Lebedin Kofman LLPBy
In this case, Wells Fargo first tried collecting the debt through their internal collections unit and then sent it out to a third-party collection agency a few months later. Finally, it was sent to Harris Beach, a debt collection law firm that frequently handles the collection enforcement of Wells Fargo private student loans. Harris Beach's goal is to sue the consumer and obtain a default judgment against them so that they do not have to litigate the matter very far making it easy and cheap for Wells Fargo. Once they obtain judgment they will look to enforce it by means of wage garnishment, bank levy, and placing a lien on any real property. Certain types of funds however, such as social security, unemployment, pension, and worker's compensation are exempt and cannot be levied or garnished. We protected our client against judgment by submitting an answer and requesting discovery from Harris Beach to force them to show proof that they owned the debt and that the amount sought was proper.
Wells Fargo made the decision that they would rather offer a settlement to resolve the loan rather than litigate. We were able to obtain a $25,000 settlement for our client reducing the debt by over $75,000. Our experience with private student loans has shown that Wells Fargo is one of the lenders that is willing to offer great reductions in settlement when the client has serious financial and or medical hardship, as well as a potential large lump sum payment. However, it is most important to counter their initial leverage with legal defenses to obtain the best deal possible and protect the consumer.