Debt Collectors Accused of Filing False Lawsuits to Collect Student Loan Debt

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National Collegiate Student Loan Trust 2007-2; National Collegiate Student Loan Trust 2007-3; Transworld Systems, Inc.; EGS Financial Care Inc.; and Forster & Garbus LLP have been named as defendants in a proposed class action that claims the defendants filed lawsuits in an attempt to collect on defaulted student loans “that they cannot prove they are owed.”

According to the suit, the defendants – a group of purported creditors and debt collectors – claim in each of the court filings that one of the Trust defendants is “the original creditor” and that the defendants are “authorized to proceed with this action,” despite knowing they cannot produce proof of ownership. Moreover, many of the debts at issue cannot be sought through litigation because their statutes of limitations have expired, the case argues.

The complaint alleges the defendants violated the Fair Debt Collection Practices Act by engaging in the following “unfair and abusive practices”:

• filing lawsuits without sufficient proof of their claims;
• obtaining default judgments against consumers or “extracting settlements from them” based on false representations;
• falsely claiming the Trust defendants were “authorized to proceed” with the actions;
• failing to identify consumers’ creditors and falsely stating a Trust defendant was the “original creditor” when the defendants do not offer any student loans whatsoever and only purchase defaulted debts;
• filing complaints signed by an attorney when no attorney had reviewed the details of each particular case;
• filing affidavits in which the affiant falsely claimed to have “personal knowledge of proof of indebtedness”; and
• reporting false, negative credit information about consumers.