We often write about National Collegiate Student Loans in this blog but it is usually in the context of a lawsuit or when it is in the judgment phase. However, sometimes we are retained on cases that are in collection which are pre-litigation or before a lawsuit is brought. NCSLT is one of the largest student loan lenders in the country. They pursue thousands of student loan debtors every year by means of collection, litigation, and post-litigation judgment enforcement. Pre-litigation collection is usually the first step for NCSLT to collect on a delinquent or defaulted private student loan. Usually they will send the matter for collection to a collection agency like Transworld Systems. The collection agency will then pursue collection for months or even years before NCSLT will finally decide to pursue litigation.
Recently we were retained on such a matter where the debtor was in default on a NCSLT private student loan for $90,000. The matter was sent to collection to Transworld Systems. The client was being called at home and at work multiple times daily. The collector was even reaching out to family members to reach the client. These sort of collection tactics are used to pressure, scare and embarrass consumers into making payments. In this case the collectors even gave the consumer an ultimatum of making payments or otherwise face a lawsuit. Litigation is the next step in these matters but ultimately NCSLT makes the decision to sue. NCSLT had notice that we were retained in this matter and decided to settle for $38,000 in affordable interest free installments saving our client a good deal in principle and interest as well as potential litigation fees. This decision may have been because of a cost benefit analysis on behalf of the creditor. Sending the matter to litigation would mean retaining a collection law firm like Forster and Garbus which means spending more money on legal fees knowing that the consumer is going to be defended by an attorney preventing a default judgment from being obtained. The uncertainty of litigation and recovery of any money combined with high cost may provide the necessary leverage to negotiate with a creditor like NCSLT to obtain an affordable settlement for the consumer which is exactly what we are able to do in most of these situations.