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$12 Billion In Private Student Loan Debt May Be Wiped Away By Missing Paperwork (nytimes.com)
New submitter cdreimer shares a report from The New York Times (Warning: source may be paywalled; alternate source): 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. Judges have already dismissed dozens of lawsuits against former students, essentially wiping out their debt, because documents proving who owns the loans are missing. A review of court records by The New York Times shows that many other collection cases are deeply flawed, with incomplete ownership records and mass-produced documentation. Some of the problems playing out now in the $108 billion private student loan market are reminiscent of those that arose from the subprime mortgage crisis a decade ago, when billions of dollars in subprime mortgage loans were ruled uncollectable by courts because of missing or fake documentation. And like those troubled mortgages, private student loans -- which come with higher interest rates and fewer consumer protections than federal loans -- are often targeted at the most vulnerable borrowers, like those attending for-profit schools.
At the center of the storm is one of the nation's largest owners of private student loans, the National Collegiate Student Loan Trusts. It is struggling to prove in court that it has the legal paperwork showing ownership of its loans, which were originally made by banks and then sold to investors. National Collegiate is an umbrella name for 15 trusts that hold 800,000 private student loans, totaling $12 billion. More than $5 billion of that debt is in default, according to court filings.
At the center of the storm is one of the nation's largest owners of private student loans, the National Collegiate Student Loan Trusts. It is struggling to prove in court that it has the legal paperwork showing ownership of its loans, which were originally made by banks and then sold to investors. National Collegiate is an umbrella name for 15 trusts that hold 800,000 private student loans, totaling $12 billion. More than $5 billion of that debt is in default, according to court filings.
It's not bullshit. Any creditor has to be able to prove that you owe them money. it doesn't require a "special kit". It just requires standing up for yourself.
Don't trust a bill just because someone sent it to you. It could be a billing error or blatant fraud. Scam artists send out small medical bills betting on the mark being diligent enough to pay their bills but not anal enough to track everything they do.
Hospitals screw up bills more often than not.
A whole batch of mortgages were nullified in Texas because the proper paperwork was never filed with the relevant government body. The Yankee corporation in question thought they didn't have to bother. Didn't go over will with the Texas judge in question.
A Pirate and a Puritan look the same on a balance sheet.
On the other hand, _if_ the lender can't demonstrate you owe them, couldn't it be that they no longer own the loan? What happens if you pay them and it turns out someone else bought the loan and now wants to be paid? I'm guessing there are scenarios where you'd end up paying twice.
You should pay your legitimate bills, but its reasonable to make sure you are paying the correct party to protect yourself.
In the article, it clearly states that like the mortgage boom, student lending also suffered from the same lax paperwork that plagued some mortgages. Invest companies were in such a hurry to buy loans that they didn't keep up with the paperwork or good record keeping. In a few cases mentioned in the article it's not just a matter of the person getting off free; the bad records meant the borrower trying to levy penalties for loans that the borrower never made. So then the lender has to prove that they own any of the loans but they can't prove it.
Well, there's spam egg sausage and spam, that's not got much spam in it.
This sounds like a bunch of creditors that cannot show that the debtors owe those particular creditors those particular obligations. Ergo, the obligations cannot be assumed to be legitimate.
The borrower may owe someone, but they don't necessarily owe the plaintiff. If the original creditor isn't interested in collecting on the debt (because they've already sold it off) or helping the successor creditor fix their colossal screw-up, that's not on the debtor.
Ah, you're confusing legality and ethics. Legality relates to obligations specified by law and enforced by courts. Ethics relates to "feels," the dictates of invisible men in the sky, and anything that you can throw at a wall that advantages you at the time.
For example, ethics would say that private loans that were dischargeable in bankrputcy prior to 1998 should have remained so, and not been converted into non-dischargeable obligations by an after-the-fact change in the law. That was the bargain struck when the loans were made, right? Or is yours merely a creditor's ethics, where any discharge of a debt is the failing of a weak society rather than a penalty for creditors who fail to ensure that a debtor was credit worthy and/or a manifestation of the risk side of the risk/reward equation?
Proof required. Show me a substitute investment that is not dischargeable in bankruptcy, has an equivalent rate of return, and is virtually unregulated.
The end result will be a bunch of beneficiaries will sue a bunch of trustees responsbile for administrating the loan trusts for being incompetent idiots, and future, somewhat more competent trusts will arise to accept capital that is desperate for anyplace to go that is paying better than T-bill rates of return (2-3%).
Account for yourself
By your logic, anyone can claim that you owe them money and not have to provide any evidence. I owe student loans but not to XYZ Corp. According to you I should just pay them. Wait, ABC Corp says I owe them the money, should I pay them too. The bare minimum these companies had to do was to keep up with paperwork. Why do you make them also equally accountable? Or are you just beholden to a corporation?
, assuming you learned basic math with your education.
I learned basic math but I seem to be more versed in the law than you. You have to prove what you say in court. If you can't then the court doesn't have to believe you.
Well, there's spam egg sausage and spam, that's not got much spam in it.
The issue is that the holder of the loans have been passing it around like crabs in a frat house and no one knows whose faul... errr owns the loans.
Chances are the borrowers weren't informed at every step, and even if they did communication claiming to own a loan and to pay someone else now is a classic scam.
well I think that's the problem. They don't have the paper.
It's also not simply people lying to get out of loans, it's courts fed up with high pressure tactics to get payment on loans that were never made! Then when they are contested the loan companies dont' show up in court. It's the courts that are invaldating the loans for their own purposes not just because people are trying to weasle out
from the article:
“I tried to be honest,” Ms. Watson said of her court appearance. “I said, ‘Some of these loans I took out, and I’ll be responsible for them, but some I didn’t take.’”
In her defense, Ms. Watson’s lawyer seized upon what he saw as the flaws in National Collegiate’s paperwork. Judge Eddie McShan of New York City’s Civil Court in the Bronx agreed and dismissed four lawsuits against Ms. Watson. The trusts “failed to establish the chain of title” on Ms. Watson’s loans, he wrote in one ruling.
When the judge’s rulings wiped out $31,000 in debt, “it was such a relief,” Ms. Watson said. “You just feel this whole weight lifted. My mom started to cry.”
Some drink at the fountain of knowledge. Others just gargle.
Do this to fix your country:
Tax the rich to provide education for everyone and tax inheritance agressively.
Take away power from corporations.
Cut military spendings to 1/10.
It seems the rest of the paragraph explains the contradiction.
If you think I voted for Trump because of this post, you're wrong. I voted for Dr. Jill Stein of the Green Party. Again.
Really, the borrower has no responsibility to track the loan, it's all on the lender?
Yep. Otherwise, I as the supposed lender can demand that you start repaying that 500k loan I claim that you took out and according to you, the onus is on you to prove that there never was a loan.
SJW n. One who posts facts.