Legal Question in Credit and Debt Law in North Carolina
I had a scholarship for undergrad that required my teaching for 4 years or repayment of the loan. I repaid two years of the loan when I received my promissary note (the contract we both signed) stating the loan was paid in full. I thought I owed two more years, but when I called, I was told this was an error and they "must have given me 2 years teaching credit after all" (I do teach at a public school but was told in the past it didn't count because it was higher ed). I verified this on two other occasions by phone but have nothing in writing other than the promissary note. Now I am told that it was a mistake and they want their money after all. Are they legally obliged to their money or is the contract voided? I did find several statements on the promissary note that might be relevant but I don't speak legal jargon. Any advice here?
"Failure of the Commission or any subsequent holder of this Note to exercise any option available to said holder shall not constitute a waiver of the right to exercise such option in the event of a future default. No delay or omission on the part of the Commission or any subsequent holder of this note in exercising any right hereunder shall operate as a waiver of such right or of any other right of such holder nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or of any other right on any future occasion."
"9. WAIVER The Fellow and the surety to this Note hereby waive presentment for payment, demand, protest, notice of protest, nonpayment and dishonor and any and all other notices and demands whatsoever and agree that any extension or extensions of time for payment of this Note for a definite or indefinite time shall not affect their liability hereunder and hereby waive all notice of such extension. The Fellow and the surety acknowledge and agree that the Commission, its successors or subsequent holders of this Note may accept payments on account of principal and interest after maturity. The Fellow and the surety agree to continue and remain jointly and severally bound hereunder until payment is made in full either by repayment of the indebtedness evidenced by this Note or by forgiveness by means of service as provided herein."
1 Answer from Attorneys
These provisions don't really answer your question. The provisions you cited concern a different situation. Your case does not involve the failure of the lender to exercise one of its rights under the note. It was the lender deciding that you had satisfied the obligation and when you even questioned it, they insisted that you did not owe the money.
Your case does not really involve the note as much as it does the law of mistake. The rule generally is that a party who makes a unilateral mistake is not relieved of that mistake. Translating out of legal jargon to your case means that the lender screwed up by giving you 2 years' credit or otherwise cancelling the loan. Your questions now should be is the lender excused by its own mistake and should you be obligated to repay the other 2 years?
The answer is - I don't know. This is not really the forum for discussion of it. And I don't do this kind of stuff on a daily basis (I resolve credit card and unsecured debt, but I don't get involved in student loans). Even if an attorney did handle this type of thing, he/she would have to review the entire document (not just the parts you quoted) as well as review the caselaw to see whether the issue has come up before and how it has been handled.
My gut feeling is that when it comes to money owed to a lender, the generally safe rule of thumb is that the lenders win and borrowers are screwed. However, that is just my opinion. Borrowers sometimes do win, but it depends on the facts. So it may be that there is a case out there which says that you need not pay as the lender screwed up.
The problem that is encountered is that to prove all this in court takes money. Depending on how much money you owe and what it would cost, it may be cheaper in the long run just to pay the mnoey back or try to resolve it in some fashion.
I definitely would seek to use the lender's screwup as a way to extract more favorable terms or concessions. For example, I would vigorously protest any late fees or penalties as they screwed up, not you. If you can pay most of the money in a lump sum, again I would argue that this is the lender's fault and only offer say, 50% now if they will take that in full payment. If they will not, try to get them to allow you to make monthly payments under the same terms as before.
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