Increasingly, private student loan companies are stepping up collections activities in Massachusetts against borrowers who are in default on their private student loans, including by filing lawsuits against borrowers in Massachusetts state courts. As a result, many borrowers facing collections lawsuits are looking for a student loan lawyer for counsel or representation.
Federal student loan collections activity remains paused due the ongoing Covid-19 moratorium. The student loan pause has suspended most federal student loan payments and interest and stopped collections activity since March 2020. That relief is currently set to end later this summer.
But private student loans are not covered by this federal debt relief. And unlike federal student loans, private student loan lenders typically must resort to a collections lawsuit in state court to try to force a borrower to pay on an unpaid loan. That’s because private lenders do not have the same administrative powers that federal student loan lenders do, such as Administrative Wage Garnishment (garnishing wages without a court order) or Treasury Offset (which can seize a borrower’s federal tax refund or a portion of Social Security benefits). Private student loan lenders need a judgment, and to get a judgment, they have to file a lawsuit.
Here’s what’s going on.
Massachusetts Educational Financing Authority (MEFA) Lawsuits
The Massachusetts Education Financing Authority (MEFA) is a quasi-public state-created nonprofit organization that originates private student loans. Many of these private student loans are cosigned by others, often a family member. MEFA loans don’t always have a lot of flexibility when borrowers encounter financial hardships, and they can easily go into default when payments are missed.
Once a loan goes into a default status, MEFA typically places the loan with Zwicker & Associates, a debt collections law firm based in Andover, Massachusetts (but with offices throughout the country). MEFA and Zwicker routinely file collections lawsuits against borrowers in courts throughout Massachusetts.
National Collegiate Student Loan Trust Lawsuits
National Collegiate Student Loan Trusts (NCSLT) are a collection of Delaware-based organizations that typically have acquired private student loans originally issued by other lenders through a process called assignment. NCSLT also routinely files collections lawsuits against borrowers. NCSLT must be able to demonstrate the validity of any claimed assignment and show that a borrower’s specific account was transferred to them from the original lender.
For years, NCSLT was represented in Massachusetts by two primary collections law firms: Solomon & Solomon, P.C. based in Albany, New York; and the Law Office of Gary Kreppel, based in Massachusetts. However, both of those firms have now closed.
Recent NCSLT collections lawsuits now appear to be primarily handled by Ratchford Law Group, a collections law firm based in Pennsylvania but with satellite offices in several other states, including Massachusetts. Ratchford Law Group also appears to be collecting on older NCSLT accounts that were previously handled by either Solomon & Solomon or the Law Office of Gary Kreppel.
Sallie Mae and Navient Student Loan Lawsuits
After a lull, during which I wasn’t seeing many collections lawsuits filed against borrowers for defaulted student loans that were originated by Sallie Mae or Navient, there now appears to be a gradual uptick in these cases.
Like NCSLT, some of these lawsuits seem to involve third-party entities that acquired these accounts through an assignment or chain of assignment. In those cases, the current account owner must be able to provide adequate evidence of such a transfer. It appears that at least some of these new lawsuits are being handled by the Law Offices of Howard Lee Schiff, based in Connecticut.
When To Seek A Student Loan Attorney
If you’re facing a student loan lawsuit, one of the most important things to know is that a response to that lawsuit — either an Answer, or a Motion to Dismiss — typically must be filed within 20 days of when you were served with a Summons. Failure to do so could result in you losing the case and having a judgment entered against you, without the ability to defend yourself or dispute the debt. Once the lender has a judgment, they can pursue other avenues of collection, such as liens and wage garnishments.
Massachusetts does not have a specific rule that requires someone to have an attorney when they are sued in state court. And some people might be comfortable handling the case entirely on their own.
But given what’s at stake, a student loan lawyer might be able to help you by providing counsel and advice, raising defenses, helping you draft documents, or representing you from start to finish as the lawsuit progresses.
Massachusetts allows for two general forms of representation that an attorney can provide. A traditional form of representation involves the attorney being “retained” on an ongoing, continual basis. In such an engagement, the attorney can draft and file documents on the client’s behalf, attend court hearings, and engage in negotiations. Massachusetts also provides for “Limited Assistance Representation” (LAR), where a client can hire an attorney for a specific, discreet and limited task only. This can be more affordable than a traditional form of representation, and gives the client more control over their case. But LAR also puts the onus on the client to handle the bulk of their matter on their own, particularly if they are only going to use LAR as it is intended — for a few, limited tasks.