Many of us carry student loan debt. Unfortunately, though, not everyone can easily make on-time payments to pay off that debt. That’s when problems begin to arise. Perhaps you’ve gone into delinquency or default, and the loan company has decided to sue you.
If you are having problems with student loan repayment, whether you are at fault or not, a student loan lawyer may be able to help.
What is a student loan lawyer?
A student loan lawyer is an attorney who specializes in helping borrowers navigate the complicated web of student loans.
Daniel Gamez, an attorney, and head of Gamez Law Firm focuses exclusively on helping individuals in debt. He explains, “As part of my practice, I developed this niche of helping borrowers with their student loan debt when they could not pay them back.
A large majority of this focus is on private student loans (those not backed by the Department of Education). My goal is to negotiate settlements with the lenders where my client’s total debt amount is lowered, and that reduction is paid out over an extended amount of time, with no additional interest accruing.”
Gamez decided to specialize in this field about six years ago when he first learned that private student loans were eligible for settlements. A potential client came to his office with unsolicited offers to settle her defaulted student loan debt.
“She had never been able to make payments, and the lender referred her accounts out to a collection agency, much like what you see happen with defaulted credit card debt,” recalls Gamez. They were offering to settle $42,000 in loans for $9,000, payable in a lump sum.
It was at this point that Gamez realized private student loans were in play for settlement purposes. “I found that a need existed to help people who aren’t able to pay back their private student loans. That includes helping them by negotiating settlements and also defending them if they get sued on their private student loans.”
6 reasons why you need a student loan lawyer
1) Aggressive collection letters and phone calls
“This is usually the trigger point for someone to contact me,” says Gamez. “Most of the people who contact me are scared and overwhelmed with collection activity and the possibility of getting sued.”
2) Served with a lawsuit for defaulted private student loans
“If the lender is successful in getting a judgment against the borrower, they have the option to garnish their wages, levy on bank accounts, or place a lien on their property. These options vary from state to state. It’s common for people to tell me they want my help to avoid a wage garnishment or bank levy,” says Gamez.
3) Help with federal repayment programs
“Federal Student Loans are a different beast, but they offer so many repayment options if you cannot afford the regular payment. The programs are free to sign up for, and you can do them without legal representation. However, I have found that some people are scared that they will mess things up if they try to do apply for these programs on their own. I always counsel potential clients on this fact, that they can do it alone. Some still request that I help them with it.”
4) Get loans out of default through a Loan Rehabilitation
“There are many articles and warnings out on the internet and issued by different entities advising people not to pay for this type of service. Yes, it is true that you can do it without paying someone else, but I have found there is a population of people that would rather pay someone to do that for them.
I think of it as being similar to filing your taxes versus hiring a tax professional to do it for you. I make it clear in my fee agreements that the client acknowledges that they could do this on their own, but they have decided to retain me as their attorney to do so for them. Then I try to make the process as transparent as possible because I have a duty to advise my client of this fact.
5) Disputing the amount you owe on your account
Loan servicers manage millions of accounts, so errors are to be expected from time to time. However, before you dispute the amount you owe on your student loan balance, note there are several legitimate reasons why your balance may be higher than you expect. For instance, unpaid interest may have capitalized at the end of a period of forbearance, or you may have incurred collection fees because if you defaulted on your loan. Once you’re confident there has been an error, your lawyer (or you) can write a letter with evidence that supports your claim. You don’t need a student loan lawyer to do this but it will speed things up and increase your chances of success if you hire one.
6) Disputing that the entity trying to collect has the legal right to do so
Student loans are often sold to big banks and other institutions. These loans are then bundled and sold to a depositor, such as National Collegiate Student Loan Trust. Sometimes paperwork gets lost. If your loan servicer cannot prove the chain of title (or ownership) of a student loan, a judge can dismiss the debt.
In September of 2017, the Consumer Financial Protection Bureau filed complaints against the National Collegiate Student Loan Trust and Transworld Systems, Inc. saying it had filed over 2,000 lawsuits for debts that it couldn’t prove it owned.
Additionally, the CFPB alleged that false and misleading affidavits were filed in many of the collection lawsuits. Further, over 486 collection lawsuits were filed after the statute of limitations on the debt had expired. The proposed judgment requires that all 800,000 of the trust’s student loans be independently audited.
Further, the company will not be allowed to collect, sue, or negatively report on any loan shown invalid or unverified in the audit. Read more about what may be the largest clerical error in history.
Real life examples
Gamez says one of his clients had a student loan in default with Navient, a spin-off company of Sallie Mae. Once your loan goes into repayment with Sallie Mae loans, they switch over to Navient for repayment and collections if you default, explains Gamez.
This client owed Navient $156,866.47 for five private student loans that she could not afford to pay. They went into collections and eventually wound up with an out-of-state collection law firm.
“My client was fortunate enough to have relatives who would provide her with the funds to settle the debt. We were able to settle her private student loans for $50,019.73, payable in two payments. She needed that time to secure the funds from her relatives. We saved her $106,846.74. That is the largest reduction I have received from a client on a private student loan,” says Gamez.
Gamez says he’s worked with other clients who had similar results. “We have been able to achieve settlements that reduce the loan balances by 50-60% of the total due, with those payments spread out for extended amounts of time. I would say anywhere from 24 to 84 months, and those settlements all come interest-free.”
The cost to hire a student loan lawyer
As with all legal costs, the amount can vary a great deal depending on a number factors including the balance on the accounts, whether or not the account is in litigation, and the number of accounts a lawyer will be working with.
Gamez usually charges a flat fee and says that he cannot make guarantees to his clients. He adds,”But I have found these lenders to consistently settle often for much less than is claimed due. I don’t recall having any clients who have balked at my fees. Most are more than happy to take their student loan problems and dump them on my lap.”
Other options for student loan repayment
Hopefully, your student loans haven’t gone so wrong that you need to seek help from a lawyer. If you’re not in serious delinquency or default and aren’t worried about being sued, consider loan consolidation or refinancing instead.
Review student loan refinancing lenders and compare rates side-by-side to find your best option.
Heather Skyler writes about business, finance, family life and more. Her work has appeared in numerous publications, including the New York Times, Newsweek, Catapult, The Rumpus, BizFluent, Career Trend and more. She lives in Athens, Georgia with her husband, son, and daughter.