Private student loans are a frequent feature on these blogs and they usually
consist of the usual suspects such as Navient and National Collegiate
Trust. However, there is a different route that original creditors sometimes
take with these private student loans and that is selling the debt for
pennies on the dollar, usually to a debt buyer. This technique is commonplace
in the credit card industry where almost all original creditors decide
to sell their debt at some point. Jefferson Capital Systems is a debt
buyer for mostly private student loans. We have seen the numbers of these
collection actions and even lawsuits rise dramatically over the last year.
Frequently, we see the debt collection law firms of Forster & Garbus
as well as Ragan & Ragan both collecting and suing on these matters
in New York and New Jersey. As with credit cards, they often obtain default
judgments due to a lack of service and then are able to freeze consumer’s
bank accounts or garnish their wages.
There are multiple reasons for why a private student loan might have been
sold to Jefferson Capital or any other debt buyer. The original creditor
usually does their homework on the consumer and if they feel like their
chances of recovering from that consumer are low because of a lack of
assets or income they may decide to cut their losses and sell the debt
for less. They still get a huge tax break for taking a loss on the debt
so don’t shed a tear for them. Sometimes the debt is actually sold
or transferred multiple times from one debt buyer to another. This means
that the debt is sold for less and less every time it is transferred.
Debt buyers are great news for consumers because they are much easier
to defend against as opposed to original creditors who are more likely
to be able to produce the necessary documents to show their rightful ownership
of the student loan debt. Debt buyers like Jefferson Capital often lack
these essential documents to prove legal standing. Thus, it is very important
to take an aggressive stance and to keep the burden on Jefferson Capital
to prove their case. In a worst case scenario this stance increases the
consumer’s leverage in potentially settling the matter for a lesser
balance. Debt buyers will likely accept 60%-80% off of the entire balance
in these situations.