Justice Department Reaches Consent Order with NJ Student Loans Authority to Settle Complaint of Alleged SCRA Violations | Ballard Spahr srl

The Justice Department announced earlier this week that it had concluded a consent order with the New Jersey Higher Education Student Assistance Authority (HESAA) to resolve DOJ’s allegation that HESAA violated the Servicemembers Civil Relief Act (SCRA) by obtaining illegal court judgments against two servicemen for amounts owed on loans students. The regulations require the HSEAA to pay $ 15,000 each to the two service members who were the subject of a default judgment, and a civil fine of $ 20,000 in the United States. It also requires HESAA to provide SCRA training to its employees and external legal advisers and to develop new SCRA-compliant policies and procedures.

The SCRA requires that a plaintiff in civil proceedings seeking a default judgment file an affidavit with the court stating whether or not the defendant is in military service and showing the facts necessary to support the affidavit or, if the plaintiff does not. cannot determine the defendant’s military status, stating that the plaintiff is unable to determine whether the defendant is on military service. If the plaintiff informs the court that the defendant is on military service, the court cannot render a judgment until it has appointed a lawyer to represent the defendant and, in certain circumstances, must postpone the proceedings for at least 90 days.

In his complaint Filed in New Jersey Federal District Court, the DOJ alleged that HESAA obtained default judgments against two SCRA-protected service members after filing affidavits stating that the defendants were not on military service while they knew they were on active duty by the time the default judgments were sought. HESAA reportedly searched the Defense Manpower Data Center (DMDC) database, which generated certificates indicating that the two servicemen were on active duty. The DOJ alleged that the HSEAA’s written policy regarding military borrowers lacked sufficient procedures designed to ensure that military status was properly reported to court.

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