National Collegiate Trust Student Loans Dischargeable in Bankruptcy
National Collegiate Trust are Student Loans Dischargeable in Bankruptcy. National Collegiate Trusts not a lender, servicer or guarantor of your student loan. Instead, it’s a series of trusts that contain private student loans packaged and sold as investment vehicles. Due to the convoluted ways in which these sorts of trusts operate, there’s some doubt as to whether anyone can prove where your loan ends up as such these student loans are dischargeable in a chapter 7 bankruptcy.
Federal students loans originate from the U.S. Department of Education, which lends the money to students. But those funds are limited, and college is expensive. So many students look to banks as a way to make up the shortfall. We’re talking about well-known financial institutions like Bank of America or Chase. These loans are not Federally insured. Therefore these federally insured loans are not Student Loans Dischargeable in Bankruptcy
Shortly after the bank lends you the money, the loan is transferred to an entity called The National Collegiate Funding LLC. This company has no function aside from hanging onto the loan until it’s ultimately transferred to into the trust. They don’t collect your private student loan money, nor do they take any action whatsoever. They merely take the loans and deposit them into the trust.
Once the loans are safely in the hands of National Collegiate Student Loan Trust, bonds are sold to investors. Each bond entitles the investor to receive distributions from the trust based on the amount of money that comes in from private student loan borrowers.
The greater the percent of loans in the trust that paid, the better the return on the investor’s investment. But if too many of those loans go into default, the investors don’t make very much money. There are more issues involved in defending a private student loan collection lawsuit brought by National Collegiate Student Loan Trust, but now you can see that it’s usually a good idea to fight the case and make them prove every element before you agree to pay them any money.
Thank you to The Law Office of Shaev & Fleishman for the research involved in this article. We strongly suggest that if you have additional questions concerning your student loan that you contact Shaev & Fleishman.