According to a new report there may be tens of thousands of student loans that are about to get wiped away because some critical paperwork is missing. The loans total $5 million and are at the center of a legal battle between student borrowers and a group of creditors who they owe after falling behind on payments.
According to Yahoo:
Judges have already dismissed dozens of lawsuits against former students, essentially wiping out their debt, because documents proving who owns the loans are missing. A review of court records by The New York Times shows that many other collection cases are deeply flawed, with incomplete ownership records and mass-produced documentation.
And even furthermore:
At the center of the storm is one of the nation’s largest owners of private student loans, the National Collegiate Student Loan Trusts. It is struggling to prove in court that it has the legal paperwork showing ownership of its loans, which were originally made by banks and then sold to investors. National Collegiate’s lawyers warned in a recent legal filing, “As news of the servicing issues and the trusts’ inability to produce the documents needed to foreclose on loans spreads, the likelihood of more defaults rises.”
Student loans account for $1.4 trillion of debt nationwide, and judges have begun clearing debts in New York, New Jersey, Texas and Ohio.