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National Collegiate Student Loan Trusts Slammed by Consumer Financial Protection Bureau

Consumer Financial Protection Bureau

Well, just recently they issued this press release where they talked about action that they’re taking against National Collegiate Student Loan Trust and who this company is, they’re a company that alleges to have purchased old charged off private student loans and they file lawsuits on them and here in Arizona where I practice law, we see these all the time and I deal with these kind of lawsuits all the time and they are typically complete garbage. I always say it’s almost a blessing in disguise to get sued by National Collegiate because their cases are typically so bad you can often get a good result, whether it be a very low settlement, or even getting the case thrown out completely, because they have so many problems. My experience with National Collegiate is exactly what the Consumer Financial Protection Bureau outlined in their press release.

They said, they have problems with National Collegiate because they were suing consumers for debts that they could not prove were owed and this is the number one thing I see. They provide a bunch of paperwork, computer printouts, that don’t really provide any evidence that own the particular account that they’re suing on, or providing really any evidence as to how they’re calculating the amounts that are owed. There‚Äôs a big problem when it comes to that. They also go on to say, that they often file false or misleading affidavits. Now an affidavit is a sworn statement by party, where they’re attesting that information in there is correct.

However, what they’re saying here, is that most of the affidavits submitted with National Collegiate lawsuits, are not based on personal knowledge or the person who’s signing off on it and the reason why, is because they use this company called Transworld Systems and I know this is kind of getting into the weeds of things a bit, but they use this company called Transworld Systems to testify on behalf of, usually another bank on behalf of National Collegiate Student Loan and then four other companies along down the line. This is what causes so many problems, is you’ve got someone who is there to testify on behalf of their particular plaintiff, who really doesn’t have any idea about what happened because they are so far removed from the underlying original creditor.

Now, what they have done in trying to curb some of the things that National Collegiate was doing, they have submitted a proposed judgment to the court, that they’re trying to get the court to sign off on. It’s important to know this, the court has not signed off on it. But what they’re asking the court to approve, I can tell you in most cases the court does approve these types of things, is they’re asking that National Collegiate conduct an audit of all 800,000 student loans that they have in its portfolio, That they pay 35 million dollars in restitution to consumers who made payments to National Collegiate after they filed a lawsuit against them. They have to agree to stop filing collection lawsuits on debt that can no longer legally be sued over. This means it’s outside the statute of limitations. That’s something a lot of people don’t know about private student loans, is that the statute of limitations typically does apply, which in Arizona, that would be six years, six years from the time that essentially when payment was stopped, when payment wasn’t being made anymore.

They have to stop filing those false affidavits; they have to disgorge 78 million dollars to the US Treasury. They have to pay a 78 million dollar civil penalty and Transworld Systems, the company that does all of the affidavits for National Collegiate, they also have to pay a 2.5 million dollar civil penalty and Transworld’s actually already signed off on that. So there’s just a ton of moving parts when it comes to these cases and when you look at the actual evidence and the documents, they’re just a mess as far as National Collegiate goes. Not only that, something that’s interesting about these cases as it applies particularly to Arizona, is that typically they’re filed in the Superior Court, because they’re for more than $10,000, ’cause most student loans are quite large.

Because of that, these cases have to go through this compulsory arbitration process and they don’t ever have witnesses appear there and I’ve heard through the grapevine, the reason why that’s the case is because National Collegiate’s not willing to pay to have a witness participate in that particular process, that’s Arizona specific. So essentially they file these suits hoping that people will just not respond to them. There is a high default rate in cases like this, again if you do get sued by National Collegiate, please give me a call, give another consumer attorney a call, because there are a lot of strong defenses and the worst thing you can do is not respond to it. If you want to learn more about National Collegiate or frankly any other large debt issue that you might be dealing with.

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