I was recently discharged from bankruptcy and of course my student loans have to be still repayed. These student loans are now being managed by a collection agency on behalf of the original bank. The collection agency says that the interest payments on this student loan cannot be tax deductible (normally it is), because the loan is no longer a student loan it is a "demand debt". This sounds self-contradictory. If this is a "demand debt" , not a student loan, then it should not survive my bk at all. If it is a student loan, then the interest payments should be tax deductible. They can't have it both ways. Any ideas on this? I live in Canada. Thanks.
I wish I could help you. I'm familiar with US laws, but I think that Canadian Laws apply here. Can someone point this person in the right direction?
This is a U.S. question: I've always been under the impression that collection agencies collecting on student loans were doing so on behalf of the guarantor, and recevied a percentage of anything they collect, turning the rest back to the guarantor. Do guarantors ever outright sell defaulted student loans to collections agencies? Question for Oswars: You said you live in Canada. Were your student loans in the U.S.?
You can rehab a loan, even with a collection agency. Make 12 payments on time and they will remove all of your derog information. For more details, check it out at http://www.ed.gov.
