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.
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!