Faced with lawsuits for thousands of dollars you may not actually owe, just when you thought you’d paid off your student loans. It’s happening to people across the country and more and more here in metro Detroit.
It’s the American Dream: a husband, a wife, kids, a house, a job, a college degree, student loans paid off.
"Every bill is paid on time it's just how I am," says Robert Chludzinski. He thought he was at a good place in life.
"I'm very organized very detailed I don't let things slip through the cracks," he says.
Then he was blindsided by National Collegiate Student Loan Trust with 5 separate lawsuits totaling $80,000.
"Just shock. You just look at it and you think, what do I do now?" says Chludzinski.
He called Attorney Daniel McCarthy with Lippitt O'Keefe Gornbein in Birmingham, MI.
McCarthy says across the country, thousands of college graduates are getting sued 10 or more years after school by a company they've never heard of. Most truly thought they were paying off all their loans.
"They have no idea! They believe that whatever money they borrowed is all rolled up in these repayment packages," says McCarthy
How does a loan fall through the cracks for a decade??
"They are not being notified," says McCarthy.
It begins your senior year of high school. You fill out financial aid forms at the college of your choice, then a bank you're familiar with offers you a small private loan to supplement the federal loans, you graduate from high school and go off to college.
Meanwhile, the bank sells your loan to First Marblehead Corporation. First Marblehead sells the loan again and it eventually ends up in the hands, allegedly, of National Collegiate Student Loan Trusts, an entity that allegedly doesn't notify you until they're ready to sue you.
And good luck trying to reach out to them.
"The National Collegiate Student Loan Trusts are no different than a piece of paper that's filed in Delaware somewhere! They don't have any employees, no officers, no directors, no managers, they don't have a door," says McCarthy.
The trusts belong to First Marblehead, the initial purchaser of the loans. So, why wouldn't they notify borrowers? McCarthy points out, defaulted loans are insured.
Meanwhile, the trust entities try to collect in court the loan, plus interest, plus late fees etc., often without paperwork to back the enormous financial claims.
McCarthy says the court documents are flawed at best. For example he discovered numerous notarized legal documents supposedly signed by 'legal case manager Dudley Turner' that each have vastly different signatures.
"You don't need to be a handwriting expert to know that 3 completely different human beings provided these signatures," says McCarthy.
Many of McCarthy's cases have been dismissed, the debt erased. But many other cases across the country end in default judgments. He says the only way to win, is to fight it in court.
Most victims in this student loan debacle took out private loans between 2004 - 2007, but if you receive a lawsuit from National Collegiate Student Loan Trusts or Transworld Systems, McCarthy says you should call a lawyer, it's your best hope for keeping your credit clear and erasing alleged debt.
To avoid this legal mess he says future students should avoid private loans and not rely solely on financial aid offices for advice.
"Let's face it, they have a vested interest in collecting tuition dollars. They don't care where the money comes from, " says McCarthy.
The Consumer Financial Protection Bureau is taking action against the National Collegiate Student Loan Trusts and their debt collector, Transworld Systems, Inc., for illegal student loan debt collection lawsuits asking a judge to order an independent audit of all 800,000 loans currently held and more than 20 million dollars in restitution.