I often asked this question about statute of limitations on student loans.

This is how the discussion usual goes, whether your loans are federal student loans or private student loans. There is distinction which is huge, as the statute of limitations for federal student loans and for private student loans are completely different.

Federal Student Loans

The bad news: Due to changes in federal laws in 1998 and 2005, collection on federal student loans now have no statute of limitation and — with very limited exceptions — can no longer be erased though bankruptcy.

The good news: There are many, often flexible, options available for student loan resolution. Depending on the specifics of the situation, student loan borrowers may be eligible for programs that offer extended repayment periods, modifications that are income-sensitive (income based repayment or income contingent repayment, or graduated (starting small and rise over time). Some plans also offer possibility of “rehabilitating” a defaulted loan, so that some or all negative information about the loan is expunged from the borrower’s credit report if certain criteria are met.

Several federal and state agencies offer programs to help you cancel or reduce all or a portion of your student loan debt. Student loan forgiveness programs involve you making and honoring a long term commitment to teaching, nursing, or military service. To learn about some of the specific forgiveness programs available and how you can apply, visit the Federal Student Aid Web site.

Private Student Loans

Private student loans have entirely different rules for statutes of limitations. Unlike federal student loans, private student loans are subject to state’s statute of limitations for taking legal action to collect on written contracts. Once the statute of limitations expires, you can raise the statute of limitations as a defense, if the creditor attempts to take legal action to collect on the debt. However, just because the statute of limitations passes does not mean that a creditor or collection agent cannot try to collect on the debt. If you make a payment on a debt whose statute of limitations has passed, you can bring an expired debt back to life.

The statute of limitations for a written contract no longer apply if the creditor or collection agency sues you, before the statute of limitations expires, and obtains a judgment against you. If that happens, you will be subject to wage garnishments, bank levies, and liens.The statutes of limitations start running 30 days after your last payment on the debt. If you think that the statute of limitations for a private student loan debt is about to expire, I encourage you to consult with an attorney in your area to discuss the implications of an expired statute, and what actions you need to avoid to prevent the statute of limitations from being tolled or restarted.