Transworld Systems Inc., the principal debt collector of the National Collegiate Student Loan Trusts, has agreed to pay $ 600,000 in penalties and release student loan borrowers from foreclosures, liens and other judgments resulting from lawsuits improperly filed in connection with ‘a settlement announced Monday with the New York state attorney general.
The company had created an aggressive strategy of filing lawsuits to collect overdue debts, according to a press release issued by the attorney general’s office. Transworld, the statement said, has sued borrowers beyond a three-year statute of limitations in the state, threatened other borrowers with lawsuits even though too much time had passed to file a lawsuit. lawsuit and made misleading and deceptive statements in the lawsuits he initiated. deposit.
“For years, Transworld has used fraud and deception to pursue delinquent borrowers and obtain large-scale default judgments,” New York Attorney General Letitia James said in a statement. “Our investigation not only puts hundreds of thousands of dollars back into the pockets of student borrowers, but made real changes through Transworld, which finally gives consumers struggling with delinquent student loans all the protections required by law.”
TSI was not immediately available for comment. The company and the trusts have already had problems. In 2017, the Federal Bureau of Consumer Financial Protection ordered the National Collegiate Student Loan Trusts and TSI to pay $ 21.6 million in payments to borrowers and civil penalties.
The New York Times reported in July that judges in several states had dismissed debt collection lawsuits brought by the National Collegiate Student Loan Trusts because ownership of the debts could not be verified. The CFPB enforcement action revealed that the trusts had filed more than 2,000 such lawsuits without proper documentation, in violation of consumer protection laws. And in many of those lawsuits, false or misleading affidavits were filed, the agency said.