Transworld Systems Named in Another Lawsuit Alleging Student Debt Collection Scheme

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A proposed class action lawsuit that piggybacks on similar allegations made against Transworld Systems, Inc. in August alleges the debt collection company and co-defendant Shermeta Law Group PLLC engage in the practice of attempting to collect defaulted student loans by filing lawsuits against Michigan consumers even though no proof or chain of title exists between the loans’ original lender—National Collegiate Student Loan Trust (NCSLT)—and the defendants.

Citing the same New York Times investigation as the previous case, the lawsuit at hand notes that after the August case was filed, the Consumer Financial Protection Bureau on September 18 took action against non-defendant NCSLT and Transworld Systems over their alleged habit of filing illegal student loan collection suits against Michigan consumers. 

“Michigan consumers like [the plaintiff] are being sued by NCSLT companies based on false proof they owned the debts they were suing upon,” the lawsuit explains.

According to the lawsuit, a proposed judgement in the matter calls for an independent audit of all 800,000 student loans in NCSLT’s portfolio and calls for the trust to pay $19.1 million, and Transworld Systems to pay $2.5 million.

 Per Shermeta Law Group PLLC’s alleged role, the lawsuit claims Transworld Systems directs law firms like Shermeta to “pursue Michigan consumers through collection lawsuits” despite a lack of ownership of the debts being sued upon.

“Defendant [Transworld Systems] and the defendant law firm are behind a state-wide scheme designed to eliminate the ‘burden’ in Burden of Proof and deceive Michigan residents into paying or settling a defaulted private student loan in state courts where the plaintiff NCSLT lacks proof of ownership and assignments in creating material and false representations to support computer template lawsuits that lack supporting documentation in violation of the [Fair Debt Collection Practices Act], [Regulation of Collection Practices Act], and [Michigan Occupation Code],” the complaint summarizes.