Showing posts with label Fair Debt Collection Practices Act. Show all posts
Showing posts with label Fair Debt Collection Practices Act. Show all posts

Tuesday, March 14, 2017

Student Loan Debt Collector accused of violating the Fair Debt Collection Practices Act; Brandon v. Eaton Group Attorneys

Unscrupulous debt collection practices: Economic exploitation of struggling student-loan debtors

Susan Browmmiller, in her classic book on rape, observed that rape victims are often assaulted twice. First, they are physically raped by their attacker; and then they are psychologically raped by the justice system when they testify against the rapist in a brutal and humiliating criminal trial.

Something similar can be said about student-loan debtors. Millions of unsophisticated young people have been enticed to take out student loans to enroll in academic programs that don't lead to good jobs. That's rape number 1.

Then when these duped individuals are unable to pay back their student loans, they fall into the hands of the unscrupulous debt collectors. That's rape number 2.

Brandon v. Eaton Group Attorneys: Law firm accused of violating Fair Debt Collection Practices Act

Last January, a federal judge in Louisiana ruled in a case brought by Cassandra Brandon against Eaton Group Attorneys (Eaton), a law firm representing National Collegiate Student Loan Trust (NCSLT), a student-loan debt collector. Eaton had sued Brandon on NCSLT's behalf, alleging that Brandon had defaulted on her student loans and owed NCSLT about $46,000.

After the lawsuit was filed, an agent for Eaton sent Brandon a letter, which was described as a "REQUEST FOR PAYMENT ARRANGEMENTS." And this is what the letter said:
Dear CASSANDRA PLUMMER [Plummer is Brandon's maiden name]: 
If you would like to explore a voluntary repayment plan, then please provide the requested information. The debt will need to be acknowledged through the attached consent judgment. Please return these forms as soon as possible. This is a communication from a debt collector. This is an attempt to collect a debt. Any information will be used for that purpose.
Accompanying the letter was a partially completed consent judgment, which stated:
IT IS ORDERED, ADJUDGED, AND DECREED that judgment be rendered in favor of Plaintiff, NATIONAL COLLEGIATE LOAN TRUST 2007-1, and against the defendant, CASSANDRA PLUMMER . . ., in the full sum of $41,115.13, together with accrued interest of $4,998.37, and additional interest of 4% from date of judgment, and for all costs of these proceedings, subject to a credit of $0.00.
Brandon then sued Eaton Group Attorneys in federal court, charging the law firm with violating the Fair Debt Collection Practices Act (FDCPA).  Basically, Brandon accused the law firm of sending her a deceptive debt-collection letter in violation of the FDCPA.

Eaton moved for summary judgment on Brandon's claim, arguing that its letter was "non-deceitful as a matter of law." But Judge Sarah Vance denied the law firm's motion and allowed Brandon to proceed with her suit.

Judge Vance began her analysis by summarizing the purpose of the FDCPA, which is to eliminate "abusive, deceptive, and unfair debt collection practices . . ." The law prohibits debt collectors from using any "false, deceptive, or misleading representation or means in connection with the collection of any debt," and it bars debt collectors from using "unfair or unconscionable means" to collect on a debt.

In the court's view;
[The] letter [Brandon] received was misleading because an unsuspecting debtor, seeking only to 'explore a voluntary repayment plan,' could be fooled into executing the consent judgment without knowledge of the consequences. Specifically, an unsophisticated debtor may not know that the consent judgment will serve to waive potentially valid defenses and may facilitate a wage garnishment order" [Emphasis supplied]
By telling Brandon she must formally acknowledge her debt before she could even "explore" voluntary repayment plan, the Eaton Group Attorneys was basically inviting her to "inadvertently dig herself into a deeper hole." (Internal citation omitted).

Congress needs to clean up the student-loan debt collection industry

Laws are already on the books that ban unfair debt collection activities. Brandon sued Eaton Group Attorneys under the FDCPA; and Navient Solutions and Student Assistance Corporation had a judgment assessed against them last spring for violating the Telephone Consumer Protection Act.

But more needs to be done.

Specifically, Congress needs to hold hearings on the activities of the student loan guaranty agencies--and Educational Credit Management Corporation in particular. A Texas bankruptcy judge slapped ECMC with punitive damages last year for repeatedly violating the automatic stay provision of the Bankruptcy Code, but the penalty was entirely too light for such a wealthy corporation.

And Congress needs to eliminate the excessive penalties--25 percent or more--that debt collectors assess on student-loan debtors in default.  After all, it is the penalties and accrued interest that are driving millions of struggling student-loan debtors into 20- and 25-year income driven repayment plans.

Republicans and Democrats could bring relief to millions of overwhelmed student-loan debtors if they just joined together to pass meaningful reform legislation.  If our nation's politicians can't cooperate in a bipartisan effort to clean up the student loan program, then shame on all of them.


Brandon v. Eaton Group Attorneys, CA No. 16-13747 (E.D. La. Jan. 24, 2017).

Bruner-Halteman v. Educational Credit Management Corporation, Case No. 12-324-HDH-13, ADV. No. 14-03041 (Bankr. N.D. Tex. 2016).

McCaskill v. Navient Solutions, Inc., No. 8:15-cv-1559-T-33TBM (M.D. Fla. April 6, 2016).

Robert Shireman and Tariq Habash. Have Student Loan Guaranty Agencies Lost Their Way? The Century Foundation, September 29, 2016. Accessible at

Monday, November 25, 2013

"You can't get there from here": It is very difficult to sue the Department of Education about a disputed student loan

According to urban legend, a traveler asked a Maine farmer for directions to a nearby town. "You can't get there from here," the farmer replied, a cryptic and distinctly unhelpful reply.

 You can't get there from here.
photo credit:
Well if you are a student-loan debtor who believes a  mistake was made about your loan, you are unlikely to get the problem resolved quickly in a court proceeding. In other words, when it comes to suing the federal government about your student-loan debt, "You can't get there from here."

The Wagstaff case: Eight years of fruitless litigation about a student-loan debt

Take the case of Audrey Wagstaff, who took out six federal student loans to attend Our Lady of the Lake University in the early 1990s.  According to the U.S. Department of Education, Ms. Wagstaff didn't make any payments on her loans.  DOE sued her in 1999, dropped the lawsuit, and then began administrative collection efforts against here.  DOE garnished Wagstaff''s wages in order to collect on the loans and applied some offsets to her federal tax refunds.

In 2005, Wagstaff sued DOE under the Fair Debt Collection Practices Act, alleging DOE's collection practices violated the Act.  A federal court dismissed her case, and she appealed.  In 2007, the Fifth Circuit Court of Appeals affirmed the dismissal, ruling that the Department of Education is not subject to the Fair Debt Collection Practices Act.

Undaunted, Wagstaff sued in a Texas state court. DOE transferred the case to federal court, where she was dismissed again.  She appealed to the Fifth Circuit, which ruled again that Wagstaff did not have a case.

In 2011, Wagstaff sued yet again, this time in the U.S. Court of Federal Claims. The Department of Education tried to get this suit dismissed as well, and the Court of Federal Claims dismissed all her constitutional claims and statutory civil rights claims.

But the court did not dismiss all of Wagstaff's claims.  The court concluded that Wagstaff had properly pleaded a claim of "illegal exaction" against the government, which the court had jurisdiction to hear. In addition, the court ruled that she had brought her claim within the six-year limitation period for bringing claims against the government, so it allowed her lawsuit to proceed.

In the end, however, Wagstaff lost her case. On July 13, 2013, the U.S. Court of Federal Claims ruled that DOE had correctly calculated Wagstaff's student-loan debt. "There is no evidence to suggest the Government behaved unlawfully," the court ruled, and "the Government has properly supported its assertion that the promissory notes were valid . . ." (p. 765).

What does the Wagstaff litigation mean for the rest of us?

Audrey Wagstaff may not be a sympathetic plaintiff.  According to the Department of Education, she had never made a single payment on her six student loans. Nevertheless, her experience in federal court gives all of us some things to ponder.

First of all, if a student-loan debtor has a dispute about the amount of money owed, it is best to try to resolve the dispute as quickly and as  informally as possible.  According to the 2013 Court of Federal Claims opinion, Mrs. Wagstaff only borrowed about $17,000.  But interest and penalties accrued over the years, and by the time the Court of Federal Claims ruled in 2013, the amount she owed had more than doubled to $36,000.

Second, the Fifth Circuit ruled conclusively that the federal government is not subject to the Fair Debt Collection Practices Act and cannot be sued for unfair debt collection practices under that law. But shouldn't the federal government be subject to the same restraints that apply to other debt collectors? After all, six million people have defaulted on federal student loans; and the Department of Education, acting through private agencies, may be the largest debt collector in the world.

Third, Ms. Wagstaff was compelled to bring her claims of unfair debt collection against the feds within six years, but there is no time constraint on the government suing Ms. Wagstaff.  Shouldn't the same six-year statute of limitations that applies to student-loan debtors also apply to the Department of Education?

Finally, if someone has an unfair debt collection claim against the federal government that pertains to a student loan, shouldn't that person be able to litigate the claim in a federal district court in the debtor's home state rather than being forced to sue in the U.S. Court of Federal Claims?

In my opinion, student loan debtors who are unable to resolve disputes about their loans at the administrative level should have easy access to the federal courts to litigate their claims, and the federal government should be under the same constraints against unfair debt-collection practices that apply to private debt collectors.

Do you think anyone in Congress is interested in making the Department of Education subject to the Fair Debt Collection Practices Act? Do you think anyone in Congress is interested in putting a six-year statute of limitation on the federal government's efforts to collect on student-loan debt? Do you think the Obama administration is interested in either of these issues?

No, Congress and the Obama administration have absolutely no interest in giving basic consumer protections to the millions of  distressed student-loan debtors. Consequently, these people are suffering in silence, unable to pay back their loans, unable to discharge them in bankruptcy, and unable to start their lives afresh.


Wagstaff v. United States, 111 Fed. Cl. 754 (2013).

Wagstaff v. United States, 105 Fed. Cl. 99 (2012).

Wagstaff v. United States, 366 Fed. Appx. 564 (5th Cir. 2010).

Wagstaff v. United States, 509 F.3d   661 (5th Cir. 2007).