National Collegiate Student Loan Trust (NCSLT), a frequent student loan
lender is attempting to collect
student loan debt by filing thousands of lawsuits against debtors. However, there is one
big problem with these law suits; the NCSLT consistently fails to include
adequate facts in their pleadings. Unfortunately, NCSLT have won numerous
lawsuits because debtors often fail to challenge the suit which results
in a default judgment in NCSLT’s favor. The problem with NCSLT’s
pleadings is connected to their relationship to the debtors.
Students typically borrow money from banks to pay for tuition and expenses
related to higher education. These banks then sell the loans to financial
companies. One of these financial companies included First Marblehead.
After buying student loans from the original lenders, First Marblehead
set up more than two dozen trusts, also known as NCSLT, and transferred
batches of student loans to these trusts. These trusts then sell bonds
to investors, and these bonds are backed by student loans. All of this
is why NCSLT is the plaintiff in these lawsuits and not the banks students
originally borrowed from.
Although many default judgments have been entered in NCSLT’s favor
most often by firms such as Forster and Garbus and Rubin and Rothman,
debtors are now challenging these suits, and they are winning, often times
with little difficulty. It is now being found that NCSLT are violating
some debt-collection laws by not following simple rules regarding their
pleadings. For example, a trust violated the debt-collection laws in California
when it failed to identify the original lender. Problems for the trusts
have also arisen when they fail to assert that they own the loans they
are attempting to collect.
NCSLT has now filed more than 4,000 lawsuits in five different states.
Originally, they were coasting to judgments in their favor, but some debtors
are now challenging and winning these suits on basic grounds such as standing
as well as gaining enough leverage to obtain a settlement which saves
consumers 40-70% off of the balance.