Private Student Loan Companies Struggling to Prove They Own Your Debt

A series of lawsuits brought by debt collection companies against delinquent student loan borrowers has revealed that in many cases, private student loan companies cannot prove they own the borrower’s debt. When it comes time to providing a court with documents proving the ownership of a debt, these private companies can’t deliver. In such cases, courts refuse to enforce the debt obligation against the borrower, which effectively releases the borrower from the legal duty to pay back the loan.

How Do I Know If my Student Loans Are Affected?

These unprovable loans, which represent a whopping $5 billion worth of debt, may apply to thousands of student loan borrowers. If you have a student loan, you are probably wondering if your student loan company can prove that you owe them money.

This issue only applies to private student loans, as opposed to the ones obtained through the federal government. These loans may later be serviced by a private loan company. You may be unsure whether you took out a private or a federal loan. If you didn’t complete the Free Application for Federal Student Aid (FAFSA) before obtaining the funds to go to college, you likely took out a private loan to fund your education.

Most of the troubled loans are now owned by a single company – the National Collegiate Student Loan Trust. This company’s loans were initially issued by banks and other private lenders, so if you have taken out a private student loan, you should check whether the debt was sold to the National Collegiate Student Loan Trust. When these loans were bundled and resold, much of the original paperwork was lost.

Debt collection agency Transworld Systems has been filing most of the lawsuits against National Collegiate’s borrowers. So if you have defaulted on your student loan and are facing a suit from Transworld Systems, it is possible that there is no documentation to connect the debt back to you.

What Can I Do If I’m Being Sued Over my Private Student Loan?

When delinquent borrowers receive notice of legal action from a debt collection agency, they are understandably worried. If you choose to settle like most borrowers in default, – or worse yet ignore the court summons, you are placing yourself at a disadvantage. Instead, you should contact an Ohio student loan lawyer.

If you don’t put up a fight, the debt collection agency wins the lawsuit automatically. The court will enter a judgment against you and may even allow the debt collection agency to garnish your wages. On the other hand, many delinquent borrowers who show up for their day in court see their debts canceled when the debt collection agency fails to show a clear chain of title for the loan.

An audit of one of the National Collegiate Student Loan Trust’s loan servicers has revealed deep issues with the company’s record keeping. Out of the over 400 randomly sampled loans, none contained sufficient documentation that could establish a chain of title in court. Thus, it’s easy to see why Transworld Systems loses most of its cases against delinquent borrowers.

How Luftman, Heck & Associates Can Help

If you are being sued by Transworld Systems or any other debt collection agency, you need to fight back. Your future and your finances depend on it. At Luftman, Heck & Associates, our student loan attorneys are dedicated to protecting the right of borrowers facing legal action from powerful corporate interests.

If you have a student loan debt you cannot repay, or have been sued by a debt collection agency, call us today at (888) 726-3181, or e-mail us at advice@ohiodebthelp.com for a free and confidential consultation.