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).
Keep in mind, as well, that the law firm or attorney filing the lawsuit on behalf of the private lender probably does not own the debt. The attorney is simply acting as the legal representative, and is handling the legal action on behalf of the lender or loan holder.
The student loan holder that initiates the lawsuit is called the Plaintiff. The Defendant is the target of the lawsuit. Note that a single lawsuit can be filed against multiple Defendants. So, it’s not uncommon to see cosigners named in the lawsuit as well as the original borrower.
Deadlines To Respond To The Student Loan Lawsuit
In Massachusetts, Defendants have 20 days after being served with a Summons to file a response. The response — called an Answer or a Motion to Dismiss — is your opportunity to tell your side of the story to the student loan lender and to the Court, or to dispute the assertions that the student loan lender is making in their lawsuit. A Motion to Dismiss, which is a request that the Court reject the lawsuit entirely, can only be filed under very specific circumstances, such as where the student loan lender filed the lawsuit in the wrong court, or it has a severely defective claim. So most Defendants choose to file an Answer.
Failure to file an Answer on time can result in you losing the lawsuit. So it’s very important to respond within the allowable timeframe. If you need more time to respond, you may be able to request an extension.
Raise Defenses In Response To The Lawsuit
Just because a student loan lender is suing you doesn’t mean that all is lost. You have a right to raise legal defenses in response to the lawsuit. For example, the Plaintiff may have waited too long to sue you under state law. Or perhaps the lender has not provided proof of a valid contract, or it hasn’t supplied adequate evidence of a transfer or assignment of that contract from the original lender to the Plaintiff.
It’s not only smart to raise valid legal defenses in response to a student loan lawsuit — it’s important. If you don’t raise your defenses in your initial Answer or Motion to Dismiss, you may not have the opportunity to raise them again later.
Hire An Attorney To Defend You
If you’re facing a student loan lawsuit, you don’t have to hire a lawyer. But it can certainly help. Court rules and student loan laws are complex and confusing. Facing judges and opposing attorneys is intimidating. Having someone advocating for you may reduce your stress and increase the chances of a good outcome.
And there may be several options for legal representation. In Massachusetts, you have the ability to hire an attorney for ongoing representation. But you may also have the option to hire an attorney for a specific, limited purpose, such as a legal consultation, assistance with drafting a response, or appearing at a specific court hearing. If you’re in need of a student loan defense attorney, a good place to start would be the National Association of Consumer Advocates.