NATIONAL COLLEGIATE STUDENT LOAN TRUST - NCSLT - PER NYT $12 BILLION IN STUDENT LOANS MAY BE UNCOLLECTABLE - But Suits Against Borrowers Continue

Today the New York Times published an article titled: As Paperwork Goes Missing, Private Student Loan Debts May Be Wiped Away. This article finally brings out in the public what consumer lawyers have been noticing for months and even years, that National Collegiate Student Loans Trusts has problems proving that the borrowers and cosigners that it sues actually owe the money claimed. Moreover, sometimes NCSLT can't prove that it is even entitled to collect on the loan at all.  

Here's a quote from the NYT article:

At the center of the storm is one of the nation’s largest owners of private student loans, the National Collegiate Student Loan Trusts. It is struggling to prove in court that it has the legal paperwork showing ownership of its loans, which were originally made by banks and then sold to investors. National Collegiate’s lawyers warned in a recent legal filing: “As news of the servicing issues and the trusts’ inability to produce the documents needed to foreclose on loans spreads, the likelihood of more defaults rises.”

National Collegiate is an umbrella name for 15 trusts that hold 800,000 private student loans, totaling $12 billion. More than $5 billion of that debt is in default, according to court filings. The trusts aggressively pursue borrowers who fall behind on their bills. Across the country, they have brought at least four new collection cases each day, on average — more than 800 so far this year — and tens of thousands of lawsuits in the past five years.

If you are a borrower with a NCSLT loan what should you do?  Well, the answer isn't completely simple. The problem is that if you are sued, you might have problems finding and affording a lawyer. Very few lawyers take student loan defense cases, and those who do (including me) have to charge an out of pocket fee for the defense - much like a criminal defense lawyer charges an out of pocket fee even to innocent clients.  This fee, however, is going to be a lot less than what NCSLT is claiming.

To find a consumer attorney who handles student loan debt defense in your area, go to the National Association of Consumer Advocates (NACA) "Find an Attorney" page linked here.