Student Loan Debt: A $1.3 Trillion Boondoggle  in 2018 !

Although it’s a little reported reality, the truth is that we are lurching towards a student loan debt crisis comparable to the mortgage crisis that began several years ago. In fact, student borrowers have defaulted on billions of dollars in private student loan debt. And now, thousands of student loan lawsuits are being filed every year by creditors against former students in every state in an attempt to collect those billions of dollars in outstanding private student loan debt.

And, unfortunately, most borrowers who are sued based upon having defaulted with respect to their student loans may assume, incorrectly, that the outcome of the case against them is an open and shut affair and that they are destined to lose in Court and will eventually have their assets seized and their salary garnished.

But the truth is that many of these lawsuits are burdened with so many factual and legal errors that they are unsustainable and subject to being dismissed out of Court before the creditor gets a dime. And, in fact, we have found that there are a number of effective legal strategies that help our client6s fend off and successfully defend many of these student loan lawsuits and head off many of the judgments that our clients otherwise thought were a foregone conclusion.

Here are five solid and complete defenses which can and have been successfully used to defeat student loan collection cases.

First, the creditor must prove that it owns the student loan debt or the case must be dismissed. This is your First Defense. And dismissal often happen on this basic in these lawsuits because most private student loans are transferred by the original lender to investors and trusts funds through a process called securitization, in which thousands of these defaulted loans are pooled together and then sold as one package to an entity set up just for this purpose. Because of this loan bundling and packaging, the final holder of the debt, the entity who might ultimately sue you – say Navient Student Credit, National Collegiate Student Loan and SLM Private Education Loan - often has difficulty in proving that the “chain of title” remained intact sand can be followed through every ownership transfer. And this can be a major headache for debt holders.

As a Second Defense, you should know that “business records”, which includes all the various documents that might be used against you I court to prove the case against you, are inadmissible hearsay (meaning that they cannot be used in court) unless there are specific statutory provisions, rules and/or case precedents which allow them to be used in Court absent you.

In fact, New York State has precise rules about what kinds of business records, such as promissory notes and payment ledgers, can be entered into the record in court. And there are rules about who is qualified to vouch for the authenticity and accuracy of such records. New York State courts require direct or firsthand knowledge of how the records were created. This means that they must present a witness who can establish what is known as a foundation for the introduction of business records because, otherwise, all of these documents are merely “hearsay’ and, again, not allowed in Court to be used against our clients.

As a Third Defense, the lawsuit must be started before the relevant statute of limitations for collection expires. And, therefore, you need to know and the first thing we determine is whiter or not that statute of limits has expired on your debt.

Now, generally speaking, federal student loans are exempt from time limits on when they can be collected. However, private loans are not and can be dismissed when the lawsuit is not started against you in a timely fashion. So, if you knot made a payment on your outstanding student loans (or any loan or line of credit for that matter) After years without payment — the exact length of time does vary according to the applicable state law — student loan collectors may in fact lose their right to sue to collect the money through a lawsuit.

In New York, the statute limits is, generally speaking, six years from the date you made the last payment. So, if you are not sued within that time period, or possibly a shorter period, depending on where the original creditor was located, the student loan collector will unable to collect the money from you at all.  So, check these statues or contact us and we will di it for you to see if you can utilize this defense.

As a Fourth Defense, it is important to determine if the student loan collector is licensed and/or registered to do business in the State in which you live, and if such licensing or registering is a statutory requirement to maintain a student loan lawsuit absent you.

For example, New York State requires “foreign corporations” — those based in other states — to register to operate in the State. Failing to do so can prevent creditors from using the court system here. One judge in New York, for example, dismissed four lawsuits brought by securitized investment trusts owned by Navient because the entities were not registered to do business in the New York state. “Plaintiff lacks capacity to sue,” he wrote in one of the rulings, SLM Education Finance Corporation v. Gray. (Civil Court of the City of New York) 

And, finally, as a Fifth Defense the student loan collector often refuses or simply fails because it is actually unable to comply with court requests for additional information.
When courts and we, as defense attorneys, ask creditors to provide additional documents, or produce witnesses to testify about the claims they are bringing against our clients, the creditors often simply withdraw their lawsuits.

They just playing the numbers and dialing for dollars, so to speak.  In other words, if these student loan collectors are challenged, and documents proving the claim demanded by the Court or defense attorneys, the creditors often cannot provide the information, and the cases are eventually fiven up or dismissed. For this reason, it is always important to challenge these claims in Court and force the collectors to “put up or shut up”, which is what we are doing here at the Credit Card Defense Center every day on behalf of our clients.

So, to summarize then, remember that you probably do have some defenses to these kinds of student debt lawsuits even when it seems, at first glance, that you do not have any way out. Again, to summarize, the best defense that we can use to help you includes showing that :

1.     The student loan collector cannot prove that it owns the debt.
2.     the “creditor’s” business records are not admissible in Court.
3.     The debt is beyond the statute of limitations for collection
4.     The “creditor” is not licensed to do business in the jurisdiction.
5.     The “creditor” failed to comply with court and defense lawyer requests for additional information.

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Experienced CREDIT CARD DEFENSE LAWYERS know what questions to ask and what discovery documents to request to possibly get your case dismissed and give you the very best opportunity to get the best outcome by objecting to the improper use of hearsay evidence against you, determining whether the debt is time barred against collection by a statute of limitations and whether or not you were afforded due process in the ways you were served with the summons and complaint in the first place.