One of the state attorney generals suing Navient said “[t]hese loans were designed to fail . . .”

According to new details from the state lawsuits, Navient allegedly used subprime loans as part of an overall business strategy. Subprime loans, notably, are part of what fueled the mortgage crisis in recent years.

Navient was sued earlier this year by the CFPB

Earlier this year, Navient was sued by the Consumer Financial Protection Bureau, alleging that “Navient has failed to perform its core duties in the servicing of student loans, violating Federal consumer financial laws as well as the trust that borrowers placed in the company.”

The allegations included a laundry list of complaints about how Navient provided service (or lack thereof) to student loan borrowers. In other words, that lawsuit alleges that Navient did not provide proper service to consumers that already had student loans.

The state lawsuits allege Navient issued loans to borrowers that were highly likely to default

The two state lawsuits appear to aim even deeper–by alleging that Navient apparently had a business strategy built around issuing loans that it knew borrowers were unlikely to repay.

According to an internal memo that was cited in the Illinois lawsuit, Navient used private loans to build relationships with various colleges and lenders across the country. Navient allegedly expected that the subprime private loans would have default rates as high as 92 percent.

According to that same internal memo, Navient would then use those loans to obtain more federal loans as part of an overall business strategy.

What’s the benefit of federal loans? Those loans are guaranteed by the federal government in the event of default. And they also cannot be discharged in bankruptcy.

Keep tabs on both lawsuits

Right now, all of the lawsuits are active and unresolved. Navient is denying the allegations. That said, the outcome of one of both of these lawsuits could impact a huge number of student loan borrowers.

With that in mind, keep close tabs on both lawsuits. And if you need help with student loans—from Navient or elsewhere—be sure to contact a consumer rights attorney for assistance.

The post Lawsuits Allege Navient Issued Loans Designed to Fail appeared first on Minnesota Consumer Attorney.

According to data from the Department of Education, student loan defaults increased at least 17% between 2015 and 2016. And in terms of real consumers, with real loans, that represents an additional 600,000 borrowers that defaulted on their student loans.

Significant increase in number of student loan defaults

In 2015, approximately 3.6 million borrowers were in default on their student loans. At the end of 2016, that number had risen to approximately 4.2 million borrowers.

According to the data, 1.1 million borrowers either defaulted, or defaulted again on their student loans.

The reasons for increased defaults are unclear

There are more options for student loans than ever before. From income-based repayment options, to public service loan forgiveness, to deferment and forbearance options.

That said, there also appears to be a recent surge in government action against companies that service student loans, and collect on student loans in default.

For example, GC Services was sued for improper student loan collections. The company allegedly continued to collect from the wrong people, and also revealed debts in voicemails to the wrong people.

And Navient was sued for how it serviced student loans. Specifically, Navient allegedly failed to steer borrowers towards the best repayment plan options, and allegedly failed to provide disclosures about certain renewal deadlines for some repayment options.

Good information can be hard to obtain

In my practice, I have seen a surge in borrowers that are misled by private companies that allegedly offer to help borrowers get out of default. Some companies charge a fee to help borrowers get enrolled in the “Obama loan forgiveness program.” That program doesn’t exist.

In all likelihood, it references one of the many income-based-repayment plans that was enacted during the Obama administration. Those plans, however, are administered by the federal government. And while the paperwork may not always be easy, it is designed to allow all borrowers to enroll on their own. In other words, consumers don’t need to pay a third party to get access to these benefits–they already have access to them.

If your loans are in default, contact an attorney

I have no doubt there are some private companies that provide good advice to student loan borrowers. I also have no doubt that it is impossible to distinguish the good companies from the bad ones. And I also tend to think there are way more bad companies that good ones.

If you have questions about defaulted student loans, you can contact an attorney, like me, that specializes in student loan issues. I have seen just about every scenario that you can imagine. I also sue companies that misrepresent borrowers rights, and I regularly defend student borrowers in student loan lawsuits.

I live in the world of defaulted student loans. And I can help. Feel free to contact me today to see how I can help you.

The post Student Loan Defaults Increase in 2016 appeared first on Minnesota Consumer Attorney.

The lawsuit alleges that GC Services repeatedly contacted third parties about someone else’s debt and even continued to call after promising to stop calling. In addition, the lawsuit alleges that GC Services left improper voicemails for consumers that resulted in a consumer’s debt being revealed to other people.

GC Services and the Federal Trade Commission have agreed that GC Services will pay a $700,00 civil penalty as part of a resolution of the lawsuit. This is the second time this year that a major student loan collector has been in the news for debt collection of student loans.

GC Services Collects Lots of Debts

According to the lawsuit, GC Services serviced more than 2 million accounts in 2014. That resulted in approximately $1.2 billion dollars in collected funds, resulting in revenues of approximately $133 million dollars.

The lawsuit also states that GC Services has 7,600 employees, and in 2014, approximately 1,400 of them were engaged in collection work.

GC Services Allegedly Called Third Parties Repeatedly

Under the Fair Debt Collection Practices Act (FDCPA), debt collectors are not allowed to call a third party more than once. In other words, if you receive a call about someone else’s debt, and tell a debt collector they have the wrong person, they are supposed to stop calling you.

The lawsuit alleges that GC Services did the opposite — it continued to call third parties after being informed they had the wrong person or that the person they are trying to reach is not at that particular number.

In fact, the lawsuit alleges that GC Services told some individuals they would stop calling, or would take steps to remove their phone number. However, the lawsuit alleges that GC Services continued to call third parties after promising they would stop.

GC Services Revealed Consumer Debts in Voicemails

The lawsuit also alleges that GC Services left voicemails that identified the consumer and indicated they were calling in connection with collection of a debt.

The problem, as noted in the lawsuit, is that some of these messages were left on voicemails that did not identify whether it was the consumer’s phone. In other words, the lawsuit alleges the voicemails may have been heard by someone other than the intended consumer — and therefore had the result of revealing the debt.

Revealing a Debt and Calling Third Parties Repeatedly are Illegal

A debt collector cannot reveal your debt to other people (with very limited exceptions – like your spouse). In addition, a debt collector cannot call a third party repeatedly unless that person requests additional calls.

If a debt collector tells someone else about your debt, a debt collector may have broken the law. And if you have received repeated phone calls about someone else’s debt, a debt collector may have broken the law.

The good news is that federal law not only protects the consumer that owes the debt, federal law protects anyone impacted by unfair or illegal debt collection activity.

If you have concerns or questions about debt collection calls that you have received, contact me today for a free case evaluation.

The post GC Services Sued for Improper Student Loan Collections appeared first on Minnesota Consumer Attorney.

Despite these restrictions under the Fair Debt Collection Practices Act (FDCPA), debt collectors calling a consumer at work can cause major problems. If you are receiving debt collection calls at work, here is what you need to know.

You can tell them to stop calling you at work

Debt collectors can call you at work. However, once you tell a debt collector to stop calling your work, they must stop. And you can make that request either over the phone or in writing.

In fact, if another employee, or your boss, tells a debt collector to stop calling you at work, they must stop calling as well. They don’t have to say anything special, the law states that once a debt collector knows you do not wish to receive calls at work, or if your employer prohibits them, the debt collector must stop.

If debt collector continues to keep calling you at work, the debt collector has violated the FDCPA.

Debt collectors cannot reveal your debt to your coworkers

Debt collectors cannot discuss your debt, or reveal your debt, to any of your coworkers.

For example, they cannot tell your coworker they are calling about your student loans, or claiming they are calling about a personal financial matter.

The debt collector must verify who they are speaking to before discussing the debt. For example, some employees share phones or phonelines at their workplace. If your coworker picks up the phone, and the debt collector does not confirm who they are and reveals your debt, the debt collector has violated the FDCPA.

Debt collectors cannot leave messages with coworkers

Debt collectors are only allowed to obtain or confirm location information when calling your employer. They can identify the name of their company, but only if someone asks for it.

There is nothing in the law that allows them to leave messages with your coworkers. Even if the message is vague, something like “personal business matter,” most people know that’s a debt collector calling.

Even if your coworker does not know who was calling, it can be embarrassing and uncomfortable when you have to explain to a coworker why you keep receiving strange calls from someone who will not identify themselves.

The law protects you against debt collection calls at work

If a debt collector calls you at work after you asked them to stop, the debt collector has broken the law. If a debt collector reveals your debt to one of your coworkers, the debt collector has broken the law. If a debt collector is leaving messages with your coworkers, they have broken the law.

You get the idea. Debt collection calls to a consumer’s workplace are a frequent area of violations of the FDCPA.

If a debt collector violates the FDCPA, you are entitled to monetary damages, and reasonable attorney fees and costs if your claim is successful. That means most consumer attorneys, like me, can handle the case on contingency. That means you pay nothing upfront out of your pocket, and I only get paid if your case is successful and I recover money for you.

Feel free to contact me today for a free case evaluation.

The post Debt Collectors Calling Work appeared first on Minnesota Consumer Attorney.

The complaint alleges that “Navient has failed to perform its core duties in the servicing of student loans, violating Federal consumer financial laws as well as the trust that borrowers placed in the company.”

The allegations involve both loan servicing and student loan collections

As a bit of background, Navient is the nation’s largest student loan servicer, servicing over 12 million borrowers. Pioneer Credit is a subsidiary of Navient, and Pioneer is responsible for the collection of defaulted student loans. The lawsuit was filed by the Consumer Financial Protection Bureau (CFPB).

In terms of Navient’s loan servicing, the complaint alleges that:

• “Navient steered these borrowers experiencing financial hardship that was not short-term or temporary into costly payment relief designed for borrowers experiencing short-term financial problems, before or instead of affordable long-term repayment options that were more beneficial to them in light of their financial situation.”
• “For borrowers who did enroll in long-term repayment plans, Navient failed to disclose the annual deadline to renew those plans, misrepresented the consequences of non-renewal, and obscured its renewal notice to borrowers who were due for renewal.”
• “Taken together, these practices prevented some of the most financially vulnerable borrowers from securing some or all of the benefits of plans that were intended to ease the burden of unaffordable student debt.”

In terms of Pioneer’s collection of defaulted student loans, the complaint alleges:

• “In seeking to enroll consumers in the rehabilitation program, Pioneer systematically misled consumers about the effect of rehabilitation on the consumer’s credit report and overpromised the amount of collection fees that would be forgiven by enrolling in the program.”

How this lawsuit impacts student loan borrowers

Right now, the allegations in the complaint are just that—allegations. It is possible that the ultimate resolution of the lawsuit could impact consumers.

Of course, it is also possible that the ultimate resolution will have no effect whatsoever. Regardless, it will likely take quite some time for the lawsuit to be resolved.

In other words, the lawsuit is worth keeping tabs on to see if it will impact you down the road.

Perhaps the more important takeaway is that all consumers should pay close attention to their student loans. If you feel something is not right with your student loans, or if you have been contacted by a debt collector about your student loans, its a good idea to talk to an attorney.

When to contact an attorney

Student loans are complicated, confusing, and can feel overwhelming. I can help provide clarity, help you choose a course of action, and feel confident in your situation.

Whether you are dealing with debt collection of student loans, questions about wage garnishment, or understanding your repayment options, feel free to contact me to see if I can help.

The post Navient and Pioneer Credit Sued For Student Loan Issues appeared first on Minnesota Consumer Attorney.

Many times, the debt collector either misrepresents the amount of the debt, or what can happen if you don’t pay it. If you have been contacted by a debt collector about rental debt, here is what you need to know.

You May Not Owe the Rental Debt

Do not assume that if a debt collector is calling, that means you automatically owe a debt, especially when it comes to rental debt. It is very common for a renter to move out thinking that they owe nothing, and then months later hear from a debt collector. For example, a debt collector may later claim that a consumer gave improper notice when moving out, or owes for alleged damage to the property.

It is important to understand the difference between receiving a letter from a debt collector versus a formal lawsuit. A debt collection letter is a demand for money—let’s call it a strongly worded letter. A debt collector can send collection letters and make collection calls, but it cannot forcibly collect money. On the other hand, a lawsuit is a legal action that can result in “forced” collections like a wage garnishment or bank account garnishment. In other words, debt collectors can only request repayment—they cannot forcibly take money from a consumer.

Think back to when you moved out of the property. Did you go through a move-out inspection? Did you get a copy of the paperwork? Did the landlord say you something like “don’t worry about that, you’re fine?”

All of those scenarios are common, and if you kept track of your paperwork, that can help you dispute the alleged debt.

Debt Collectors Cannot Threaten Your Credit Report

Debt collectors frequently make misleading statements and false threats about consumer credit reporting. Those threats are used as leverage to convince a consumer to pay a debt, even if a consumer disputes the debt.

There are a number of false threats to be wary of. One, a debt collector may threaten to report the debt even if a consumer disputes the debt. Or they may threaten to report a false amount. Or a debt collector may threaten to report it without reporting the debt is disputed. Any inaccurate credit reporting can violate both the Fair Debt Collection Practices Act (FDCPA) and/or the Fair Credit Reporting Act (FCRA).

Two, a debt collector may claim that once reported, the debt will never go away. That is false for a number of reasons. Items on a credit report can only be reported for a set amount of time. In addition, disputing a debt can result in the reporting party removing it from a consumer’s credit report.  Again, this type of statement would likely violate both the FDCPA and FCRA.

Three, some debt collectors claim that once a debt is reported on your credit report, you will never rent another place again. That is blatantly false. Having an unpaid debt on your credit report can make renting difficult, but claiming renting is impossible is a stretch. Unless the debt collector has spoken with every potential landlord in the consumer’s town, that type of claim is also violative of the FDCPA.

Debt Collectors Cannot Add Illegal Collection Fees

For the most part, a debt collector cannot add collection fees unless the lease provides for it. Many leases contain a provision regarding collection fees and costs, but pay very close attention to the language in the lease.

For example, a lease may say something like “landlord may recover actual collection costs and fees in the event of collection.” That type of provision potentially allows for the recovery of actual costs incurred by the landlord. And that’s where things get interesting. Many debt collectors charge a contingency-fee based on a percentage of the debt owed. In other words, a debt collector may charge 33% for trying to collect on a $1,000 debt. And that fee will get added to the first collection letter. That 33% charge, however, does not reflect the actual collection cost as referenced in the lease. And that is very problematic for the debt collector.

Similarly, some leases provide for the recovery of collection costs and/or attorney fees in the event of a successful legal action. That means if a landlord prevails in a lawsuit, they can request for the addition of attorney fees and or collection costs. However, prevailing in a lawsuit is distinctly different than simply trying to collect on a debt.

Do Your Homework Before Agreeing to Pay Anything

The bottom line is that a consumer should do some serious homework before electing to pay any alleged debt from a rental property. There may be issues with the validity of the debt itself. A landlord or debt collector may also add improper or illegal collection fees. Lastly, a debt collector may make misleading statements, or even report false credit information about the debt.

If you have been contacted by a debt collector about an alleged debt from rental property, feel free to contact me to discuss your options and your rights.

The post Debt Collector Calls About Rental Debt appeared first on Minnesota Consumer Attorney.

Receiving a debt collection call can be confusing and stressful. If you are receiving debt collection calls, here are some tips for talking to a debt collector.

Get the basics – who/what/why/how

The first thing you should do with any debt collector is find out who they are and what they are calling about. And you should take notes during your phone call in order to document all of the details.

In terms of who, get the name of the debt collector and the debt collection company, along with a callback number. When you end the call, you want to be able to do some research to determine if it is a legitimate company.

In terms of what, find out what the debt collector is calling about. An “unpaid” or “delinquent” debt is not specific enough. You should ask what alleged debt they are calling about, the amount of the debt, and when the debt collector started collecting on the debt. When you end the call, you want to be able to figure out if they are calling about an actual debt that you may owe.

And in terms of why and how, ask them what the options are. Most debt collectors will offer two options—a settlement option based on a lump sum payment or monthly payments towards the balance. Those amounts will not only help you decide on a potential course of action, they will also provide clues as to whether the debt collector and/or the debt are legitimate.

Do not commit to anything

Think of your call with the debt collector as a one-way street: get information, do not give any information (other than verifying who you are).

The biggest mistake a consumer can make is committing to pay without knowing all the relevant and necessary details. Do not assume that you owe a debt simply because a debt collector is calling you, or because a debt collector knows who you are.

For example, it may not be a legitimate debt or debt collector. Or perhaps you think you owe the debt, but you think the balance is incorrect. Or the interest rate or collection fees are incorrect.

If you pay the debt or make payment arrangements, you can hurt yourself in a number of ways. One, you may unintentionally restart or prolong the statute of limitations. Two, you may be hurting your potential legal defenses down the road. Three, you might be paying the wrong company—and your payment(s) will not go towards the debt. Four, you may not even owe the debt—but you just paid it.

Feel free to ask questions

A debt collector has the right to collect a legitimate debt from a consumer. A consumer also the right to be treated fairly by a debt collector.

In other words, you can, and should, ask questions. If you are confused about the options for resolving a debt, ask the debt collector to explain more. If you are confused about the next steps, ask the debt collector to clarify.

If you are confused about who the debt collector is, ask them to repeat the name of their company and the company’s address.

It can be very stressful to talk to a debt collector, and you may feel pressured to make a commitment—either to call the debt collector back or make a payment. But you should not do anything until you completely and fully understand the situation, your options, and your rights.

When to call an attorney

If you feel like you were misled or mistreated during a call with a debt collector, call an attorney. If you are not sure whether a debt collector is legitimate, or whether you actually owe the alleged debt, call an attorney.

Debt collectors are highly regulated under the Fair Debt Collection Practices (FDCPA). And if a debt collector said something that doesn’t sound quite right, a consumer rights attorney like me can help you understand your rights, your options, and help you decide on a course of action.

The post How to Talk to a Debt Collector appeared first on Minnesota Consumer Attorney.

This recognition is only available if an attorney is under the age of 40 and has been in practice for less than 10 years. No more than 2.5% of the attorneys in Minnesota can be awarded Rising Star status.

In order to be selected, an attorney must be nominated by an attorney that has observed that attorney in action. After that, each nominee is thoroughly vetted and researched to determine their eligibility. You can learn more about the selection process here.

The post Attorney Randall Ryder Named a SuperLawyer Rising Star appeared first on Minnesota Consumer Attorney.

Here is what you need to know about robocalls from a debt collector, and why you should contact an attorney.

What is considered an autodialer/robodialer

The Telephone Consumer Protection Act (TCPA) has a broad and definitive definition of an autodialer (also known as a robodialer). It is equipment that has the capacity to store or produce telephone numbers to be called, using a random or sequential number and to dial the numbers.

In other words, any equipment that can store and dial numbers. Not just that, but if it has the capacity to do so, it may be considered an autodialer or robodialer. Given that broad definition, many types of equipment and technology fit the definition of an autodialer.

Debt collectors are one of the biggest users of autodialers. Given that debt collectors make get paid by collecting money for someone else, their goal is to talk to as many consumers are possible. Using an autodialer can be a very effective way for a debt collector to get a consumer on the phone.

What makes a robocall illegal

For the most part, robocalls to cellphones are strictly regulated. Debt collectors cannot call a consumer’s cellphone unless they have prior express consent to do so.

Consent can generally be provided a number of ways:

1. If a consumer listed their cellphone number on an account application;
2. If a consumer updated their contact information and included their cellphone number;
3. If a consumer provides verbal consent for robocalls.

For the most part, a debt collector can be liable for illegal robocalls for three main reasons. One, the consumer never provided their cellphone–they never consented to the calls. Two, if a consumer revokes consent to a debt collector, the debt collector cannot continue to autodial the consumer. Three, the debt collector is calling the wrong person—which means the consumer never consented.

How to know if you are receiving robocalls

Full disclosure, although there are some key indications of robocalls, you may not spot them. If you are receiving phone calls from a debt collector though, there is a good chance they are using an autodialer.

The clearest indication of a robocall is if you receive pre-recorded voicemails from a debt collector. A pre-recorded message is a synthesized robotic voice, instead of a message left by a live person. A consumer may also hear a prerecorded message if they answer a call from a debt collector.

Another common sign of a robocall is voicemails that are only “dead-air,” or a recording with no message. You may also receive a phone call with nobody on the other end of the phone. Or there is a long pause before a debt collector starts talking to you. In some cases, a consumer may also hear mechanical clicks before a debt collector comes onto the phone.

Repeated and frequent calls from a debt collector also tend to indicate an autodialer—especially if the debt collector does not leave a message. With many companies, the call is not actually transferred to a debt collector unless the system detects that the consumer has answered. So if you don’t answer, the call will not be transferred to a collector, and no voicemail will be left.

Why you should contact an attorney about robocalls

If a debt collector makes impermissible robocalls to a consumer, the TCPA provides damages of $500 per call.  A consumer can also request damages of up to $1,500 per call if they can prove the calls were “willful.”

As noted above, debt collectors get paid by collecting money for someone else—and they do that by getting consumers on the phone. With that in mind, most consumers will receive frequent calls from a debt collector—and those calls are likely made with an autodialer.

If a debt collector is making impermissible robocalls, the debt collector may have not only violated the TCPA, but they may have also violated the FDCPA. If a debt collector has also violated the FDCPA, you may be entitled to damages under both the TCPA and FDCPA. Especially if you are receiving debt collection calls from someone else’s debt.

If you are receiving robocalls from a debt collector, contact me today.

The post Debt Collector Robocalls To Your Cellphone appeared first on Minnesota Consumer Attorney.

Whether you are considering co-signing for a child, a family member, or someone else, think twice before agreeing to pay someone else’s debt.

If the primary borrower does not pay, you may find yourself contacted by debt collectors, or part of a debt collection lawsuit.

Co-signing generally means joint responsibility

If you co-sign a student loan, you may be just as responsible as the primary borrower. If the primary borrower stops paying, or never pays, the lender can pursue you for the full amount.

In general, it does not matter if the primary borrower is paying or not–if you co-signed, you are just as responsible. If the creditor cannot find, or cannot collect from the primary borrower, they will usually pursue the co-signer. In other words, if the creditor thinks it can recover money from you, they will pursue you.

The bottom line is that if you agreed to co-sign, you are generally just as liable.

It is difficult to prove a co-signer is not liable

Most student loans are very clear and explicit on the signature pages—they usually say something like “IF YOU ARE CO-SIGNING THIS LOAN YOU ARE ALSO OBLIGATED TO REPAY THE ENTIRE AMOUNT.”

It would be very difficult to prove that a co-signer did not understand what that meant. Or in the alternative, a co-signer is unlikely to get much sympathy if they claimed “I didn’t read the contract.”

If there was an element of fraud, that changes things. For example, if a consumer could prove identity theft, or that they never actually signed the document. Those would potentially be very strong defenses.

Check the contract & terms and conditions for a potential buyout option

Bad news: you co-signed a student loan. Good news: you may not be totally screwed.

Some student loans contain a provision that explicitly allow a co-signer to be removed from a loan. It usually says something like “if the borrower makes 24 on-time payments once the loan is due and payable, the borrower may request that the co-signer is released from the loan.” For example, Sallie Mae has information on their co-signer release policy on their website. And you can review this article for more information on various co-signer release policies.

If you are a co-signer on a loan, or if you are considering co-signing on a loan, pay very close attention for that term. It could be your best way to solve the issue. And once a borrower fails to make initial payments, a creditor is not obligated to honor that provision. They may still agree to do so, but they are not under a contractual obligation to do so.

Federal loans usually do not require a co-signer

The majority of federal student loans do not require a co-signer.

That said, it can potentially be easier to get released from liability, simply because of more discharge options for federal loans. For example, if you co-sign a federal loan and the borrower dies, the loan is discharged. If the borrower becomes permanently disabled, the borrower can apply for discharge of the loan.

Contrast that with private loans—if the primary borrower dies or becomes disabled, you may still be on the hook for the loan.

Talk to an attorney and/or the lender for other options

Absent fraud, or an express contractual right to remove a co-signer, the options may be limited. That said, it is always worth talking to an attorney and/or the lender.

For one, an attorney may spot a different part of the terms and conditions that can help. Or they may be familiar with the creditor and know what they might accept for a co-signer buyout. If there is a potential defense (like fraud), an attorney should be able to provide more information.

The lender, creditor, or debt collector may also present options—but in many cases they will only do so when expressly asked. In other words, they won’t tell you upfront, but if you ask, they may present some options. The options may not be great, but in many situations it at least presents an alternative to paying the entire balance.

The post Co-Signing a Student Loan appeared first on Minnesota Consumer Attorney.