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.
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.
Get help with student loans! Call for a free phone evaluation! (888) 301-0584
(1) CFPB. (CFPB Takes Action Against National Collegiate Student Loan Trusts,
Transworld Systems for 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
*Not legal advice. For informational purposes only.