Student Loan Lawsuits Can Fail on Several Grounds
Tens of thousands of student loan lawsuits are filed every year by creditors who allege default on collectively billions of dollars in private student loan debt.
Although we are teetering on the edge of a student loan debt crisis, the reality is many of these lawsuits are riddled with factual and legal errors. Some borrowers who have defaulted may assume the outcome of the case against them is a foregone conclusion – they will lose. However, those who are fighting back against student loan lawsuits are discovering there are a number of effective legal strategies that may help them fight off a large judgment against them.
Miami student loan debt attorneys are closely familiar with the defenses outlined recently by The New York Times, which detailed the top ways these lawsuits fail (and work out in your favor).
The first of those involves the fact the creditor is unable to establish it actually owns the debt. We say this same problem in the housing crisis as well. The reason it happens is because private student loans are bundled and transferred from the original lender to investors (a process called securitization) which can happen several times over. When one of those loans goes into default, proving that chain of title can be challenging for those trying to collect on that debt.
A frequently-cited case on this issue was decided right here in Florida, by Florida’s 5th Circuit Court of Appeals. In Lovett v. National Collegiate Student Loan Trust, the court ruled the creditor failed to offer up enough evidence to show it owned the note on the loan that first originated by a Chicago-based bank. When the court reversed the trial court’s summary judgment favoring creditor, the creditor simply withdrew the case.
Another defense strategy involves challenging the admissibility of the creditor’s business records. Numerous states – including Florida – have tight rules on the kind of business records that can be entered into evidence. There are also stringent guidelines regarding who should be allowed to authenticate those records in court. If there is no one with firsthand or direct knowledge of the way in which those records were generated, there may be no case.
As Miami student loan attorneys, we also will look carefully at how long it’s been since the debt was first outstanding. Although there is no statute of limitations deadline for collection of federal student loans, private loans still have to follow state statutory guidelines on contract law. In Florida, F.S. 95.011 stipulates a five-year deadline for damages stemming from breach of a written contract. If your last payment was more than five years ago, there is a good chance the creditor can’t compel you to pay.
Additional defenses may include closely examining the creditor’s license to do business in that jurisdiction (foreign corporations may not be able to avail themselves of local courts), and holding creditors accountable for complying with requests by the court for additional information. Sometimes when creditors are pressed on producing certain documents or offering up witnesses to testify to certain material facts, they simply withdraw the lawsuit. They know they can’t win.
Collections agencies can be intimidating, especially if you’re getting dragged into court. But you need to know you are not powerless in this. Our dedicated debt defense lawyers are committed to helping you fight back.
If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.