{"id":3901,"date":"2017-11-30T07:00:14","date_gmt":"2017-11-30T12:00:14","guid":{"rendered":"https:\/\/nybankruptcy.net\/main\/?p=3901"},"modified":"2018-08-08T01:34:37","modified_gmt":"2018-08-08T01:34:37","slug":"nyt-explores-assembly-line-student-debt-lawsuits","status":"publish","type":"post","link":"https:\/\/nybankruptcy.net\/main\/nyt-explores-assembly-line-student-debt-lawsuits\/","title":{"rendered":"NYT Explores ‘Assembly Line’ of Student-Debt Lawsuits"},"content":{"rendered":"

Back in July, The New York Times<\/i> ran a long article about abuses (and incompetence) of debt collectors trying to recover from private-student-loan debtors. The issue is important because unlike federally backed student loans, debtors with private loans have fewer options to deal with them when they become burdensome because those loans are ineligible for income-driven repayment plans and are nearly nondischargeable in bankruptcy. .<\/p>\n

I wrote that the debt collectors’ practices looked a lot like the “robo-signing”<\/a> scandal from several years ago, and in a follow-up article an interviewee of the Times<\/i> said exactly that. Here are some of the practices the NYT detailed about Transworld, the collector for the National Collegiate Student Loan Trusts, which are securitized private student loans. Then I’ll go into some of the more common weaknesses in Transworld’s lawsuits against private-student-loan debtors that debtors might be able to use to their advantage.<\/p>\n

The NYT describes Transworld’s Georgia operations as an “assembly line” for generating student-loan debt-collection lawsuits. When a borrower falls behind on his or her payments, a Transworld employee will review the file. In order to file a lawsuit, Transworld needs an affidavit to prove its case, but instead of painstakingly completing the form as for a common court proceeding, Transworld’s software automatically populates the relevant fields (debtors’ names, addresses, amount owed, etc.). The office workers complete the forms and hand them to an affiant for a signature. Rather than being sophisticated legally trained professionals, the affiants are lowly office workers with little authority, even though they sign statements swearing that they have “personal knowledge” about the cases.<\/p>\n

The Consumer Financial Protection Bureau (CFPB) initiated a proceeding against Transworld, which settled for $21 million in refunds and penalties. The bureau claimed the affiants could not have had personal knowledge of the documents, which were often riddled with flaws. For example, in at least 800 cases, Transworld employees swore that the trusts bought the loans before they had been originated. One debtor interviewed by the Times<\/i> claimed she was sued by two creditors over the same debt.<\/p>\n

Because the debt-collection industry is rife with so much mismanagement, here are some defenses the NYT recommends debtors consider. One, demand the creditor prove it actually owns the debt. With such poor documentation it’s common for creditors to be unable to sufficiently show in court that the money belongs to them. Two, demonstrate that the collection act is outside the statute of limitations. Three\u2014and this one is interesting\u2014prove that the creditor is not licensed to do business in the state. In New York for example, businesses must register in the state to operate. Asset-backed security trusts often don’t, and some debtors have been able to cause student-loan debt collectors cases to be dismissed.<\/p>\n

The New York Times<\/i>‘ article on Transworld’s litigation practices is here<\/a>; its article on the flaws in private-student-loan debt collectors’ cases is here<\/a>.<\/p>\n

If you are falling behind on your private-student-loan payments then talking to an experienced New York bankruptcy lawyer can help you assess your case. Often debtors owe multiple creditors, so a chapter 7 bankruptcy can help free up income for the student loans.<\/p>\n

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney<\/a> Bruce Weiner for a free initial consultation.<\/p>\n","protected":false},"excerpt":{"rendered":"

Back in July, The New York Times ran a long article about abuses (and incompetence) of debt collectors trying to recover from private-student-loan debtors. The issue is important because unlike federally backed student loans, debtors with private loans have fewer options to deal with them when they become burdensome because those loans are ineligible for …<\/p>\n

NYT Explores ‘Assembly Line’ of Student-Debt Lawsuits<\/span> Read More \u00bb<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-global-header-display":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":""},"categories":[31,7],"tags":[2,30,87],"acf":[],"yoast_head":"\nNYT Explores 'Assembly Line' of Student-Debt Lawsuits<\/title>\n<meta name=\"description\" content=\"Back in July, The New York Times ran a long article about abuses (and incompetence) of debt 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