LCS Capital Lawsuits From Sallie Mae

This year we have seen an increase in the number of lawsuits brought by LCS Capital, a new debt-buyer creditor. LCS seems to acquire debt primarily from Sallie Mae which is interesting because Sallie Mae used to be one of the most common private student loan creditors that we encountered when it came to collection, litigation and judgment matters. Sallie Mae and their sister company Navient often pursued debtors via common collection law firms such as Rubin and Rothman and Forster and Garbus. However, this year it seems that after all of the lawsuits and large settlement reached against Sallie Mae/Navient, they would rather sell some of their debt rather than pursuing consumers themselves in litigation. Relin, Goldstein and Crane, a New York debt collection law firm that used to frequently represent American Express in the past has been representing them in New York while Fein Such Kahn and Shepherd, a large New Jersey debt collection law firm represents them in New Jersey.

LCS Capital has the same difficulty as any other debt buyer such as Midland Funding, Portfolio Recovery or LVNV Funding in proving that they are the rightful owners of the debt. They must show standing to sue the debtor and must prove privity, or the proper assignment of the debt from one creditor to the next. This includes providing the bill of sale for every transfer from creditor to creditor along with the other necessary assignment paperwork. LCS must also overcome the hearsay requirement meaning that an agent or officer from LCS must testify in court to having personal knowledge of the transfer of the purchase of debt along with personal knowledge of the practices of the company in relation to these specific matters. All of these requirements can become a difficulty to overcome for a debt-buyer that purchases debt like this for pennies on the dollar in bulk. Their goal is probably to collect as much money as possible while spending as little as possible. This is particularly important when dealing with LCS Capital as they are purchasing debt from Sallie Mae whose debtors hold more than the average credit card debt amounts because these are private student loans. Private student loan debt can range between $10,000 to over $200,000 making it extremely important to use these defenses to the consumer’s benefit.

Forcing LCS Capital to prove that they are the rightful owner of the debt can lead to the ultimate dismissal of the entire case if they lack some of the necessary documents. However, from a more practical and economically friendly perspective, these sorts of defenses also provide fantastic leverage for negotiating a significantly lower settlement with LCS Capital. Whereas Sallie Mae might settle the matter for 50% off, there is a much better chance that a negotiated settlement with LCS using the leverage above can lead to 70% off or more over an interest free payment plan. Relin, Goldstein and Crane and Fein Such Kahn and Shephard have both been willing to negotiate fair settlements and arrange interest free payment plans in these matters from our experience.