Student Loan Lawsuits Filed Without Proper Documentation Class Action

You’d think that a company that sues people for student loan debts would have to prove that they owned the debt. But this complaint claims that the defendants in this class action can’t do that.

The class for this action is all persons sued in state-court lawsuits for the collection of consumer debts in which National Collegiate Student Loan Trusts 2004-2 or 2006-4 was a plaintiff, between August 23, 2012 and August 23, 2018.

The defendants in this case include those two National Collegiate Student Loan Trusts (2004-2 and 2006-4), the trust defendants; Transworld Systems, Inc., EGS Financial Care, Inc., two third-party debt collectors; and a debt collection law firm called Forster & Garbus.

National Collegiate now holds $12 billion in student loan debt, of which $5 million is said to be in default. The complaint claims that the group’s agents (including the other defendants in this case) file state court collection lawsuits on the student loans in its trusts with robo-signed documents without proper evidence.

The complaint claims that the trusts came into existence through a roundabout process that doesn’t allow National Collegiate access to proper documentation.

The trusts have no employees and their acts are done by servicing agents, at this point Transworld. Transworld employs debt collection firms like Forster. The complaint claims that Forster is not permitted to contact National Collegiate directly, but must rely on a computer connection that automatically generates court filings in default cases.

Although Forster is a law firm, the complaint says, these cases are prepared by non-attorney staff and do not receive meaningful legal review before collection is pursued.

Also, the complaint says that the trusts should not be filing cases in New York, since out-of-state entities who regularly file suit against New Yorkers are required to register with its Department of State and pay state taxes.

In addition, the complaint claims that affidavits submitted in connection with the cases are false. For example, an affidavit claimed that a certain person is “competent and authorized to testify relating to this action through personal knowledge of the business records … that detail the education loan records.” The complaint claims that the only knowledge of the records the person had was seeing data on a computer screen, without knowing where the data was from or how it got there.

In fact, the complaint claims that the default judgment filed against one of the plaintiffs in this action did not include any loan documentation.

In a July 2017 article, the New York Times interviewed Donald Uderitz, a founder of the private equity firm that is beneficial owner of National Collegiate. Uderitz says that, in an audit of approximately 400 National Collegiate loans with Transworld, not one had paperwork showing the chain of ownership.  

Also, the Consumer Financial Protection Bureau (CFPB) penalized National Collegiate for filing lawsuits without the ability to prove claims, filing lawsuits on time-barred debts, and filing false affidavits in support of the lawsuits.

The complaint claims violations of the Fair Debt Collection Practices Act and of New York’s General Business Law.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Student Loan Lawsuits Filed Without Proper Documentation Complaint

August 23, 2018

You’d think that a company that sues people for student loan debts would have to prove that they owned the debt. But this complaint claims that the defendants in this class action can’t do that. 

student_loan_complaint.pdf

Case Event History

Student Loan Lawsuits Filed Without Proper Documentation Complaint

August 23, 2018

You’d think that a company that sues people for student loan debts would have to prove that they owned the debt. But this complaint claims that the defendants in this class action can’t do that. 

student_loan_complaint.pdf
Tags: FDCPA, Student Loans, Unlawful Debt Collection