Many private student loan debts may be discharged

As Least $5 Billion Of Private Student Loan Debt May Be Erased Because Of Missing Paperwork

It is an umbrella name for 15 trusts that hold 800,000 private student loans, totaling $12 billion, and according to the Times, $5 billion of that debt is in default. Of those, roughly 166,000 loans, worth some $5 billion, are in default.

The loans in question here were taken out before 2007, and some other institution would have actually originated the loan.Documents filed with the SEC, for instance, show that the majority-but not all-of the loans owned by National Collegiate were originated by Bank One, Charter One Bank, Bank of America, JPMorgan Chase, GMAC Bank, RBS Citizens Bank, and Union Federal Savings Bank.

But National Collegiate's problems are especially acute, she said. But National Collegiate trusts don't own all of the loans by made by these lenders, and these aren't the only lenders that sold loans to National Collegiate.

The New York Times noted that hundreds of cases have been thrown out when borrowers challenge them because the trusts continually fail to bring the critical paperwork needed to proceed. The debt passed through too many hands before reaching National Collegiate's trusts, and imperative paperwork that documented who owned the loans disappeared. Private student loans account for around $108 billion of student loans, according to The Times.

"It's a numbers game", lawyer Richard Gaudreau, who has helped defend borrowers in several National Collegiate lawsuits, told the newspaper.

From the sounds of it, there are thousands of dutiful Americans in debt who are paying their monthly loan payments to this company that may not have to do so because of this massive issue. "It's not like they're rolling over on these cases", Gaudreau says. The Times also notes that for the cases National Collegiate has been able to win, the mitigating factor is borrowers not even knowing the cases have gone to court and/or not showing up to defend themselves.

This makes it unclear who exactly owns them.

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