1,600 lawsuits filed in Colorado courts against students delinquent on school loans

Posted at 1:45 AM, Jul 19, 2017
and last updated 2017-07-19 03:45:23-04

DENVER – As the cost of education skyrockets, students across the country are struggling to pay down their loans.

Some are catching a break.

Several courts have tossed out lawsuits filed against students who have defaulted on loans, because the trusts that purchased the loan portfolios can't produce paperwork proving they're owed the money.

But local attorneys caution there is no guarantee that a lawsuit will be thrown out.

“Laws vary from jurisdiction to jurisdiction,” said Karen Cody-Hopkins, “and different judges look at things differently.”

Christine Levi is one of more than 1,600 Coloradans who were sued by one or more of the trusts.

“I reached a point in my life where I had to file bankruptcy,” she said.

Court documents state that Levi took out loans totaling $31,000 in 2006. 

Six years later, she filed Chapter 7 bankruptcy.

She said she couldn't afford the escalating payments.

Shortly afterward, American Education Services gave her a one-year deferment, then demanded repayment.

“They were very aggressive,” Levi told Denver7. “I got calls day and night all the time.”

At some point, American Services sold its loan portfolio to Transworld Systems.  An attorney from Transworld contacted Levi.

“I just had an attorney say, ‘hey, you owe this to us and we’re going to sue you if you don’t pay.’ I was like, ‘sue me,’ and they did.”

In many cases, the students who are being sued fail to show up and the trusts win a summary Judgement.

In Levi’s case, she represented herself.

After attending CSU and Metro State, she moved to Miami and attended law school.

“I’m not an attorney,” she said, “but I have experience as a paralegal.”

Her response to the lawsuit, was that the loans were not an educational benefit and that her paperwork stated specifically they were a “consumer credit transaction,” and could thus be added to her bankruptcy case.

Levi said at some point, Transworld sold their portfolio to National Collegiate Student Loan Trust.

She said when she asked National Collegiate for paperwork proving they owned her loan, "they didn’t provide it."

Instead of fighting them on that ground, she decided to settle.

“For me, it was either I settle, or I take a risk and go to trial and owe everything or I owe nothing,” she said.  “For me, that 50/50 risk wasn’t worth it... at that point.”

Levi wouldn’t discuss the settlement agreement.


Cody-Hopkins, who represents clients in similar cases, said if you aggressively defend those cases, you can often reach a decent settlement.”