The Department of Education has turned a blind eye to the collection harassment and debtor abuse that debt collectors that it has hired collect student loan debt. Well, no more. On Friday, February 27, 2015, it announced that its firing 5 debt collectors for having “unacceptably high rates” of misleading student borrowers. It kinda makes me wonder what an acceptable rate of screwing student debtors is.
The most prominent student loan debt collector to get the ax is Pioneer Credit Recovery which is owned by Navient Corp. This student loan company formerly known as Sallie Mae. Navient is having its issues with the Consumer Financial Protection Bureau. Kinda weird having one governmental agentcy investigate a formerly government controlled agency.
Many student loan borrowers are in default; as many as 7,000,000 such loans. Collecting on this debt is profitable and lucrative. Indeed, there was a story a few years ago about the obscene amounts of money that student loan debt collectors and the CEOs of those companies make.
The latest word is that the DOE is going to take back some of these cases that it has handed to third party debt collectors and start working these cases themselves. The other collection companies getting axed are Coast Professional, Enterprise Recovery Systems, National Recoveries and West Asset Management. In 2011, the FTC went after West Asset accusing it of violating the Fair Debt Collection Practices Act. It hit West with a $2.8 million fine.
My take on this is to not get too excited. A debt collector working for a private company is not much different than one working for the government. The biggest difference is that the one working for the private company can get sued along with the company. The collector working for the government may be shielded from lawsuits under the doctrine of Governmental Immunity” If that’s the case, I would cancel the champagne celebration because things just took a turn for the worse for consumers.
If you have been victimized by a debt collector or have items on your credit report that are incorrect, call or email Attorney Gary Nitzkin at [email protected] for a free consultation at (888) 293-2882. For more information about your credit rights as a consumer, visit our website at www.micreditlawyer.com for informative how to videos on consumer financial protection. We are here to fight for you. Call us today! 888-293-2882.
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