Help! Someone is Suing Me For Student Loans!

Help! Someone is Suing Me For Student Loans!

You don't have to panic

Student loans have become an iron anchor the size of the titanic around the ankles of many young (and middle-aged) people in the United States today. Many of these folks are being sued for private student loan debt. It’s a scary thought, being sued for tens of thousands of dollars for loans taken out when you were much younger and had no real way of knowing what the cost would actually be. I'm going to give those folks a little information about student loan lawsuits, the players, and how an attorney (like me) can help you.

This article deals with private student loans. I will write about the difference between private and government-backed student loans in a later article. Typically, a private student loan comes from a bank or specialty lender. These loans are usually used to fill the gap between financial aid available from government-backed loans and the cost of tuition. In most case, the most significant student loan pain comes from private student loans.


Simply put, they have the same bankruptcy limitations as government-backed loans but are not subject to the generous repayment plans that government loans offer. The payments are high and unforgiving. It’s very easy to fall behind and default. Once you default, it’s only a matter of time until you’re sued by a debt collection outfit for the loans, and since you can’t rely on bankruptcy to discharge the debt, you’re in a bad place.

One thing you’ll notice if you’re sued for a private student loan is that the person suing you is most likely not the bank you originally did business with. This might annoy you, but it works in your favor. We’ll get back to that.


Private student loans are regularly sold to investors or other companies as a way of acquiring capital and offloading distressed assets. When the loans are sold, they are typically sold in huge batches covering large swathes of time. If a lawsuit on a private student loan is filed, it is usually the purchaser of the loan that files. The transactions are typically shoddy with limited documentation. This works to your advantage.

Most of the companies that will sue you for a defaulted student loan hope that you will simply ignore the summons. If you do, they can take a default and start garnishing your wages. This is their best case scenario. Their worst case scenario? You hire an attorney and fight the case.


Now, you might ask: “why would I fight the case if I know I took out student loans?” Simple: even if you took out student loans, did the company suing you actually loan you the money? Have you ever done business with the company that is suing you? Most likely not. So why pay them until they can prove that they actually own the loan? Many of the companies buying student loans have a very hard time proving that they actually own the individual loans. If they can’t prove they own the loans, they risk having the case dismissed or settling cheap. It’s called standing. You need it to file a successful lawsuit, and unless they can prove they own the loans, they don’t have it.

There are other issues that might come up too, like the statute of limitations or problems with service of process. If you’ve been sued, it would be a good idea to talk to a lawyer about your case.