The First Thing to Do If a Debt Collector Sues You for Student Loan Debt

With student loan balances continuing to climb, student loan default has increasingly become a problem for consumers, and in addition to the problems default causes on its own, it brings along another unpleasant experience: debt collection.

The rise in student loan debt has resulted in more lawsuits against borrowers for failing to pay, often leading to judgments against the borrowers. Judgments typically lead to wage garnishment and credit damage (in addition to what’s already been suffered by not repaying the loans), making it even more difficult for the borrowers to regain the financial stability necessary to catch up with debts that are practically impossible to get rid of.

This issue becomes more problematic when you factor in the possibility that these lawsuits come from entities without the right to collect these debts in the first place. In a recent article, Bloomberg described a system in which debt ownership is repeatedly transferred and lawsuits come about from entities that may not have the right to sue borrowers. Still, if borrowers don’t question the lawsuits and fail to show up in court, judges rule in favor of the creditor and issue default judgments against the borrowers.

Whenever you’re dealing with a debt collector, and especially if you’re being sued over a debt, the first thing you should do is request verification of that debt in writing. It’s one of your consumer rights in regard to debt collection, but it’s something many people overlook, either because they assume it’s legitimate and can’t do anything about it or they don’t know otherwise. The collector should be able to provide you details on the debt and how it got to the point of needing to be pursued legally.

Checking your credit also needs to be at the top of your to-do list when dealing with debt collectors. It’s important you know how the debt is being reported and that is done so accurately, because collection accounts and judgments have a seriously negative impact on your credit scores. You’re entitled to a free annual credit report from each of the three major credit reporting agencies through AnnualCreditReport.com, and you can get two of your credit scores for free on Credit.com, updated every 14 days.

If ever you have questions about how to deal with a debt collector or if you legitimately owe the debt, seek the help of a consumer attorney — you should be able to find someone to review your case for free.

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