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What avenues are available for a very old student loan?

Santa Rosa, CA |

My mother had a student loan back in the early 1990s. She went into default and they withheld her income tax return for years to recover the funds. She assumed that when they stopped withholding her income taxes that it was paid in full. She recently tried to purchase a home only to find that a judgment had been entered without her knowledge almost 15 years ago. They have not tried to contact her to recover funds in all this time. She is now retired and living on a fixed income. What recourse does she have left? Is it possible that they could accept a settlement on whatever is left or should she just let it go as they haven't pursued it?

Attorney Answers 3


  1. Best answer

    A couple of things come to mind. First, has the judgment been renewed? Many, if not most, states require that a judgment must be renewed every so many years (10 is common) or it no longer has any effect. Second, she may be able to file a motion to vacate the judgment based on some other error (like not having been properly served). Someone will likely need to look at the original court file to examine the proof of service document. That will depend on your local laws about time frames and what grounds are available to vacate the judgment. If her only income is retirement and/or Social Security, she is what we call "judgment proof". That means that no creditor can take that money and there is no reason for her to do anything. If she has equity in a home that is above the state homestead exemption, then there may be something at risk there and it would be worth it to find out if the judgment can go away. It might also be worth it if she wants to purchase another home and doesn't want to have that judgment paid at closing. I suggest she contact a consumer protection/collection defense lawyer in her area to discuss her options.

    The answers to these questions may be different depending on your individual circumstance and should not be considered as legal advice or the establishment of an attorney-client relationship.


  2. It never hurts to ask if a settlement would be accepted but there is no guarantee that a settlement be accepted either. For the settlement to get the best result, it should be offered as a lump sum, immediately available, obtained from some mythical "one chance" source. Hope this perspective helps!


  3. Did the judgment prevent your mother from buying the home? If it does not show up on her credit report, one would think it would not affect her credit score. I agree that you should be able to settle for much less than one hundred cents on the dollar. But if your mother is financially strapped, you may want to set aside the money you have on hand to help your mother in other ways if needed.

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