UPDATE: HGD has settled this case and is no longer taking new clients.
Heninger Garrison Davis, LLC is investigating the actions of the law firm Solomon and Solomon PC (“Solomon”), various National Collegiate Student Loan Trusts, including trust numbers National Collegiate Student Loan Trust 2001-X National Collegiate Student Loan Trust 2002-X National Collegiate Student Loan Trust 2003-X National Collegiate Student Loan Trust 2004-X, National Collegiate Student Loan Trust 2005-X, National Collegiate Student Loan Trust 2006-X, and National Collegiate Student Loan Trust 2007-X, (together, the “National Collegiate Student Loan Trusts); Transworld Systems, Inc. (“Transworld”), itself and as successor to NCO Financial Systems, Inc. (“NCO”); and EGS Financial Care Inc. (“EGS”), formerly known as NCO Financial Systems, Inc., and other associated entities and law firms (collectively, “Defendants”) for their role in an apparent scheme to collect alleged defaulted loans from former students and alleged co-signs to private student loans.
Heninger Garrison Davis’ investigation has revealed that Solomon and other law firms suing former students and alleged co-signers are filing state lawsuits to collect alleged debts for which they are unable to produce the alleged underlying loan documents when requested, apparently did not have the alleged underlying loan documents in their possession at the time they filed lawsuits, and did not review those loan documents before filing their lawsuits, which is a violation of the legal and ethical requirements to which law firms are held. Additionally, it is alleged that the Defendants and/or their predecessors have ignored requests from consumers to cease and desist contact with consumers regarding these alleged loans, in violation of the Fair Debt Collection Practices Act (“FDCPA”). Further, it appears that the Defendants are aware or should have been aware that they are unable to prove that these debts are owed and are aware that the alleged debts are too old to sue over.
If you are facing a lawsuit from Defendants, you are not alone. In September 2017, the Consumer Financial Protection Bureau (‘CFPB”) penalized the National Collegiate Trusts and Transworld $21.6 million for prosecuting illegal debt-collection lawsuits. The CFPB found that the National Collegiate Trusts and Transworld sued consumers in state courts over purported debts that they could not prove were actually owed or were too old to sue over. In addition, the National Collegiate Trusts and Transworld allegedly have employed illegal tactics later in the state-court litigation process, including using false or deceptive affidavits to obtain default judgments. The CFPB found that the Transworld employees or agents who fill out affidavits filed on behalf of National Collegiate Trusts have falsely attested to personal knowledge of (1) the account records and the consumer’s debt, and (2) the chain of assignments establishing entitlement to sue. In fact, these individuals sign the affidavits without reviewing any such evidence, provided affidavits that were not notarized. A copy of the complaint, proposed final judgment, and consent order filed by the CFPB are included here:
All persons sued in state-court debt-collection lawsuits in which a Trust Defendant was named as the plaintiff are potential class members. National Collegiate Trusts does not directly lend money for student loans, rather they are assignees of alleged student loan debts. In fact, the National Collegiate Trusts are merely owners of bundles of student loan debt created using a complex securitization process. Heninger Garrison Davis believes these debt-bundles now total $12 billion, with more than $5 billion now classed as in default.
The National Collegiate Trusts-which allegedly have no employees-use Transworld to attempt to collect debts allegedly owed on these student loans. It is alleged that Transworld coordinates with law firms throughout the country, including firms like Solomon, to file debt-collection lawsuits against consumers in state courts. In the past three years, it is believed that more than 40,000 such actions have been filed.
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The History of the Case
In September 2017, the National Collegiate Trusts were ordered by a federal judge to pay at least $19 million in penalties and borrower refunds and to cease most of its debt collecting activity. In the same case, Transworld was fined $2.5 million. The National Collegiate Trusts were ordered to refund $3.5 million to 2000 borrowers. The National Collegiate Trusts had insufficient documentation to support lawsuits against these borrowers. In some cases, the statute of limitations for suing for debt-repayment had already passed.
Besides, a private auditor is going over all of the National Collegiate Trusts documentation about student loans. It is anticipated that many people will have their loans simply dismissed. They will receive refunds for any payments that they made because there is insufficient documentation available to prove they owe this money. Some experts are speculating that the amount of money to be refunded may eventually exceed $21 million.
If you have a student loan that is held by the National Collegiate Trusts, you should contact Jim McDonough with our law firm. We will assist you in determining if your loan can be dismissed and if you are due a refund of money you paid toward the student loan.
A class-action lawsuit filed against Transworld for its unethical and illegal attempts to collect student debt loans was settled in January 2018. Around 8,000 individuals who were residing in Illinois and were sued by Transworld will benefit from this settlement. Their interactions with Transworld will be removed from their credit records. They will receive some loan forgiveness and assistance in paying off any legitimate student loans.
Other class-action lawsuits have been filed against Transworld and the National Collegiate Trusts. These lawsuits are attempting to clear the victims’ credit reports, to dismiss any loans not supported by the documents held by the National Collegiate Trusts, and to seek loan refunds. Anyone who qualifies to participate in one of these class-action lawsuits can register to become a beneficiary of the settlement.
Frequently Asked Questions
We know that you likely have many questions about your rights, and our team is ready to provide the answers during a confidential, no-cost consultation. Contact us by phone or online to schedule your case evaluation with an experienced member of our legal team today. We’ve also provided the following frequently asked questions and their answers to better help you understand this case.
A: Admittedly, it can be challenging to determine this unless Transworld has already sued you. Some hints that the Trusts hold your private student loan include:
- Most of these loans were made before 2008
- Check your credit report for any mention of American Education Services (AES) or Transworld Systems Inc. (TSI)
- Who did you originally get the loan from? The following are the primary banks that sold private student loans to the National Collegiate Student Loan Trusts:
- Bank One
- Bank of America
- Charter One Bank
- GMAC Bank
- JPMorgan Chase Bank
- RBS Citizens Bank
- Union Federal Savings Bank
A: The short answer is no. The Department of Education has nothing to do with the Trusts. In addition, the Trusts cannot garnish your wages, seize money from you, or place liens on the property that you own unless they file a lawsuit against you and win in court. Many people don’t realize that it is often quite easy to get the court to find in their favor in a debt collection lawsuit. However, this only happens if they seek legal assistance to defend themselves against the lawsuit. If a debt collection agency has sued you over a student loan, call our firm today to discuss your options.
A: If you were sued in the past and lost, call to discuss your options. Even if it wasn’t Transworld that sued you, many collection agencies across the US are using the same tactics as Transworld to collect debts. Namely, violating laws about having proper documentation of the loan and suing after the statute of limitations runs out. You may have a case against the collection agency that will invalidate the court’s former decision against you.
If you have ever been sued in a debt-collection lawsuit filed on behalf of any National Collegiate Trust, and you have any questions or wish to discuss your rights or interests with respect to these matters, please contact us.
Even if you feel you are not ready to file a suit, consult HGD attorney Jim McDonough as soon as possible so that you will know your options. We do not charge any fees upfront. In fact, we will only charge attorney’s fees if we obtain a financial settlement for you. If you don’t win, we won’t get paid a legal fee.
Call us today for your free case evaluation 1.800.241.9779