Lawsuits: Firms Scamming Folks WIth Student Loans
Illinois attorney general warns consumers about 'predatory' offers
By Jenn Gidman, Newser Staff
Posted Jul 14, 2014 1:40 PM CDT
People who are struggling to pay off their student loans may be vulnerable to scams by "debt settlement" firms.   (Shutterstock)

(Newser) – Debt-settlement companies have long targeted people saddled with mortgages or credit card debt, promising more manageable monthly payments, settlements, or even complete loan forgiveness—but now these companies are targeting individuals bogged down with student loans, reports the New York Times. And these companies' tactics may not be on the up-and-up: The Times article notes that “predatory” businesses often require large upfront costs or monthly fees. They also may offer to help customers take advantage programs that either don't exist, such as the "Obama Forgiveness Program," or which they could have gotten for free from the Education Department.

Illinois, where the companies have been advertising heavily, struck back today, when Attorney General Lisa Madigan filed two lawsuits against firms that she says perpetuate these “scams,” the Chicago Tribune reports. “Once you see posters, something is wrong,” Madigan tells the Times, adding that the businesses are targeting economically vulnerable groups such as teachers, firefighters, and nurses. The rest of the nation is starting to catch on, too: In 2013, the number of complaints to the FTC regarding “misleading” or “outright abusive” tactics reached 204,644, up about 10% from two years earlier. Madigan’s advice to current and former students: Never pay anything upfront, and tap into reputable resources such as the Consumer Financial Protection Bureau and National Consumer Law Center.

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Jul 14, 2014 2:28 PM CDT
"Firms Scamming Folks With Student Loans" So just what was it you learned at college, anything practical?
Jul 14, 2014 2:24 PM CDT
The fact is, it's worse than this. If you have ever had any loan of any kind, and even paid it off, you can still be attacked! The swindle involves a perpetrator, usually a collection agency or law office, buying up loans, even ones that have been paid off. Then, they wait a length of time, long enough that the intended victim will likely either have thrown away any notice of termination of the loan, due to its being repaid, or mislaid it. That is, if they even receive a notification of the debt being terminated. Then the perpetrator sends a notice that, “due to an oversight”, there is still an amount due and owing, even if a “small amount” “that was missed”. Of course, the “small amount” will have grown due to “interest”. Sometimes, if they know the original lender didn't provide a notice of termination, they'll simply accuse the intended victim of stopping payment with the remainder unpaid. Either way, the intention is to get the intended victim to pay what they hope will be a single payment to clear everything up. But that is where the trap is. Because, making a payment, even on a loan that was repaid, can activate the loan again! It is an admission by the debtor that they cannot verify that all the debt has been repaid. And the person holding the loan now can do whatever they want. It always helps to get complete documentation on every loan. An amortization list, a verification for each payment made and a notice of termination. And it can be crucial to keep them safe, stored in a safe deposit box or copied onto a disk.
Jul 14, 2014 1:52 PM CDT
Force those tightwads at the banks to lessen their loan restrictions making it harder for these legal "loan-sharks" to take advantage of those who are in need but can't qualify because of such hard qualifying practices!