Have you been served with a summons by the ultra-aggressive private student loan lender known as the National Collegiate Trust?
Countless students and graduates are being taken to court by the NCT for not meeting their student loan obligations. Solutions have been few and far between for private student loan borrowers; with various measures being taken by institutions such as the NCT – with lawsuits being one of the most common.
Settlement prior to litigation is the only tried and true way to prevent a lawsuit on a defaulted NCT loan – although once a lawsuit does happen, NCT is being beaten in court with some regularity. This largely depends on the experience and skill level of the consumer defense attorney representing the borrower, however.
In fact, policy makers and journalists have even gone as far as labeling the NCT as a “lawsuit machine” – sound extreme? It’s not. Borrowers can expect a lawsuit within 6-12 months of defaulting on their NCT private student loans in many cases.
The NCT is notoriously litigious and they file lawsuits as a regular part of their business model. It only gets worse once you realize that most people are typically underrepresented in trial, allowing the NCT to easily win the case in court. When borrowers don’t even show up to defend, the NCT wins a default judgment which opens the door to wage garnishments, liens, and bank account levies.
What Exactly is the NCT and Why is it So Difficult to Beat Them?
The NCT is one of the strongest private lenders – consisting of an actual trust (or set of trusts) that is owned by a company called Goal Structured Solutions, which is also closely affiliated with Turnstile Capital Management.
So what does this mean?
To put it simply, the NCT has been operating for years out of the limelight – various students and recent graduates have attempted to contact the NCT by looking for a phone number online, but there isn’t one – considering it’s an actual trust fund owned by GSL. While there is a phone number for borrowers to call GSL, most people don’t know that NCT is a literal trust fund owned by GSL.
To make matters more confusing, NCT is one of the largest debt buyers in the private student loan industry (where debt buying is not as common as in other industries such as credit card debt); so NCT is usually never the original private lender a borrower signed up with. Rather, the NCT purchases loan portfolios from small and large private lenders who have rapidly exited the private loan business during and after the Recession. And to add a final layer of confusion, most NCT accounts are serviced by AES when they are current.
It’s apparent that going up against the NCT in court can be a daunting task. To make matters worse, the consequences of losing a case to the NCT are extreme; ranging from default judgments, wage garnishments, or heavy court ordered payments. Therefore, you have to do everything in your power to ensure you successfully defend yourself in court – this means hiring an experienced student loan attorney to defend you if a lawsuit is filed. If a lawsuit hasn’t been filed, it’s a good idea to reach out to an experienced private student loan negotiator to reach a settlement at a significant discount, without having to go through the legal hassle of a court battle.
But with so little options in your corner – how can you level the playing field and come out victorious? There’s not a lot of defenses that have worked in the past, but there is one legal defense that has successfully defeated the NCT (disclaimer – I am not a lawyer and do not provide legal advice, and this article is inspired by another article by an attorney who has beaten NCT in court).
We begin by analyzing the increasing number of lawsuits characterizing the private loan industry, the usual court process, and what defense you can use to put a halt to the powers of the NCT.
The Current State of the Private Loan Industry
When it comes to federal student loans lawsuits are quite rare, but does this hold true for private student loans? Federal loans have extensive collection measures which mean they don’t have to take someone to court to collect through wage garnishment or even tax return or SSI offset.
Judging by the actions taken by large institutions such as the NCT, it’s apparent that the story is much different. When it comes to the private loan industry, lawsuits are very common.
Why Are Lawsuits So Common for Private Loans?
Unlike federal loans, lawsuits are far more common for private loans because they’re the main source of collection for private lenders. Whereas federal loans come equipped with many tools of collection that can be administered without the courts – private lenders don’t have much of a choice and have to solely rely on lawsuits to collect.
With that said, if you’ve been served a lawsuit – the worst thing you can do is ignore it. This may prove to be common sense, but a lot of borrowers make the fatal mistake of simply discarding the lawsuit paperwork – this is clearly the wrong approach because it will almost always result in a default judgment followed by potential wage garnishment or other forced collection activity.
So if you shouldn’t ignore the lawsuit, what should you do?
You need to defend yourself with the help of a licensed attorney. There are quite a few defenses attorneys for students and graduates raise in court – the most common of which are included below:
–The defendant paid the outstanding balance but it wasn’t recorded by the lender
–The defendant does not owe the outstanding debt
–The private lender failed to calculate the correct amount outstanding
–The private lender is demanding more than the defendant initially agreed to pay
–The defendant never agreed to pay the outstanding debt
–The private lender waited too long to file a lawsuit
Although the above defenses may work in certain cases, the reality of the situation is they haven’t consistently worked against the NCT. So if the above defenses aren’t fit for success – what’s the best defense to put forth in court?
According to lawyers who have successfully defended their clients against the NCT – the most effective defense is that of standing.
What Does This Mean? And How Can You Use it to Beat the NCT?
In order to successfully use this defense, you must first realize that the NCT actually may not have a contractual relationship with you – you can use this fact to your advantage by raising the question of whether or not the NCT actually owns your particular loan and whether they have all the required SEC documentation to prove this. While it is rather easy for a lender like NCT to meet the FDCPA Validation requirements, the more complex SEC forms required by a good consumer defense attorney during litigation can prove more problematic for them to produce.
So if you’ve been served a lawsuit from the NCT – the number one thing you should do is hire an experienced lawyer. If you’re going to seek representation, you must make sure your lawyer is experienced with cases involving the NCT.
It’s true that going to court against the NCT can be frightening, especially since you don’t have many options in your corner, but if you keep the above points in mind – you can greatly level the playing field and come out victorious against the NCT in court.
If you’ve already received a judgment (lost a lawsuit), it is likely that it can be settled by an experienced NCT debt negotiator without the help of an attorney. If you have an NCT account that is not yet in litigation, it can also be settled by an experienced debt negotiator. Check out our homepage slideshow for many of the NCT settlements I’ve negotiated in the past.
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