From the rising cost of tuition to expensive living arrangements, many individuals struggle to pay for their higher education. For people unable to obtain federal student loans or who need additional funds to cover their tuition, books, and living expenses, private student loans are often the only option. Unfortunately, private student loans do not offer the same protections and repayment options as federally backed student loans. If individuals have trouble paying their private loans once they come due, they are much more likely to be on the receiving end of a collections lawsuit. For example, The National Collegiate Student Loan Trust is one of the entities currently filing lawsuits against private student loan borrowers across the country.
Fortunately, there are ways to defend against these suits. In Ohio, some borrowers have had success in questioning the trust’s ownership of their loans. Anyone currently facing a lawsuit from the National Collegiate Student Loan Trust should contact the experienced Ohio student loan lawyers from Luftman, Heck & Associates at (888) 726-3181. Consumer law attorney Jeremiah Heck has years of experience protecting borrower’s rights from unfair debt collection practices.
What is the National Collegiate Student Loan Trust?
When discussing the National Collegiate Student Loan Trust, it is important to first understand what this entity is not. Specifically, it is not the originator or the lender of the loans, which is a private bank or credit union like Chase, Bank of America and Charter One. It also does not service loans, which is the entity that oversees a person’s repayment plan and payments. Servicers may be the original lending bank or another company.
The National Collegiate Student Loan Trust is an entity that holds private student loans guaranteed by The Education Resources Institute, Inc. (TERI), a nonprofit organization that filed for bankruptcy in 2008. This entity is actually a group of trusts that purchase bundled loans sold as investments. They do not hold federal student loans – only private student loans. These trusts are created by First Marblehead. Since the National Collegiate Student Loan Trust is actually more than one trust, each trust is identified by a number code such as 2007-3. Together, all of the trusts currently hold private student loan debt totaling more than $1 billion.
Why Do They Sue So Many People?
In order for the National College Student Loan Trust to make money, they sell bonds to investors. These investors receive distributions based on the amount of money obtained from borrowers. The less money that is paid back by borrowers, the less investors earn. Clearly, this provides the trusts with a great deal of incentive to encourage or force borrowers to pay back more money. This has led to more than 4,000 lawsuits against borrowers around the country.
What You Should Do If You Are Sued
If you are served with paperwork stating you are being sued by the National Collegiate Student Loan Trust, contact an attorney immediately. You must answer this complaint properly otherwise you could default. By defaulting, the trust can gain a judgment against you automatically, which means you will owe the trust more money, and it will have the right to go after your or your co-signer’s income and assets.
If you are sued by the National Collegiate Student Loan Trust, you should:
- Contact an Ohio student loan lawyer immediately
- Verify that you took out the loan in question
- Review whether your loan was originally public or private
- Check if you are behind on loan payments
- Verify the amount allegedly overdue is correct
There are numerous ways to defend against this type of suit. Do not ignore this paperwork or try to handle the case yourself.
Potential Defenses to a Student Loan Collection Lawsuit
When you are facing a collections lawsuit regarding your student loan debt, you probably fear you do not have the money to hire an attorney. However, working with a lawyer is your best chance to pursue strong defenses to the claims including standing. A lawyer can save you tens of thousands of dollars compared to if the National Collegiate Student Loan Trust gains a judgment against you.
In order to file any type of lawsuit, a person or business must have what is known in the legal field as standing. Standing is the connection between the party who brought the suit and the alleged harm. In this case, there must be a sufficient connection between the National Collegiate Student Loan Trust and your default on the loan. Whether there is this connection and therefore standing is generally based on ownership of the loan. If the trust can prove it owns your private loan, it has a right to file the suit. They may prove this through a copy of your signed promissory note, an assignment from the lender to the trust, and/or a proper accounting of your account. However, in most situations, the National Collegiate Student Loan Trust does not have a proper paper trail associated with ownership of the loan passing from the original lender to itself. Without proof of ownership, many judges around the country have dismissed lawsuits against borrowers.
Your attorney may also be able to demonstrate that the trust does not have the correct facts regarding your loan and what is owed. Many borrowers have faced lawsuits in which the information is not right.
Additionally, the trusts have been known to bring lawsuits after the private loans collection period. Lenders or parties who purchase loans have a certain period of time to collect on defaulted loans. If the trust is beyond the collection period, you may be able to have the lawsuit dismissed.
Contact Our Ohio Student Loan Lawyers
Borrowers who have been unable to keep up with their private loan payments and now face a lawsuit from the National Collegiate Student Loan trust should immediately contact Ohio Student loan lawyer Jeremiah Heck from Luftman, Heck & Associates at (888) 726-3181. We have experience with these types of suits and have kept a close eye on successful defenses to these suits in Ohio courts.