If you have a private student loan here in New Jersey and fall into default through failure to make payments, you may have received a demand letter or even a lawsuit from an outfit called National Collegiate Trust (NCT). You may also have received correspondence from an outfit called AES, American Education Services.

National Collegiate Trust Is Collecting a Student Loan

This entity is trying to collect the student loan from you. The confusion comes in when you realize that you never borrowed money from them, and the lawsuit does not provide very much information about how they fit into the picture. This is because there are three things that they don’t want you to know.

1. They Probably Can’t Prove They Own the Debt

National Collegiate Trust is a debt buyer. It is a family of trusts out of Delaware that buys up defaulted loans from private lenders and then turns around and sues the borrower. The problem is that their paperwork isn’t that good. Often, although they can provide paperwork that they bought an inventory of loans from a particular bank, they cannot prove that they bought YOUR loan.

Being sued by National Collegiate Trust in New Jersey? You may well be able to beat the suit! Call me today at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office.

This leads to a problem in court regarding “standing.” To bring suit in a New Jersey court, you have to prove that you are the wronged party and the one to whom the money is owed. Although this was originally the bank from whom you borrowed the money, NCT has to prove that that right was transferred to it. Without standing, their suit can be dismissed.

2. They Don’t Have the Right to Sue in New Jersey

The New Jersey court system is funded by taxpayer money. Thus, it is something that taxpayers can use to address grievances by bringing suit. For individuals, it is usually not an issue. However, it can be a sticky point when it comes to businesses like corporations and LLCs if said business was not formed in New Jersey.

Businesses formed here pay taxes here. But what if you are an out-of-state corporation doing business in New Jersey, and one of your business deals goes south, and you need to bring suit? Can you do it if you are from somewhere other than New Jersey? You can if you register with the NJ Secretary of State as a foreign corporation and file annual tax returns.

The problem is that the trusts within NCT are Delaware Trusts that, as of this writing, are not registered foreign corporations! Under New Jersey law, therefore, they cannot use the court system to bring suit.

In effect, the law is saying that you are doing business in New Jersey and making money in New Jersey but are not paying taxes in New Jersey. But you want to use a taxpayer funded system to help collect some of that money!

3. They Probably Can’t Prove Their Case

Even if NCT could establish standing and pay all of the back taxes to become a registered foreign corporation, it may not be able to prove its case in court if you contest it. This is because they purchase these loans in bulk and often do not have the paperwork necessary to prove their case.

This means having the original loan documents, an accurate payment history, and the affidavits necessary to get them admitted under our rules of evidence.

Like most debt buyers, when push comes to shove, their case turns out to be a house of cards. Filing an answer and challenging their suit can lead to dismissal or a very favorable settlement that is affordable to you. So, as you can see, filing an answer to the lawsuit with the help of an experienced New Jersey student loan lawyer is the best move you can make!

Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.