Claim Your Share: Eligibility Criteria Revealed for One-Time Payment in $28 Million Loan Settlement

Continued student loan collection had a toll on the finances of several borrowers who had previously filed for bankruptcy.

In order to address allegations that it coerced customers to repay student debts that could have been erased through bankruptcy, Navient consented to a $28 million settlement.

The settlement helps those who, as borrowers or co-borrowers, were required to repay one or more Navient private student loans, filed for bankruptcy in a US Bankruptcy Court outside of Texas, Louisiana, or Mississippi after October 17, 2005, and were granted a discharge order.

The class action lawsuit’s plaintiffs contend that bankruptcy discharge orders ought to have included Navient student loans. After borrowers and co-borrowers filed for bankruptcy, Navient reportedly disregarded the bankruptcy rules and is still collecting on student loans.

Navient serves as a student loan servicer, collecting payments from borrowers and perhaps sending them to collections when they don’t.

According to Top Class Actions, the private student loan corporation settled the student loan bankruptcy class action case for $28 million without acknowledging any wrongdoing.

Navient will remove relevant trade lines—records of activity—from credit reports and forego collecting outstanding loans owed by class members.

In terms of settlements, this is not Navient’s first experience.

Following a $198 million settlement from the corporation this past August, bankruptcy filers were equally eligible, as reported by Yahoo News.

In a statement, Adam Shaw, counsel for the student loan borrowers and partner at Boies Schiller Flexner LLP, stated that “this settlement gives considerable relief to thousands of borrowers who were wrongfully forced to pay back loan sums that had been duly discharged in bankruptcy. At a time when our nation is wrestling with questions around student debt forgiveness and abusive lending practices, this agreement establishes once and for all a legitimate bankruptcy pathway for private student borrowers in financial distress.”

The case dispels the misconception that not all student loan debt may be eliminated through bankruptcy, having been filed for the first time in 2017.

Not all private student loans are excluded from bankruptcy discharge, even if federal student loans are normally exempt, unless the borrower can demonstrate “undue hardship”—a very high bar that is seldom granted.

“Certain private student loans are protected against bankruptcy discharge. If they are for the cost of attendance, they are qualified as exempt,” stated Shaw. “But all other private student loans can be discharged.”

In October, a different but comparable settlement against Navient also occurred. The settlement went on because Navient is being sued on the grounds that some of its student loans ought to have been dismissed when the debtors declared bankruptcy.

Financial losses were reportedly sustained by the borrowers as a result of Navient’s failure to discharge those debts.

Claimants may be borrowers or co-borrowers who never renewed their private student loans and who filed for bankruptcy protection after October 17, 2005, when they were required to reimburse their students.

Members of the class may get 20% to 100% of the damages.

Who is eligible, and how can you apply?

Those who filed for bankruptcy in a United States Bankruptcy Court outside of Texas, Louisiana, or Mississippi after October 17, 2005, and received a discharge order, are entitled to petition for a claim, and the settlement is accessible to one-time borrowers or co-borrowers.

Based on a number of variables, such as the kind of losses sustained, qualified borrowers may be paid in cash.

First, decide if you wish to stay in the Settlement Class or withdraw from it. You belong to the settlement class if you take no action.

According to Navient, anybody who objects to any aspect of the settlement may do so in writing to the District Court by November 8, 2023, at the latest.

By November 13, 2023, at the latest, you must submit a claim form in order to be eligible for any potential payout.

December 8, 2023, is the date of the settlement’s final approval hearing.

Only once the District Court gives the settlement its final approval and all appeals have been settled will payments be distributed to qualified Settlement Class members.

People submitting are advised to exercise patience.

According to the New York Times, this settlement follows the cancellation of $127 million in student loans for millions of students, even in the face of a Supreme Court decision that prevented President Joe Biden’s student debt forgiveness program.

Up to $17,500 in debt will be forgiven through the Teacher Loan Forgiveness Program following five years of continuous teaching at an approved institution. Loan forgiveness alternatives are also available to medical professionals, active military personnel, and volunteers, including those in the Peace Corps and AmeriCorps.

In some situations, such as a complete and permanent handicap, you can be eligible for the discharge of your student loans. Through borrower defense to repayment, borrowers who were duped by for-profit universities, like the now-defunct Corinthian Colleges, may also be eligible for debt discharge.

According to student loan attorney Adam Minsky, “federal student loan forgiveness programs have very specific eligibility criteria, so borrowers should make sure they understand a program’s requirements if they are considering pursuing it.”

In addition, a lot of governments and colleges help qualified professionals—like physicians, nurses, pharmacists, and veterinarians—with debt repayment.

Bankruptcy is becoming more common among low-income Americans as hope for loan forgiveness fades.

According to the Federal Reserve, about 45 million Americans have an average outstanding loan debt of less than $25,000 yet collectively owe more than $1.7 trillion in 2023.