Open Letter: Debt Relief Attorney’s Response to the July, 17, 2017 New York Times article As Paperwork Goes Missing, Private Student Loan Debts May Be Wiped Away
by Daniel Gamez, Debt Relief Attorney
San Diego, CA – July 19, 2017 –
On Monday, the New York Times wrote the article As Paperwork Goes Missing, Private Student Loan Debts May Be Wiped Away. The first two paragraphs stated the following:
Tens of thousands of people who took out private loans to pay for college but have not been able to keep up payments may get their debts wiped away because critical paperwork is missing.
The troubled loans, which total at least $5 billion, are at the center of a protracted legal dispute between the student borrowers and a group of creditors who have aggressively pursued them in court after they fell behind on payments.
Based on this article, almost every major news outlet in the country ran a variation of the following headline: $5 BILLION IN STUDENT LOAN DEBT COULD BE FORGIVEN THANKS TO MISSING PAPERWORK. But let’s look at this. The article acknowledges that these people took out the loans, but couldn’t pay. And now due to a purported technicality, they may have their debts wiped away. Is that fair considering the tens of thousands of other student loan borrowers that took out loans that didn’t wind up in the hands of this particular creditor?
This claim is irresponsible, misleading and gives false hope. As a debt relief attorney who represents student loan borrowers, on a day-to-day basis, I am deeply involved in the world of student loan debt. I have many clients who have been sued by National Collegiate Student Loan Trust (“National Collegiate”), so I know from first-hand experience the inner workings of what happens when a borrower is sued for defaulting on their private student loans. The past few days I have received numerous inquiries from private student loan borrowers who have read this headline and are wanting to know if their debts are now going to eligible for discharge due to faulty paperwork.
Stating that $5 billion in debt can be wiped away just isn’t true. I don’t see a basis for this claim. How exactly is the $5 billion going to be wiped away? It’s not going to magically disappear. It’s not like some entity is going to come around and say that $5 billion in student loan debt is forgiven.
False Hope Given to Student Loan Borrowers
The article gives false hope to student loan borrowers who are being sued by National Collegiate attorneys for not paying their loan when it alleges that their lawsuit will be dismissed on the eve of trial. There are a number of reasons a case may get dismissed prior to trial. One of those reasons is that the law firms representing National Collegiate simply lack the resources to fight every single challenge to the lawsuits they have filed. It may be that a witness isn’t available to provide deposition testimony (as was the case in the matter referenced in the article). Or that particular witness may not be available on the particular day of trial. The fact of the matter is, National Collegiate has so many cases stacked up for defaulted student loans. It simply isn’t possible to fight every one of these cases simultaneously. So they may dismiss the case “without prejudice”, meaning they reserve the right to re-file the lawsuit later. Even if the case is dismissed due to lost paperwork or another reason, the lawsuit can still be re-filed.
I can say that, from my experience, every time I have been requested to get loan documents from National Collegiate, they have been able to produce them. Furthermore, National Collegiate is now in able to produce witnesses who will testify as to the chain of custody of the student loan. This wasn’t the case a few years ago, but their resources have since improved.
There May Be Confusion, But Let’s Be Real
Borrowers are often confused that they took out a private student loan with a bank and now National Collegiate owns it. As the borrower, you still owe that debt and you owe it now to National Collegiate. If the loan was still owed to the original lender, don’t you think they would be trying to collect if a borrower went into default? Bank of America, Chase or any other bank WILL start the collection process if a debt owned by them is in default. So it stands to reason that National Collegiate is legitimately collecting on debts they acquired from these banks.
Many borrowers complain that their loan balances have grown and they don’t think they owe as much as National Collegiate claims, but that’s how loans work. The balance is going to grow due to accruing interest, which can range from 8-13% annually. So while people might be surprised by how much they owe, simple math shows how that loan grows.
If you acknowledge that you owe the debt and an attorney tells you that they can get you out of paying that debt altogether by challenging the chain of ownership of the loan, then in my opinion that attorney may be acting unethically. The article says that law firms representing National Collegiate are being aggressive in filing lawsuits to collect, but name one creditor that won’t file a lawsuit to collect on a debt that is rightfully owed. Your best bet may be a debt settlement, which is a negotiation between the borrower and National Collegiate that the borrower will pay back a (usually) significantly reduced amount of the total debt to National Collegiate over an extended period of time.
I understand the magnitude of the student loan debt crisis. I, myself, am a student loan borrower. I spend my working hours trying to help distressed student loan borrowers who can’t afford to pay their debt. Every day I hear very valid hardship stories and reasons why borrowers can’t make their payments, and I do everything in my power to help them. It is simply unfair to mislead these borrowers and report that $5 billion in student loan debts could be magically wiped away. It simply isn’t that easy.
Daniel R. Gamez, an attorney focusing exclusively in debt relief, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in San Diego, CA. For more information, please contact Daniel Gamez at 858-217-5051, firstname.lastname@example.org or use our online contact form. Mr. Gamez was recently interviewed by NBC regarding student loan programs.