Student loans have become a focal point of consumer protection experts
across the country. The total debt owed by borrowers, now totals more
than the entire nation’s credit card debt. Private student loans
create more of a challenge for borrowers than federal loans because debt
relief for such loans is limited. Federal loans have many different repayment
options while private loans do not. Private loans cannot be automatically
discharged and most companies are unwilling to offer borrowers plans to
help keep them out of default or take them out of default as federal loans do.
One of the main players in the private student loan market is National
Collegiate Student Loan Trust (NCT). The company is the assignee of thousands
of securitized private student loans and files thousands of lawsuits all
across the country. In some states, NCT has been known to file more than
one lawsuit per day such as in New York. Most of the time these lawsuits
demand payment that is higher than what the borrower can afford and much
higher than what was originally taken out due to fees and interest. This
scenario often leads to default and litigation. These lawsuits also often
involve co-signers, such a parents or grandparents who are attached to
the potential default and are negatively affected by it.
One weakness that attorneys have found in lawsuits brought by NCT is legal
standing. NCT does not have contractual relationships with the borrowers
it sues. The company acquires loans after multiple assignments. New York
state law requires a tremendous amount of documentation to assign securitized
student loans multiple times and therefore, it can sometimes be difficult
to determine who is the actual owner of the loan. If it can be determined
that NCT is not the owner of the debt, the lawsuit can be dismissed for
a lack of standing.
NCT is required to prove that it owns the loan before the court can order
the borrower to pay an amount. In some cases, NCT’s lawsuits have
been dismissed for failure to prove ownership of the debt. In hundreds
of others that we have handled for clients, favorable settlements have
been reached with NCT.