Student Loan Lawsuits

How to Strike Back and Prevent a Judgment Against You

You can be sued when you default on a student loan. Though it’s more common to face a lawsuit for a private student loan, the federal government has the option of suing you in federal court.

The good news is that a student loan lawsuit is often an opportunity to resolve disputes regarding ownership of the loan and shoddy accounting. Private student loan lawsuits can also give you access to settlement and repayment plan options that otherwise may not exist.

When you defend the lawsuit, you get your chance to make the collector prove every part of their case.

Does the collector have the right to collect the debt? Make them prove it.

Have they calculated the correct amount due? Make them prove it.

Have they followed the collection laws?  Make them prove it.

Collection Efforts Before a Lawsuit

When you’re in good standing on a private student loan, a servicer sends bills and you make payments. That changes when you fall behind.

For the first 180 days or so, you’ll get calls and letters from the servicer in an effort to get you back in good standing. Though the student loan servicing company may not have many options for you, it’s in their best interests to keep you from falling into default because they get paid only if a loan is in good standing.

If you don’t bring the account current, the servicer will send your student loan back to the owner of the loan for collection. Many private student loans originate from a bank and are immediately bundled together and sold, which is why you may not recognize the name of the creditor listed on a collection letter.

Collection efforts usually include phone calls and letters, with the student loan owner sending your file to different collection agencies over time. These collection agencies are subject to federal and state rules governing their conduct, and you may be able to sue if a collection agency violates your consumer protection rights.

Ultimately, the loan holder will make a decision to sue you for the unpaid balance. If you’ve got a cosigner on the loan, that person may be sued as well.

How Long Can a Private Student Loan Take to File a Lawsuit?

The time limit for a lawsuit to be filed is called the statute of limitations, and it varies from state to state as well as the type of legal action. In California, you can be sued for collection on a private student loan for 4 years beginning with the date the loan goes into default. New York gives the creditor 6 years from the date of default. Other states provide for longer or shorter time periods.

There are various ways to stop the clock or reset it entirely, so it’s a good idea for you to understand how the law works in order to avoid mistakes.

The Beginning of the Lawsuit

A lawsuit begins by filing a Summons and Complaint with the civil court in your county. The creditor pays a filing fee, the court enters the case into the system, and the court system is officially involved.

The creditor now has a limited amount of time to serve you and anyone else who they may be suing. Service can be performed in a variety of ways, including:

Personal Service: Someone personally delivers a copy of the Summons and Complaint to you, then files an affidavit with the court detailing the date, time and location of delivery.

Substitute Service: If the process server tries at least 3 times to serve you personally but is unable to do so, they can deliver the Summons and Complaint with someone over the age of 18 at your home or work location.  The server must also mail a copy of the documents by regular mail at the location where the documents were delivered, and file an affidavit with the court regarding service.

Service By Mail: California allows the server to mail the papers to you by regular mail to your home or mailing address. The server then fills out a Proof of Service and files it with the court. New York also allows service by mail, but it’s considered valid only if you sign an acknowledgement and return it to the creditor.

Service by Publication: If the creditor can’t find you and doesn’t have your home or work address, the court may grant permission to publish the Summons and Complaint in a newspaper in the area where you’re likely to be.

Responding to a Student Loan Lawsuit

Once you’ve received the Summons and Complaint, the clock immediately begins to count down your time to respond. If you miss your deadline, the student loan lender’s attorney can request that a default judgment be entered against you. That judgment is the court’s final decision regarding your liability for payment of the student loan.

A judgment cuts off your defenses and eliminates your rights to force the student loan company to prove the case. That’s why you need to spring into action immediately by taking these actions.

Review the Summons and Complaint Carefully

The Summons and Complaint contains important information about the case to help you understand who’s suing you and the claims they’re making. Reviewing the court documents will tell you the following:

  • Name of the entity suing you.
  • Name and address of the law firm representing the student loan company.
  • Case number and court location.
  • Names of anyone else being sued.
  • Information about the student loan.
  • The amount they claim you owe.

With this information in hand, you can move onto the next step.

Check Your Records

Now that you know what you’re up against, you should spend some time gathering whatever information you have regarding the private student loan. You’re looking for documentation regarding any payments you may have made and correspondence you’ve received from student loan collectors. It’s a good idea to obtain a copy of your credit report as well because it may provide more insights about the loan history.

You may not have any records or documents about this private student loan, but it’s good to try your best.

Consider All Possible Defenses

In order for the creditor to win the case, you either have to default or show that they can’t prove all of the required elements of their case. Those elements include:

  1. You borrowed the money.
  2. You didn’t repay the private student loan.
  3. The amount being claimed as due is correct.
  4. The company suing you has the legal right to do so.
  5. The debt is legally enforceable and not past the statute of limitations.

Companies such as National Collegiate Student Loan Trust, Navient (Sallie Mae) and others are notorious for shoddy record-keeping and questionable accounting practices. That means there are a lot of defenses available to you when you’re being sued for a private student loan. Some of those defenses are:

  • You never borrowed the money for the student loan.
  • You believe the loan has either been paid in full or the amount claimed is incorrect.
  • The student loan servicer put you into default in error.
  • The company suing you has no legal right to do so because you don’t believe that they own the loan.
  • You believe the statute of limitations has expired.

You have the right to raise any defense you believe to be true. Once you do, it’s up to the student loan company to prove the case.

File and Serve Your Response

Remember, you have a limited amount of time to file and serve a response to the Summons and Complaint. This response may be an Answer or a request that the case against you be dismissed.

This is usually when someone will want to meet with a lawyer who defends student loan lawsuits. Though many attorneys defend collection cases, student loan lawsuit defense is a far more complex matter. Private student loans are usually transferred through a complicated financial scheme called securitization, so the attorney needs to have a deep understanding of the way these transactions are structured. Beyond that, issues surrounding student loan interest capitalization make it difficult for most people to verify the amount due.

If you’re being sued for a student loan debt in either California or New York, you should meet with our Managing Attorney, Jay Fleischman, about your options. Jay has successfully defended hundreds of private student loan lawsuits brought by National Collegiate Student Loan Trust, Navient, Citizens Bank and more.

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Betting on Default

If you don’t respond to the Summons and Complaint on time, the student loan collectors win by default and you lose.

That’s exactly what happens in most cases. In fact, 95% or more of all private student loan lawsuits result in a default judgment against the borrower.

It’s all part of the business model used by collection attorneys – file lawsuits, get default judgments, and start seizing money and assets from people who can’t afford to make their student loan payments.

About Jay Fleischman

Jay Fleischman is a student loan lawyer who has been representing people with bill problems for 23 years. There is no other attorney focusing solely on student loan issues in the United States with more experience.

From 2012 until 2018 Jay helped to build and run The Student Loan Law Workshop, the first and largest training ground for attorneys seeking to learn how to help their clients with educational debts. He personally trained over 300 attorneys in the field of student loan law during that time, showing them how to help borrowers and their families level the playing field.

He also represents people in bankruptcy court, and championed a consumer’s right to have their credit report properly updated after bankruptcy.

Jay hosts the critically acclaimed Student Loan Show, and is frequently sought out by the media on matters concerning educational debt and consumer credit in general.

Don’t take his word for it. The only way to make a hiring decision is to independently verify Jay’s credentials with the California State Bar and New York State Bar, read client reviews on Yelp and Avvo (even the bad ones), and spend some time here.

What You Get When We Work Together

Our job is to do all the work, so you don’t have to.

You hire a lawyer to do the heavy lifting, not to print papers and give you instructions. That’s why we believe in giving you our best work and the highest level of service.

When you hire our office, here’s what we do for you:

  • review your entire case with you to determine the right defenses;
  • draft, serve and file all court documents on your behalf;
  • conduct discovery in your case (this is the formal process of exchanging information between the parties about the witnesses and evidence they’ll present at trial);
  • attend all court hearings in the case;
  • review all of the debt collector’s information with you to help decide whether it’s appropriate to settle the case or go to trial; and
  • negotiate the best possible settlement for you (unless we decide that it’s more appropriate to go to trial).

If we decide that it’s better to go to trial than settle, you will not be charged any additional legal fees.

We will also look into whether any of your rights under the state or federal collection laws have been violated. If they have, we may sue for money damages on your behalf.

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“No Surpise” Legal Fees

If you had a lot of money to spend on legal fees, you probably wouldn’t be behind on your student loans. That’s why we’ve structured our legal fees to give you the maximum benefit in the most cost-effective way. All legal fees include:

  • Personal access and representation by Jay Fleischman – not some inexperienced junior lawyer
  • File and serve an Answer or other responsive pleadings in court
  • Handle all discovery requests and responses as needed
  • Deal with any motions
  • Attend at all court hearings, mediation sessions, and conferences
  • Negotiate settlements and repayment options as necessary
  • Prepare you for, and conduct, trial if needed

Our legal fee to defend a student loan lawsuit is $295 per month for 12 months. If you’re being sued with a spouse, parent or grandparent then we can offer a reduced legal fee to represent both of you in the same lawsuit.

California clients are also required to pay an initial court filing fee, which is between $225 – $435 depending on the amount of money the lender claims you owe (click here for a schedule of court filing fees). There is no court filing fee in New York.

There are no additional fees and no bonus if we get you a better deal.

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