A recent New York Times article reports that certain student loan creditors have had their cases dismissed because they could provide proof to support the loan, and to support that the plaintiff suing on the loan actually owned it. As Paperwork Goes Missing, 7-18-17, Private Student Loan Debts May Be Wiped Away . As the authors point out, these loans have been sold off or handed off to loan servicers who did not get and cannot find the supporting documents. Many cases have been dismissed. Nevertheless, many suits simply result in default judgments because the borrowers being sued did not bother to respond and demand paperwork, or go to trial. So the lenders may still file suit, to see what happens when they do.
The lesson? Demand to see the signed loan agreements, and the endorsed promissory notes or assignments to show who owns and has the right to sue to collect. Better yet, be sure to get or keep all your paperwork from the get-go, including documentation of all payments or notices of transfer.
A caution is in order here, though. Not all loans will suffer from this problem, and defending these cases will cost money. But it may often pay to demand that the lender provided the documents to support their claim in order to be paid. Many may ignore these requests. You have a right to see the documents.
Also, if you file a bankruptcy where creditors file claim, eg a Chapter 7 with “assets” or a Chapter 13, you can challenge the student loan creditor’s claim and demand the same documents.
Since student loans are almost always non-dischargeable, it pays to make sure.