Corinthian Colleges Class Action Says Loan Debt Collection is Unfair

A woman from California says three companies violated the law in their attempts to collect on Corinthian Colleges private education loans.

Plaintiff Deborah Terrell is suing defendants University Accounting Service LLC, Balboa Student Loan Trust, and Turnstile Capital Management.

Terrell says these loan companies made unlawful attempts to collect on private education loans from former students of the now-defunct Corinthian Colleges Inc. chain of for-profit schools.

According to her Corinthian Colleges class action lawsuit, Corinthian fraudulently induced students to take out these loans with promises of career services assistance, impressive graduate earnings, and high job placement rates.

In 2008, Terrell claims Corinthian Colleges created the “Genesis Loan Program,” under which private lenders issued loans to Corinthian students under the school’s terms, without revealing their connection to the school. She claims Corinthian later bought back many of those loans.

Corinthian Colleges’ alleged scheme got the attention of federal and state authorities, and by May 2015 investigations and penalties against the school had driven it into bankruptcy.

Before filing for bankruptcy, Corinthian sold off its Genesis loans, Terrell says.

Defendant Turnstile bought over $505 million in loans, Terrell claims, and later created defendant Balboa to service these loans. Terrell says that in February 2015 Balboa made a commitment not to sue or threaten to sue to collect those loans.

Later, Balboa contracted with defendant University Accounting Service to collect on those loans. Terrell alleges UAS has taken overly aggressive steps to collect those loans, disregarding Balboa’s agreement to avoid litigation.

The Corinthian Colleges class action lawsuit now alleges the defendants’ attempts to collect the debt violate a slew of debtor protection laws, including the federal Fair Debt Collection Practices Act and California’s Rosenthal Debt Collection Practices Act, Consumer Legal Remedies Act, and Unfair Competition Law.

Terrell says she was drawn into the scheme after a Corinthian Colleges recruiter talked her into enrolling in a medical administrative assistant program in June 2014. When Corinthian shut down in April 2015, she says she was told her Corinthian diploma was “worthless.”

With no employment prospects in her new field, Terrell says, she started receiving aggressive attempts at collection from UAS.

Terrell proposes to represent two plaintiff Classes. Her proposed Debt Collection Class would consist of all persons who attended a Corinthian Colleges school in California within the last four years and paid for it using private loans that were later assigned to Balboa and are currently serviced by UAS, and to whom UAS has sent at least one debt collection notice.

The other proposed Class, the Balboa Discharge Class, would represent all persons who in the last four years funded a Corinthian Colleges education in California using private loans that were later assigned to Turnstile and after that to Balboa.

She is seeking an award of actual and statutory damages, court costs and attorneys’ fees, and any other relief the court may provide.

Plaintiff’s counsel are attorneys Anne Richardson, Magdalena Reyes Bordeaux, Charles Evans and L. Adelaiede Anderson of Public Counsel; Frederic D. Woocher, Jenna L. Miara and Dale Larson of Strumwasser & Woocher LLP; and Dan Stormer and Caitlan McLoon of Hadsell Stormer & Renick LLP.

The Corinthian Colleges Debt Collection Class Action Lawsuit is Deborah Terrell v. University Accounting Services LLC, et al., Case No. 5:16-cv-01535, in the U.S. District Court for the Central District of California.