From Torrey’s Mailbag: How to dispute negative student loan information after a disability discharge

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In my blog I shared information about veterans who qualify for student loan discharge and forgiveness if they are totally and permanently disabled, or deemed unemployable. I get a lot of traffic on this topic since it is a little-known benefit in the first place. As a result, I also get a lot of questions. Most have been answered via private email messages and through the comments section on the original post, but this question came in and I felt it was important to give it a dedicated post so more people could see it.

As a result of this question, I’ll also be covering some basics about credit reporting in the upcoming weeks; how to dispute negative (and inaccurate) information found on your credit reports, how credit reporting works and the laws that support your rights as a military (and civilian) consumer.

I haven’t really talked about it here on the blog yet, but I have EXTENSIVE experience in this area. I’ve been known to have these conversations mostly via Facebook and by private email on a case-by-case basis, but it’s long overdue that I share them here and on a larger scale.

I am not an attorney, nor do I pretend to play one on the internet, so bear in mind this is advice and information coming from my own research and experience. It will be your responsibility to verify my information through the use of proper legal counsel.

That said, I hope to educate my readers with information that has taken me years to learn, sleepless nights to acquire through trial-and-error experience, and to gather the information not found publicly through my own deep investigative measures. I will do this so you can all be empowered and informed consumers, too.

Here’s the email I received, minus any identifying information in order to protect the veteran’s privacy. This veteran had his student loans discharged, yet the negative information remained on his credit report(s):

 I just came across your web site and was wondering if you could spare some advice?   I was rated p and t, got my educational loans discharged last year.  Then  earlier this year i found out about being able to get negative history removed from those loans.  I have run into a brick wall with [lender name removed] loans.  They assured me for 2 weeks no problem,  they would delete.  Then today i get off the phone and they say nope, not going to do it.  Perhaps its merely a matter of not speaking to the [lender name removed] p and t disability discharge people.  But it seems that every time i talk to someone they dont know what they re talking about.  About one hour ago i called their 24 hour service line,  Yes, the rep agreed they re supposed to delete all negative information.  But then hastily admitted she wasnt trained in the procedure, so she cant help me.   Can you refer me to the statute or regulation to fax these people?   Or something concrete?

 Thanks again

Here’s my response:

To answer your question, the people you speak to have no concept of credit reporting, nor the authority to fix it. The good news is, this works in your favor. You see, when inaccurate information is reported to the credit bureaus, the Fair Credit Reporting Act is your best recourse. The FCRA states that inaccurate information must be removed if it cannot be proven accurate.  In simple terms, your student loan lender must remove the disputed information [on the basis of it being inaccurate], and if they don’t then you can sue for damages.

What you have to do is send a letter to each of the three Credit Bureaus:  Equifax, Experian and TransUnion.  Send the letter by certified mail, return receipt requested (aka “Green Card”) to prove the bureaus received it. Be sure to keep a copy of the letter for your records. In your letter, you give your name, SS number, date of birth and copies of two forms of ID’s proving your identity. You state that the lender (citing the exact lender reporting the information) has inaccurate information placed on your credit reports and you are no longer liable for that debt. State the following: “This information is inaccurate and a violation of the Fair Credit Reporting Act. Please remove this entry from my credit report immediately.”

The bureaus have 30 days to investigate the information. They will contact your lender through a system called “e-Oscar” electronically. If your lender sends the information back as accurate, they have violated the FCRA. From there, you will get a letter from each bureau stating the outcome of their investigation. If the information is removed, you are good to go. If it is not, that’s when you can contact a National Association of Consumer Advocates attorney (www.naca.net) with copies of everything you sent to the credit bureaus, their response, and any other communication you may have from the lender showing this debt is no longer valid (ie, DOE discharge letter.) When you have a good paper trail of proof, most attorney’s can take a case on contingency. Not only would you get the information removed, but you may win a settlement on top of it all.

This is my advice, which is not to be construed as legal advice.

Let me know how it goes or if I can be of any further assistance.

Thank you,
Torrey Shannon

Do you have a consumer question you’d like answered? If so, please leave your question in the comments section below (for general questions), or email me privately at torrey@torreyshannon.com if your question contains sensitive information.