Transworld Systems Improper Student Loan Debt Lawsuits Class Action

This class action, concerning student debt lawsuits, is brought against Transworld Systems, Inc. (TSI), Weltman, Weinberg & Reis Co. of Michigan, and Shermetta Law Group, PLLC. The complaint contends that these defendants have filed lawsuits in Michigan to collect student debt that have two flaws: (1) the defendants do not show that they own the debts they are trying to collect, and (2) the lawsuits should be brought under Ohio laws, not Michigan laws.

The complaint alleges violations of the federal Fair Debt Collection Practices Act (FDCPA), the Michigan Regulation of Collection Practices (RCPA), and the Michigan Occupational Code (MOC). 

Two classes have been defined for this action.

• The FDCPA Class for this is action is all persons with a Michigan address who, between June 24, 2017 and June 24, 2018, received collection lawsuits filed by defendants in violation of provisions of the FDCPA.
• The RCPA and MOC Class for this action is all persons with a Michigan address who, between and June 24, 2012 and June 24, 2018, received collection lawsuits filed by defendants in violation of provisions of RCPA and MOC.

The complaint claims that all three plaintiffs—and, by extension, others in similar situations—have been sued with formulaic, computer-template lawsuits that do not show proof of ownership of the debt.

A party in interest in the lawsuits is the National Collegiate Student Loan Trusts (NCSLT). However, the complaint contends that that organization, as part of the trust securitization process, is required to sell is rights to US Bank, NA, the Indenture Trustee.

The complaint says that NCSLT therefore does not own the debt and is not the real party in interest. In fact, the complaint says, “In the 6th Circuit, a trust generally is not recognized as a separate legal entity with the capacity to sue or be sued in its own name. … In Ohio law, the trustee is the legal owner of a trust.” Therefore, it claims that NCSLT has no standing to pursue the debts against the plaintiffs.

According to the complaint, the process still works for the defendants because “most if not all of the judgments procured by NCSLT are default judgments, as few consumers in similar debt collection cases take the necessary steps via litigation to defend themselves.” The goal of the defendants, the complaint alleges, is to obtain a default judgment because they do not have the evidence to make a prima facie case proving their contentions. 

Article Type: Lawsuit
Topic: Consumer
Tags: FDCPA, No Proof of Standing/Ownership of Debt, Unlawful Debt Collection