Our client was sued by
Jefferson Capital Systems, a common debt buyer of private student loans. Jefferson often buys loans
that were previously owned by
National Collegiate Student Loan Trust, a common student loan creditor.
Forster and Garbus are usually the debt collection law firm that represents Jefferson in
these matters and they were so on this case. Jefferson Capital's goal
like most debt buyers is to sue individuals in order to obtain a default
judgment against them. A default judgment allows them to levy or freeze
a consumer’s bank for up to double the amount of the judgment or
garnish their wages while 9% judgment interest accrues. Through garnishment,
these debt buyers often make double the amount because of the accruing interest.
In this case our client contacted us before a default judgment could be
entered against her and we submitted an answer with affirmative defense
designed to protect her. Forster and Garbus eventually reached out to
us in order to attempt to resolve this matter through an out of court
settlement. Forster and Garbus generally knows that litigating these debt
buyer cases against us is difficult as they have the burden of proving
that Jefferson Capital or any debt buyer is the rightful owner of the
debt. This standing issue is generally a difficult one for them to prove
and so they usually prefer to settle the matter for a significantly lower
amount than the judgment. This is beneficial for the consumer in some
instances as well because they do not have to spend additional fees on
litigation and cut out the risk of losing on the merits. In this case
our client saved approximately 75% off of the balance of the judgment.