A borrower had two private student loans with Navient, with balances totaling almost $120,000. He had not made any payments on those loans since at least July 1, 2008, based on the date when Navient capitalized interest on this debt, but had been in two previous Chapter 13 cases, which had tolled the Statute of Limitations from running.
Upon consulting with Ed Boltz about these student loans (as well as his federal student loans which, while not subject to any Statute of Limitations, but may be discharged through a forthcoming Total & Permanent Discharge application, a third Chapter 13 case was filed once the three year ( or 1096 day) Statute of Limitations had expired. Fortunately, in North Carolina, following Person Earth Movers, Inc. v. Buckland, 136 N.C. App. 658 (N.C. Ct. App. 2000), while bankruptcy does toll the Statute of Limitations Trustee disbursements don't reset the Statute of Limitations.
The history of the Debtor’s payment periods and tolling due to prior bankruptcies was as following:
|Event||Date||Statute of Limitations Time (3 years or 1096 days)|
|Capitalized Interest Date||7/1/08||-|
|13-81601 § 108(c)(2) Date||5/9/13||-|
|13-81601 § 108(c)(2) Date||6/20/19||-|
Based on this and pursuant to N.C.G.S. § 1-52(1), the claims were disallowed as exceeding the Statute of Limitations at . See In re Kittrell, 2012 Bankr. LEXIS 633 (Bankr. M.D.N.C. Feb. 3, 2012).
This case was filed as a Chapter 13, because, unlike a no asset Chapter 7, that allowed both for the filing Proofs of Claim and the objections to those. (The debtor could actually, but didn't need to in this case, file Proofs of Claim for the creditor if it had failed to.)
Now with these claims being disallowed, explicitly due for the nonbankruptcy dependent Statute of Limitations, any future attempt to collect these by Navient or any subsequent debt collector or debt buyer, will likely face claims for violation of the FDCPA or North Carolina's UDTPA, with the question of the Statute of Limitations being already decided by the bankruptcy court and subject to res judicata. While not necessarily a discharge, this result is largely indistinguishable.
For a copy of the objection, please see:
For a copy of the order disallowing the claim, please see: