Legal Question in Credit and Debt Law in Virginia
In 1996 I a promissory note with Johnson and Wales University for an in house Achievement Loan (not a federal loan). I had forgotten about the loan and had never been contacted by the school until the middle of last year by a collection agency. I requested a copy of the promissory note from the school and on the note it states this under repayment: "I understand that in the event that a monthly payment of $40 is not suffiecient to repay the total principal balance hereunder, plus all accrued and unpaid interest thereon, during the maximum repayment period of 10 years, the University will adjust the monthly payment accordingly." Since it has been past the "maximum repayment period of 10 years" am I still responsible for this loan?
2 Answers from Attorneys
Morally, yes, but due to the apparent expiration of the applicable statute of
limitations, probably, no, legally speaking, but you might wish to have an attorney review the note and relevant facts to make sure.
If the loan is not federally funded, it (or part of it) may be time-barred by the statute of limitations. If it is a 6-year statute of limitations and they never accellerated the payments, just the payments due on the note in the last six years would still be owed. If they never adjusted the payments, and $40/month payments would not have paid it off, then it would have probably ballooned at the 10-year mark (2006), and that would still be timely to collect.