What Is The NCSLT and Why you need a Student Loan Lawyer

Most college students look to federal loans to fund their education, however, this often isn’t enough. As a result, people turn to privately funded loans to cover their education expenses. These loans typically originate at a bank who, in turn, transfers the loan to National Collegiate Funding LLC. This company holds the loan until it is transferred into a trust. One group, called the National Collegiate Student Loan Trust (NCSLT), is made up of 15 different trusts. They hold a significant number of student loans, about 800,000, and worth about $12 billion, according to a New York Times report.

Who is NCSLT and what do they do?

The NCSLT packages private student loans and sells them to investors. Being privately-backed loans typically carry high-interest rates, a lot of money is generated. Most people who have taken out private student loans have no idea a third party, such as NCSLT, is involved. The servicer they pay their monthly bills to is not the owner of the trust. Not to mention, students don’t know where their loans end up because the NCSLT doesn’t provide documentation to show who owns the student loans.

NCLST initiating lawsuits

A portion of the student loans held by the NCLST, worth about $5 billion, is at the center of a massive legal dispute. The NCSLT has been aggressively suing borrowers across the U.S. who have defaulted on their loans. Most cases, which have the trust listed as the plaintiff, are problematic because they:

  • Don’t show a chain of ownership
  • Contain incomplete information
  • List inaccurate information (i.e. students in schools they never attended)

These lawsuits have been compared to the subprime mortgage fiasco that emerged after the housing bubble burst.

Why Georgia residents need to be defended by a consumer law attorney

Student loan borrowers are vulnerable because few consumer protections are in place to help them and the NCSLT takes advantage of this. They pursue legal action to bully borrowers into paying, relying on the fact many borrowers don’t show up to court and the trust wins by default. Borrowers who fight back usually see the cases dropped. Many judges across the U.S. throw these cases out of court due to the poor paperwork, fuzzy details of ownership and an overall lack of transparency.

To date, the NSCLT has sued 5,000 Georgia residents. Aside from the inaccuracy problems associated with these trusts, these lawsuits don’t align with Georgia law. Georgia’s Constitution limits the judicial power of its courts because the legal title to property held in trust must be linked to an owner. Georgia law states a trust is a non-entity and, that being the case, the NCSLT doesn’t have the right to sue Georgia residents. These NSCLT lawsuits are frivolous, improper and illegal.

A consumer law attorney will ensure your rights are protected and defend you when the NCSLT tries to bully you into paying extraordinary amounts—sums you may not even owe. For more information, give us a call today.

How long does a lien stay on a property in Georgia?

There are several types of liens that can be attached to a person’s property.  Each has a different expiration date, and if successfully enforced, could result in the sale of your property to obtain the amount of the lien from the proceeds (with any remaining funds going to the property holder).  While this list is not exhaustive, the most common types of liens are:

Tax Liens

A state tax lien occurs when taxes are due to the state, or to counties of the state, or other special tax districts of the state.  State tax liens don’t expire, and the only way to get rid of them is to pay the amount owed-otherwise, when you sell your home, the state will collect the amount owed from the proceeds of the sale.

A federal tax lien is one that the federal government can use when you fail to pay a tax debt.  A federal tax lien exists after the IRS puts your balance due on the books (assesses your liability), then sends you a bill that explains how much you owe (Notice and Demand for Payment) after you fail to fully pay the debt in time.  The lien continues until it is paid, or it expires.  Generally, the IRS has ten years to collect after it is assessed.  The IRS can extend the ten years under two different circumstances.  First, the statute of limitations can be extended if you enter into an installment agreement; this extends the expiration date to 89 days after the installment agreement expires.  The second is a release of levy with an agreement to extend the statute of limitations to a specific date, provided the extension date hasn’t passed.  A release of levy may be given if the lien is creating an immediate economic hardship.  This doesn’t mean you are excused from paying what is owed, only that you will be given some leeway to make the payments.  The IRS will generally work with you to establish a payment plan or other steps to help you pay off the balance.

Judgment Lien

A judgment  lien is created when a judgment is obtained in superior, magistrate, or other state courts.  This lien can become unenforceable after seven years, if the lien holder doesn’t seek to enforce the lien by providing public written notice of its efforts, and by including the names of the parties to the enforcement action, the nature of the action, and having it recorded in the court.  The lien holder is able to re-record the judgment every seven years to keep it enforceable; however, if the lien holder fails to re-record the lien within the seven year period, he or she has only three years after that expiration date to re-record it.  If the lien holder fails to re-record during the three years, he or she is barred from enforcing the judgment.

Laborer’s Lien

A laborer’s lien is a lien filed by a person who provides services under a contract for manual labor or physical work.  The lien can only be for the work performed, and cannot include any materials provided (but these would fall under a materialman’s lien, described below). The lienholder must go to court to obtain a judgment against you within twelve months, or the lien becomes unenforceable.

Mechanic’s or materialman’s lien

A mechanic’s or materialman’s lien is a type of lien that contractors, subcontractors, and others who have contributed services and/or materials to improve a new or existing home can file against a homeowner’s property if they do not get paid, even if the homeowner paid the general contractor.  Liens like this don’t go on your credit report, and expire within 12 months unless the subcontractor or contractor actually files a lawsuit to collect the money.

Q: I lost my job last year when my company down-sized. I have gone through all my savings and even borrowed money from relatives, but I just can’t keep up with my mortgage payments. I’m afraid that the bank will foreclose on my house. Is there any help available to me?

Reposted from the “Ask Consumer Ed” column of the Georgia Governor’s Office of Consumer Protection:

A: Unfortunately, you’re not alone in this situation. Fortunately, there are several state and federal programs that can help some people having difficulties making their mortgage payments.

Your first step should be to contact your mortgage company directly. Many are willing to discuss your current situation and to try to come up with a solution, including a loan modification, deferment, or repayment plan. Look at your mortgage bill to find the name and contact information for your particular mortgage provider.

For consumers who began experiencing difficult times within the last 36 months, Georgia offers several programs. Go to www.homesafegeorgia.com to find a summary of the programs available, requirements for eligibility, and how to start the application process. These programs are provided in the form of a loan at 0% interest, and the loan is forgiven after five years if you stay in your home. The Georgia mortgage assistance programs are:

  •   Mortgage Payment Assistance – Provides monthly mortgage payments directly to lenders for up to 24 months to assist unemployed and underemployed homeowners.
  •   Reinstatement Assistance – Assists homeowners experiencing a hardship by

offering a one-time payment to catch up on missed mortgage payments.

Mortgage Payment Reduction (Recast and Modification Assistance) – Assists homeowners experiencing a permanent reduction in income by paying the lender a one-time $30,000 payment to lower the monthly mortgage payment.

The federal government also has several loan modification programs available to struggling homeowners. Unlike Georgia’s programs, the federal programs aren’t loans, but ways to change the actual terms of your mortgage to make the payments more manageable. You can find out more about these programs at www.makinghomeaffordable.gov. The federal programs include:

  •   Home Affordable Modification Program (HAMP) – Modifies the terms of the mortgage to lower the monthly payments.
  •   Principal Reduction Alternative (PRA) – Assists homeowners who owe more than their home is worth by reducing the total amount owed.
  •   Home Affordable Unemployment Program (UP) – Assists unemployed homeowners by temporarily reducing or suspending mortgage payments. BEWARE! Unfortunately, foreclosure prevention scams have increased because of recent tough economic times. Before consulting a provider who claims it can prevent your foreclosure, there are a few things you should do to avoid getting ripped off. For example:
  •   Avoid individuals/companies promising they can halt your foreclosure – These companies cannot guarantee a particular outcome, so their promises are unrealistic (and, most likely, a lie).
  •   Always send your mortgage payment to your lender or the mortgage servicer – Even if someone is assisting you in the process, make sure to send your payments directly to your mortgage company or someone approved by your mortgage company, not to any other intermediary.
  •   Avoid providers who charge up-front fees – Federal law makes it illegal for mortgage assistance relief services to collect fees before you enter into any negotiated agreement about your mortgage with your lender.
  •   Never sign over your deed to anyone without consulting an independent lawyer whom you select – Some companies will attempt to have you sign over your deed, often claiming that you’ll remain in the home under a lease while they negotiate on your behalf. This situation almost never ends well, because you no longer have ultimate control over the ownership (or occupancy) of your home. You should never sign over your deed without first consulting an attorney that hasn’t been chosen by the provider.
  •   Always read what you are signing– Some individuals may attempt to trick you into signing over the deed to your property by burying it in other paperwork. If you don’t understand every item and every page of all documents you’re being asked to sign, DO NOT sign any of them until you have received a complete explanation from someone whom you trust, and who does understand.

If the provider makes any promises, get all of them in writing.

Don’t do business with any provider that tells you not to contact your mortgage company– Any legitimate service provider should, and will, encourage open communications between you and your lender.

Before making any decisions, contact a counselor or organization to assist you in making the right choices regarding your mortgage. The following are great resources to learn more about the available programs and the steps required for each:

HUD sponsored counseling agencies may be able to provide free advice to help you avoid foreclosure. Locate an approved counselor near you by going to www.hud.gov.

The Home Ownership Preservation Foundation is a non-profit organization providing free counseling to help you learn about the programs available to you. Call them toll free at 1-888-995-HOPE (4673).

Working with mortgage companies to avoid a possible foreclosure can be overwhelming, but with proper support, you can make the best decision for your family and your home. Be proactive and seek out the programs and counselors that will work in your best interest. And, don’t wait until the last minute to do so – give yourself as much time as possible to seek a solution that fits your situation.

Why Debt Settlement May Hurt Consumers More than It Helps

“Be debt-free in 36 months!”

“Reduce your debt by up to 50%!”

We’ve all heard commercials from debt settlement companies that use pitches like these, promising troubled borrowers that they can get out of debt by paying just a fraction of what they owe.  The industry that the New York City Department of Consumer Affairs once called the “top fraud of the year” is now fighting hard to set up shop in additional states across the country. While several states—such as New Jersey, New Mexico, Arkansas and Wyoming —do not currently authorize debt settlement, industry lobbyists have been making the rounds in state capitals trying to rustle up support to allow the practice.

But it may be in consumers’ best interest to keep debt settlement companies at bay. A recent report by the Center for Responsible Lending confirms that debt settlement is often not worth the risk—and leaves many consumers even worse off.
Debt settlement seems like a viable alternative for families struggling to break free from excessive debt. Enlisting the services of a professional to negotiate down debts appears equivalent to hiring a lawyer to deal with complex legal proceedings.

But there’s a catch. In order to sign up for debt settlement, clients must first default on all of their debts. The money they once spent on minimum credit card or other debt payments is then instead used to fund a special account that can eventually be used for settlements.[1] While consumers wait for settlements that may never come, their debts continue to grow due to late fees and other default charges.

In some cases, creditors simply refuse to negotiate with debt settlement firms. Clients face the significant risk that creditors may instead sue them to collect on these defaulted debts. For example, a Maryland regulator found that one in four clients had been suedby at least one of their creditors during the first year of their debt settlement program.

These drawbacks led the Federal Trade Commission in 2010 to bar debt settlement companies from charging fees until they had settled at least one debt on behalf of their clients. But the CRL report shows that while this regulation may have led to some improvements in business practices, serious risks remain for debt settlement clients.

A debt settlement company would have to settle at least two-thirds of a client’s debt in order for her to emerge better off from the process than when she started, according to the CRL’s analysis of data published by the industry trade association, the American Fair Credit Council. If the potential tax liability on settled debts and the monthly cost of maintaining a special account for settlements are considered, a debt settlement company would have to settle over 80% of a client’s debts for the savings to exceed the costs of the settlement process.

Historically, only a small portion of clients have achieved such successful outcomes. In 2010, the industry reported that over 42% of clients were unable to have even a single debt settled

More recently, the Colorado Attorney General reported that over half of clients in that state who enrolled in debt settlement programs in 2011 had dropped out of their programs by the end of 2012. During that same time period, fewer than 8% had all of their debt settled.

While there are exceptions, it’s clear that debt settlement is inherently risky for financially vulnerable families, potentially leaving many people much worse off than they were in the first place.

Any state should think twice before offering a welcome mat to the industry—unless and until debt settlement companies can show that clients typically settle enough debt to actually benefit from these programs.

The debt settlement chapter of the Center for Responsible Lending’s State of Lending series is available on the CRL website. Ellen Harnick is senior policy counsel and Leslie Parrish is deputy director of research at CRL.

Is Debt Settlement Legitimate?

Re-posting from the “Ask Consumer Ed” publication of the Georgia Governor’s Office of Consumer Protection
Published October 11, 2013

Dear Consumer Ed:

I owe close to $30,000 in credit card debt. I contacted a company that said it could help me get out of debt.  The counselor I spoke to told me to stop making credit card payments for six months and that he would then contact my credit card company and offer to settle my account for $10,000.  Well, it’s now six months later, and the credit card company has refused to accept the debt settlement offer.  Because I didn’t pay anything for six months, I now have an even worse credit rating, not to mention my creditors have added late fees to my balance and have turned my account over to a collection agency.  What can I do?

A:  This company is engaged in an illegal practice known as “debt settlement.” While services known as “debt adjustment” may legally be provided to Georgia residents, these are strictly regulated by Georgia’s 2003 Debt Adjustment Act.  The reason such practices are stringently regulated is that people seeking these services are among the most vulnerable consumers:  those already in dire financial straits.

Before July 2003, debt adjustment, along with debt settlement, debt negotiation, and debt “counseling”, were all illegal in this State.  When our legislature began to allow some of those services to be provided to Georgia consumers, it enacted tightly written laws that established clear and rigid standards through which such businesses could ply their trade.

If a debt adjuster is charging for its services, it cannot provide them to Georgia consumers using any business model or fee structure other than the one contemplated under the Act.  Under this model, the debtor sends money directly to the debt adjustment company, which places the funds in a trust account and then disburses the money to the debtor’s creditors after taking a percentage of not more than 7.5 percent off the top as its fee. While up-front fees, which are fairly common, may be permitted (debt adjustment companies may charge you an up-front fee, monthly fee, or both), the combination of these fees may not exceed 7.5 percent of the amount paid monthly by the consumer to the debt adjustment company for distribution to his or her creditors.  In addition, the debt adjustment company must disburse all funds received from the debtor, less any fees, to creditors within 30 days of receiving them.

The company you contacted is using a model whereby the company tells consumers not to make payments to their creditors, then attempts to negotiate a lump-sum “settlement” with those creditors.  This practice is not permitted under the Debt Adjustment Act.

Companies that commit these types of violations can be subject to legal action on State and Federal levels. In fact, the Consumer Financial Protection Bureau recently took action against Meracord, LLC, a debt settlement payment processor that is alleged to have charged millions of dollars in illegal fees to over 11,000 consumers, nearly half of whose accounts were closed without ever being settled. The company must now pay $1.376 million in penalty fees and immediately cease all illegal activities.

If you believe the business you’re working with may have violated the Debt Adjustment Act, you can file a complaint with the Governor’s Office of Consumer Protection (www.consumer.ga.gov or 404-651-8600), and/or file a private a legal action of your own.  If the company is found to be in violation, it could be required to refund all of the fees you paid and, in a private action, you may request an additional $5,000 as restitution.

Because your debt has been turned over to a third-party debt collector, you are entitled to certain protections under the Federal Debt Collection Practices Act (FDCPA).  Among other things, the FDCPA prohibits a debt collector from contacting you at unreasonable times and places, using abusive tactics to collect the debt, or falsely representing themselves.  For more information about your rights under the FDCPA, visit: http://consumer.georgia.gov/consumer-topics/debt-collectors.