paper application form and promissory note. The guarantee company insisted I fill out a computer generated additional promissory note. They said they would void the original. Fast forward to today after making payments of $40k on a $20k debt... Loan is in default. Collections is pursuing it. Have requested debt validation including underlying loan docs. Collections company refuses to give any info other than two consolidation notes which show the first loan was NOT voided.
    First question:
    1) Am I right in thinking the first loan is void for novation and the second is void for failure of consideration? Or to look at it another way, the second loan is not valid until the first loan is voided and if it was voided today then they would have the right to collect payments/interest from this day forth, not for last couple decades? Meaning technically, I'd owe the principal of $20 but technically they'd owe me $20k since it would be $40k less payments of $20k? In addition, the consolidation loan forms themselves were created in 1989 but signed in 1996 so numerous items were missing on the notes since they didn't take into account the 1992 HEA amendments...
    2)If the original loans were not made according to the HEA (example: pell grant not offered at all in some years even though would have qualified or GSL (stafford) loan not offered in some years so was given SLS instead... again, would have qualified), would that be enough for them to lose their guarantee where the guarantee agency and the federal government (who reinsures) would no longer be a party of interest and technically have no standing to sue?
    Thanks in advance!

  2. #2
    Join Date
    Jul 2018
    Posts
    455

    Default Re: If There Are Two Different Promissory Notes Representing the Same Loan, Are They

    Quote Quoting sgodphoto
    View Post
    Am I right in thinking the first loan is void for novation and the second is void for failure of consideration?
    Nothing in your post suggests that any of the seven loans mentioned in your post are void for any reason.

    Quote Quoting sgodphoto
    View Post
    Or to look at it another way, the second loan is not valid until the first loan is voided and if it was voided today then they would have the right to collect payments/interest from this day forth, not for last couple decades? Meaning technically, I'd owe the principal of $20 but technically they'd owe me $20k since it would be $40k less payments of $20k?
    Huh? I think that, when you are referring to "the first loan" and "the second loan," you are actually talking about the two promissory notes relating to your consolidation loan, which is a single loan. Nothing in your post suggests that loan is anything other than valid, and the notion that anyone owes you anything seems absurd.

  3. #3
    Join Date
    Sep 2005
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    Default Re: If There Are Two Different Promissory Notes Representing the Same Loan, Are They

    pg1067 is correct that this is a single loan, even if there was a superseding promissory note. If the collection is predicated upon the second note, the one your facts indicate is the proper note to use for the calculation of your debt, then this is a non-issue.

    Were the creditor to locate the first note and to try to claim that you owed money on two separate loans, then you would have a defense to that action based upon the fact that there was only one loan. But their (possibly) misplacing the original note, the one superseded by the second note, does not prevent them from collecting the money that you owe.

    If your reference to the "original loans" is to the loans that you refinaced with the loan consolidation, those debts were paid off more than twenty years ago. Your present debt is for the consolidation loan, and theoretical defenses to the original loans won't change the balance of the consolidation loan.

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