CFPB Sues Student-Loan Servicer for Illegal Collections on Discharged Debt

The CFPB has filed a lawsuit against student-loan servicer PHEAA, accusing it of illegally collecting payments from borrowers whose loans were discharged in bankruptcy and providing false information to credit reporting agencies. The CFPB seeks relief for affected consumers and a civil penalty for PHEAA, which denies the allegations and claims regulatory overreach. The lawsuit highlights the need for loan servicers to properly recognize discharged debts and adhere to bankruptcy laws.