Student loan companies return to court to collect on private education debt

Student loan firms return to court docket to gather on non-public schooling debt

While the federal authorities continues to pause the gathering of defaulted student loans in the course of the coronavirus pandemic, non-public firms that originally adopted go well with are again in court docket.

Private schooling lenders and collectors have resumed submitting new lawsuits and persevering with present circumstances to get well past-due money owed, based on court docket data. Many firms had vowed to halt collections litigation as Americans confronted layoffs and wage reductions at first of the well being disaster.

But regardless of tens of hundreds of individuals nonetheless shedding their jobs, student loan firms are once more searching for cost. Attorneys for among the largest non-public schooling debt collectors have filed dozens of lawsuits in a number of states since at the very least the summer time.

Private companies don’t have the power of the federal government to seize tax refunds, wages, and Social Security benefits to repay defaulted debt. Instead, they must file a lawsuit and get a court judgment. Lenders and creditors, if successful in court, can then garnish a person’s wages or seize their assets.

In mid-March, Navient stopped taking legal action against private student loan borrowers in light of the pandemic. But by August, default judgment and wage garnishment orders emerged in a handful of cases that remained on the docket.

Navient spokesman Paul Hartwick said those orders were filed before the pandemic and recently approved by judges. The company, he said, has not filed any actions to seek enforcement and is not planning to in the near-term.

’’A small number of pre-existing cases may have remained on dockets after March 25, but we have not filed any new suits or actions since then and are not currently doing so,’’ Hartwick said.

One of the nation’s largest holders of private education debt, National Collegiate Student Loan Trusts, has been active in the courts since the summer. Transworld Systems, which oversees debt collection for the trusts, told The Washington Post in April that it would be pulling lawsuits in the pipeline and would stop entering default judgments against borrowers for at least two months.

Lawyers for the trusts have recently filed dozens of cases against borrowers in New Jersey, California, Maryland, and New York. In Maryland alone, the trusts have brought at least 67 new cases since July, according to court records and a recent report from the Student Borrower Protection Center. The advocacy group found most of those cases were brought against people in majority-minority communities in Prince George’s and Baltimore counties.

Transworld did not immediately respond to requests for comment.

National Collegiate has run afoul of state and federal authorities for flooding the courts with lawsuits that relied on false or deceptive authorized paperwork. Consumer attorneys say the trusts and different collectors are nonetheless participating in the identical conduct in the course of the pandemic.