As the economy begins to reopen and state courts start to resume operations, more debt collectors are filing private student loan lawsuits against borrowers in default this year. If you’re facing a private student loan lawsuit, don’t panic. Here are some key tips.
Student Loan Lawsuit: Who Is Suing You?
Your first task is to figure out who sued you, and whether you recognize the student loan that is the subject of the suit. It is common for borrowers to have many different student loans. Some may be federal student loans, and others may be private student loans. But federal student loan lenders rarely file collections lawsuits in state court because they have other collections powers available that may make litigation unnecessary. Furthermore, federal student loan payments and collections are currently paused through September, anyway.
To make matters even more confusing, private student loan lenders often outsource operations and servicing to third-party contractors. Sometimes, they sell or transfer your student loan to a new loan holder. So understanding who filed the lawsuit, and what specific loan account is the subject of the suit, is a critical first step. Some of the most recent student loan lawsuits in Massachusetts have been filed by National Collegiate Student Loan Trust and Massachusetts Educational Financing Authority (MEFA).