A top federal consumer watchdog is putting student-loan companies on notice for potentially illegal behavior that's harming borrowers.detailing recent findings that some student-loan companies have engaged in unlawful behavior by sending borrowers' loans back to collections after a bankruptcy court approved a discharge of their debt.
"When a court orders the discharge of a loan, lenders and servicers should not treat this as a suggestion," CFPB Director Rohit Chopra said in a statement."The CFPB has found that some servicers are ignoring bankruptcy court orders. The student loan servicing industry should ensure that their collection practices are compliant with the law.
"In fact, CFPB examiners also observed that after exiting bankruptcy and being presented with bills from their student loan servicers, most borrowers made payments toward the debts, sometimes paying thousands of dollars on discharged debts," the report said."Since the consumers could not control the servicers' actions, consumers could not reasonably avoid the injury."
The companies' unlawful misconduct only adds to the difficult process borrowers must face when attempting to get rid of their student debt through bankruptcy. For years, borrowers have