Jefferson Capital Systems Student Loan Lawsuit Settled

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.