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.
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.
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, their paperwork isn’t that good. Oftentimes, 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.” In order to bring suit in a New Jersey court, you have to prove that you are the wronged party, that you are 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.
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. But when it comes to businesses like corporations and LLCs, it can be a sticky point 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 not from New Jersey. You can if you registered with the NJ Secretary of State as a foreign corporation and file annual tax returns.
The problem is, 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 systems to bring suit.
In effect, the law is saying that you are doing business in New Jersey, 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!
They Probably Can’t Prove Their Case
Even if NCT could establish standing, and paid 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 is the best move you can make!
So What Do I Do?
If you live in southern New Jersey and are being sued by National Collegiate Trust, I may be able to be of assistance. Please feel free to call me at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office to discuss your case.
If you would like more information about the collection process in New Jersey and why many creditors can't prove their case, you can download my free book, The Biggest Secrets Your Creditors Don't Want You to Know.
If you would like more information about student loans, you can dowload my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.