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  • FIRST POST
    • devon_lad
    • By devon_lad 6th Mar 18, 3:23 PM
    • 6Posts
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    devon_lad
    Bankruptcy and Student Loans
    • #1
    • 6th Mar 18, 3:23 PM
    Bankruptcy and Student Loans 6th Mar 18 at 3:23 PM
    I had to file for bankruptcy back in 2003 after a business failure. At the time I included my student loan in the bankruptcy petition.


    I believe since this time the laws have been tightened so that it is not possible to write off student loans.


    However, many years after forgetting about all this...


    I'm currently moving house and there's a problem with my mortgage application due to my credit score. Turns out that in the last week (good timing) Link Financial Outsourcing have registered a default on my credit file for not paying my student loan. The actually default date is 2 years ago.


    This is the first I've heard about my student loan since 2003.


    Some quick googling reveals that payment cannot be enforced as the loan was pre-1998.


    But this is actually not my main concern. My concern is there's now a default on my credit file that'll be hanging round for 6 years whether I pay or not - stopping me from getting a mortgage.


    So anybody know if a 2003 bankruptcy would cover a 1996 student loan?


    And if so, is there enough of an argument to get the default removed?


    Thanks
Page 1
    • devon_lad
    • By devon_lad 6th Mar 18, 5:07 PM
    • 6 Posts
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    devon_lad
    • #2
    • 6th Mar 18, 5:07 PM
    • #2
    • 6th Mar 18, 5:07 PM
    Managed to find some information on this.

    A debt in respect of a student loan (see paragraph 40.92) is not released on discharge where the bankruptcy order was made on or after 1 September 2004.! This is provided for in legislation [note 24] other than the insolvency legislation.


    And also

    (2)!In England and Wales—
    (a)any sum payable to an eligible student by way of a student loan which the eligible student receives or is entitled to receive after the commencement of that person’s bankruptcy, will not be treated as part of the bankrupt’s estate or claimed for the bankrupt’s estate under section 307 or 310 of the Insolvency Act 1986(2), whether the entitlement arises before or after the commencement of the bankruptcy; and
    (b)any debt or liability to which that person is or may become subject in respect of any sum payable to an eligible student by way of a student loan will not be included in that person’s bankruptcy debts when the person receives or is entitled to receive that sum–
    (i)in the case of a bankruptcy commencing before 1 September 2004, after the commencement of the bankruptcy; or
    (ii)in the case of a bankruptcy commencing on or after 1 September 2004, before or after the commencement of the bankruptcy.


    I'm no lawyer - but that to me says the student loan liability was discharged with the bankruptcy of 2003.
    • iolanthe07
    • By iolanthe07 7th Mar 18, 5:03 PM
    • 5,030 Posts
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    iolanthe07
    • #3
    • 7th Mar 18, 5:03 PM
    • #3
    • 7th Mar 18, 5:03 PM
    I'm no lawyer - but that to me says the student loan liability was discharged with the bankruptcy of 2003.

    You may well be right, but perhaps a default can still be lodged even if the debt cannot be enforced. You may need professional advice on this.
    I used to think that good grammar is important, but now I know that good wine is importanter.
    • devon_lad
    • By devon_lad 13th Mar 18, 9:38 AM
    • 6 Posts
    • 0 Thanks
    devon_lad
    • #4
    • 13th Mar 18, 9:38 AM
    • #4
    • 13th Mar 18, 9:38 AM
    Have spoken to solicitor, and they have confirmed that this debt would have been discharged with the bankruptcy.


    However, to pursue this they want £400 up front, at which point they'll be able to tell me how much it's likely to cost in total to resolve. Could be more than the debt itself.


    Bit annoying.
  • National Debtline
    • #5
    • 14th Mar 18, 11:00 AM
    • #5
    • 14th Mar 18, 11:00 AM
    Hi devon_lad


    You don't need to pay a solicitor to help you with this. As you were made bankrupt before 2004 you are correct that your student loan was provable and should have been written off. Your next step is to complain to Link Financial with details of your bankruptcy and a request to remove the default.


    It's a good idea to also inform the Insolvency Service office that dealt with your bankruptcy and the Student Loans Company (SLC). If you can't resolve the matter this way you can take your complaint on to the Financial Ombudsman Service (FOS) and the Information Commissioner's Office (ICO). The whole process is free and should get the matter resolved.


    Susie
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • devon_lad
    • By devon_lad 14th Mar 18, 11:10 AM
    • 6 Posts
    • 0 Thanks
    devon_lad
    • #6
    • 14th Mar 18, 11:10 AM
    • #6
    • 14th Mar 18, 11:10 AM
    Thanks for this. Yes, I figured I could probably do the same myself. The reason for engaging the solicitor is that we're right in the middle of a house purchase - lender wants to see some firm proof that this is an invalid default notice - so solicitor is needed to verify my story in the short term.
  • National Debtline
    • #7
    • 14th Mar 18, 1:47 PM
    • #7
    • 14th Mar 18, 1:47 PM
    Hi there again


    Have you told the mortgage lender that the default is invalid because the student loan was included in your bankruptcy? If they are not already aware of the bankruptcy it's probably not something you want to bring up. However, if they do know about it, it's a fact that you can't be held liable for the debt and therefore the default should never have been issued.


    I appreciate there is an element of urgency so it will of course be up to you whether to pay the solicitor to help you. It may be worth calling Link Financial to see if it's something that can be quickly resolved directly with them. Although even if they remove the default, your credit file is only updated once per month.


    Susie
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
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