Due to the complexity of the student loan industry and the various types of educational financing available, student borrowers may be confused as to which lender they owe, and how much is due. This confusion can be further exacerbated when a lender or collector is unclear about the details of the underlying debt. The Fair Debt Collection Practices Act is a federal statute that was specifically enacted to protect consumers from unlawful collection tactics.
National Collegiate Trust and Transworld Systems Inc.
On September 18th 2017, the Consumer Financial Protection's Bureau ("CFPB") took action against National Collegiate Student Loans and its agent Transworld Systems, Inc. for allegedly taking advantage of student loan borrowers to the tune of $3.5 million. The CFPB claims they discovered at least 486 instances of National Collegiate and Transworld ("TSI") collecting on private student loans that were past their statute of limitations, as well as collecting on loans which National Collegiate Trust had no legal claim to.
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The complaint filed by the CFPB consists of three primary arguments. Firstly, it alleges that National Collegiate and TSI sued consumers over debts without possessing the necessary legal documentation. This means that that National Collegiate and TSI proceeded with lawsuits against student loan borrowers without sufficiently proving that the company owned the loans, or without producing documentation that the consumer had legally agreed to pay said debts. Secondly, CFPB alleges that National Collegiate and TSI knowingly submitted false or misleading affidavits in an attempt to coerce consumers into paying student loan debt that they did not own. Finally, the CFPB claims to have found 486 instances in which National Collegiate Trust collected on debts that were passed the legal statute of limitations for student loans.(1)
The CFPB is seeking to fine National Collegiate for at least $19.1 million, including at least $3.5 million in restitution to those aggrieved consumers involved in the alleged proceedings. Additionally, the Bureau has order an audit of over 800,000 student loans in it’s portfolio. Any consumers who are revealed to have been coerced in the same fashion through this audit may also be entitled to restitution. The Bureau has also provided protections against National Collegiate Student Loan Trust and Transworld Systems from further pursuing any pending student loan debt until sufficient legal proof of debt ownership can be provided. (2)
While one may take comfort in the fact that the CFPB has cracked down on these abusive practices, the damage done to those consumers involved is undoubtedly severe. Should you be contacted with regards to a student loan lawsuit it is of the utmost importance that you understand the legal proceedings to the best of your ability. Given the severity of the consequences of student debt lawsuits, it can be greatly beneficial to have a legal expert to parse out the complexities of your case.
STUDENT LOAN DEBT RELIEF ATTORNEYS
The Law Office of Simon Goldenberg, PLLC is dedicated to helping consumers resolve their student loan debts while protecting them from unlawful debt collection practices. If you've been contacted by a debt collector or you've been served with a private student loan lawsuit, contact our experienced legal team to learn your options for relief.
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References:
(1) CFPB. (CFPB Takes Action Against National Collegiate Student Loan Trusts, Transworld Systems for Illegal Student Loan Debt Collection Lawsuits, https://www.consumerfinance.gov/about-us/newsroom/cfpb-takes-action-against-national-collegiate-student-loan-trusts-transworld-systems-illegal-student-loan-debt-collection-lawsuits/)
(2) Bauer, Tim. (A Closer Look at CFPB Action v. National Collegiate Student Loan Trusts and Transworld Systems – What Does it Mean to the ARM Industry?, https://www.insidearm.com/news/00043304-closer-look-cfpb-action-v-national-colleg/)
*Not legal advice. For informational purposes only.