Expert: Terry Leeders - 3/1/2008

Question
My wife got an unsecured personal private loan from Wells Fargo Bank in 1999. The purpose of the loan was to pay for living expenses during the period she was going to school at the Art Institute of Atlanta. By 2003 we were living in Illinois, where we had to file for bankruptcy. The bankruptcy was discharged in April of '03. The Wells Fargo debt is identified as an "Education Loan" in our bankruptcy discharge papers. The only debts not discharged were our Sallie May loans, which we ultimately paid off.

Recently, we've been served court papers by a collection agency demanding payment of the Wells Fargo Bank debt. How can a collection agency attempt to drag us into court to get money from us that has been discharge in a bankruptcy? My second question is about the statute of limitations on a debt.

Answer
The bankruptcy law states any debt for "educational purposes" is nondischargeable unless you can prove an undue hardship by adversarial motion during your case. Unfortunately, this is very hard to win.  So, most likely she will have to pay back this debt.  Your only shot is to answer the suit pending with a defense that it was not an educational debt, and thus discharged thru the case.  You should speak to a local attorney to help defend this suit.  Good luck.