Our client contacted us after receiving a summons and complaint stating that she was being sued for over $150,000 by Navient, formerly Sallie Mae on private student loans that she had take out for medical school. This is a common occurrence for graduate students from a variety of fields but happens quite often with doctors as they suffer through residency on a low beginning salary. As private student loans do not have income-based programs like federal loans do, the consumer’s option is to either pay an inflated amount every month or default. Most consumers default in these cases and then face the continuous collection efforts by Navient whom retain a variety of collection agencies to constantly contact clients, their family and their jobs to pressure them into making payments. After failing to obtain funds through the collection process, Navient then retains local counsel to sue consumers.
In this case, Rubin and Rothman, a New York debt collection law firm was retained to sue and potentially obtain a default judgment against our client. Their goal is always to obtain a default judgment because it is the easiest way to win and then gives them the ability to freeze a consumer’s bank account or garnish their wages. In the meantime, 9% New York judgment interest accrues on the debt so that they ultimately recover even more money than what was sued for. Our defenses prevented them from doing so in this situation and forced Rubin and Rothman to agree to negotiate to a lower settlement amount. We were able to use our legal leverage to obtain a settlement of $50,000, a reduction of roughly $100,000 off of the lawsuit amount.