National Collegiate Student Loan Trusts Consumer Actions

Seaman et al. v. National Collegiate Student Loan Trust 2007-2 et al.

Bifulco et al. v. National Collegiate Student Loan Trust 2004-2 et al.

Frank llp is litigating a class action against National Collegiate Student Loan Trust 2004-2, National Collegiate Student Loan Trust 2006-4, National Collegiate Student Loan Trust 2007-2, and National Collegiate Student Loan Trust 2007-3 (together, the “Trust Defendants”); Transworld Systems, Inc. (“Transworld”), in its own right and as successor to NCO Financial Systems, Inc. (“NCO”), and EGS Financial Care Inc. (“EGS”), formerly known as NCO Financial Systems, Inc. (together, “TSI-NCO”); and Forster & Garbus LLP (“Forster”) (collectively, “Defendants”).

This case began with complaints filed in 2018 in the United States District Court for the Southern District of New York. Through orders dated March 13, 2023 and September 7, 2023, that court certified the following class under Federal Rule of Civil Procedure 23: “All persons have been sued in New York State court debt collection lawsuits where the plaintiff was one of the Trust Defendants, with TSI-NCO acting as servicing agent and Forster as plaintiff’s counsel, and where a default judgment was obtained, from November 1, 2012 through February 7, 2018. From this class shall be excluded any individual who (i) appeared and litigated in state court after entry of the default judgment, (ii) succeeded in setting aside the default, but (iii) thereafter had judgment entered against him or her after dispositive motion practice or trial.” The court appointed Frank llp as class counsel.

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UPDATE: The court has scheduled a conference with the case’s attorneys for August 7, 2024, to discuss issues related to facilitating notice to individuals identified as class members. Please check this website later for further information about the case.

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There are least fifteen National Collegiate Student Loan Trusts (the “National Collegiate Trusts”), including the four Trust Defendants presently named in these actions. Although consumers might assume that the National Collegiate Trusts directly lend money for student loans, they actually do not. Rather than originating loans, the National Collegiate Trusts are the ultimate owners of bundles of student loan debt following a complex securitization process. These debt-bundles now total $12 billion, with more than $5 billion now classed as in default.

The National Collegiate Trusts — which have no employees — use Transworld to attempt to collect debts allegedly owed on these student loans. Transworld coordinates with law firms throughout the country, including Forster, to file debt-collection lawsuits against consumers in state courts. In the past three years more than 38,000 such actions have been filed.

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 couldn’t 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-specifically, 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 robosign the affidavits without reviewing any such evidence.

The claims on behalf of the class in this case allege that the Defendants’ misconduct amounted to violations of, among other law, the Fair Debt Collection Practices Act (“FDCPA”) and the New York General Business Law (“GBL”).

If you have questions about this case, please contact us.

Contact:
Frank llp
Gregory A. Frank
(800) 497-8076
(212) 682-1853
investigations@frankllp.com
www.frankllp.com