Millions of dollars of private student loans made over a decade ago by lenders such as Bank of America and JPMorgan Chase were later sold as debt to investors, who are now in hot water for illegal and abusive collection practices that may result in consumers receiving a refund.
In fact, one of the nation’s largest holders of private student loan debt, the National Collegiate Student Loan Trusts, has been ordered to give back millions of dollars to borrowers and cease many collection actions.
The company will pay penalties and refunds to the tune of $19 million because they “sued borrowers for student loans they could not prove were owed and filed false and misleading affidavits in courts across the United States”.
Prior to this action, dozens of lawsuits against former students were already being dismissed and debt erased because documents proving who owed the loan were missing, a common occurrence when loans change hands.
In one such case, a New York mother of three who had fallen behind on her private student loans was sued for repayment for ‘loans she took’ and also ‘loans she never took for schools she never even attended’. She decided to get the help of an attorney who found the documents presented to the court to collect the debts ‘were a mess’ and, subsequently, her $31,000 student loan debt was erased because National Collegiate failed to establish the chain of title for her loans.
Student Loan Debt Collector Harassment
For the many unrepresented borrowers who made payments after being sued despite collectors’ lack of needed paperwork or legal standing, the recent ruling has ordered companies such as National Collegiate and Transworld to refund borrowers what was collected and suspend all further collection efforts, including creditor harassment, until a compliance plan has been approved and implemented.
Stop Debt Collectors & Lawsuits
And Get a Fresh Start!
If you are having trouble paying your expenses, the best approach is to contact an experienced attorney to deal with debt collectors who may or may not have grounds to legally collect a debt. In the event you are being sued for a debt, a chapter 7 or 13 bankruptcy can stop a lawsuit in its tracks and may even be able to discharge judgement debts. If you are struggling with a difficult financial situation, contact the Peoria bankruptcy law offices of Charles E. Covey to discuss strategies to manage your debt to protect you from further creditor actions. Call today at 309-674-8125 for your free initial consultation.
Source: New York Times, “Student Loan Creditor, Fined for ‘False’ Lawsuits, Must Halt Collections”, By STACY COWLEY, September 18, 2017