Lawsuit: Navient, Two Debt Collectors Sought Payment for Wrongfully Defaulted Student Loan Debt

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A proposed class action filed in Kansas back on September 1 claims Navient Corporation, Navient Solutions, Inc., United Student Aid Funds, Inc. (USA Funds) and EOS CCA Debt Collection Co. violated state and federal debt collection laws with regard to the plaintiff’s student loans that the case says were wrongfully placed in default despite being paid in full years earlier. Filed by a former nursing student, the complaint claims the plaintiff borrowed a little more than $16,500 in student loans in 2001, and as of June 20, 2013, owed Navient a balance of $3,592.24 on one loan and $2,665.35 on the other. After that date, the complaint says, the plaintiff’s loans were each set up with an “auto debit” payment method due to continue each month until the loans were fully repaid. In July 2013, the plaintiff reportedly consolidated her loans via an agreement with Commerce Bank, which that month made a $6,304.32 “PAYOFF” payment to Navient (then called Sallie Mae) via cashier’s check to fully pay off the woman’s debt.

Despite the loan obligations being satisfied, Navient allegedly placed the loans into default status, after which they were purchased by defendant USA Funds, the suit says. From here, the complaint describes a years-long saga between the plaintiff and defendants that allegedly saw the woman’s credit report take a hit due to her wrongfully defaulted loans even though she reportedly provided USA Funds and Navient with proper documentation that her debt was paid in full. The plaintiff claims that she, on three occasions, sent Navient and USA Funds notice in writing that her debt was satisfied. Defendant EOS CCA then contacted the plaintiff in November 2016, the complaint continues, indicating the woman’s account had been placed with the company for collection. Upon receiving EOS CCA’s first demand notice, the plaintiff allegedly provided the company with notice in writing that her student loan debts were paid in full.

At some point in 2016, the lawsuit reads, the plaintiff’s supposed debt was reported to the IRS, with the ultimate goal of garnishing the woman’s tax refund checks. Under the Fair Debt Collection Practices Act, however, the plaintiff should have been provided with a mandatory notice of the proposed garnishment, yet “was not given an opportunity to object to the wage deduction or demand a hearing on said objection,” the lawsuit argues.

Navient allegedly purported to the plaintiff in August 2016 that USA Funds, when it purchased the ostensibly defaulted loans, was the “guarantor” of the obligations. The lawsuit argues that the plaintiff’s student loan debt, which was supposedly fully satisfied back in 2013, was not bought by USA Funds until more than two years later in October 2015.

The situation spilled into 2017, the case says. Counsel for the plaintiff sent Navient two letters requesting an explanation of the alleged default of the woman’s student loan obligations, inquiries that the lawsuit says were not answered with any supporting documentation. After initially stating in 2016 it had received the plaintiff’s cashier’s check satisfying her loans in 2013, Navient, in May 2017, claimed it never received that payment, yet failed to explain the remaining defaulted debt, the lawsuit says.

“Despite [the plaintiff’s] repeated efforts to contact [the defendants] via mail, phone, fax, and email, [the defendants] have not provided an explanation as to why the cashier’s check was cashed, but not used to pay off the loans it was meant to satisfy,” the lawsuit charges, adding that the plaintiff has reportedly been forced to pay monthly installments under protest for loans that were allegedly already paid in full to protect her credit score.