Paperwork can get lost right? Think about it: How many times have you misplaced a key document or lost an important paper you thought was filed appropriately?

But what about a big company losing $5 billion of its $12 billion private student loan portfolio?

While millions of Americans can only hope and pray their student loans will one day disappear into oblivion, these dreams may be coming true for others. In fact, tens of thousands of who have defaulted on their private student loans may have their debt cleared out due to important paperwork missing.

According to an article in The New York Times, “National Collegiate, a conglomeration of 15 trusts that hold 800,000 private student loans worth $12 billion, has recently lost multiple court cases due to bad paperwork — effectively clearing dozens of debtors of the money they owe. The loans currently being disputed total more than $5 billion.”

For example and according to the article, when Samantha Watson, a mom of three took out private loans to finance a degree in psychology at Lehman College in the Bronx, things quickly turned for her.

“When her daughter became sick, Watson was unable to afford her high student loan payments. National Collegiate sued her, but their paperwork was incoherent, unorganized and incomplete, her lawyer, Kevin Thomas of the New York Legal Assistance Group, told The Times,” according to the article.

In fact, a judge in New York City’s Civil Court in the Bronx dismissed four lawsuits against Watson since National Collegiate failed to provide sufficient paperwork. “This ruling cleared Watson of $31,000 in debt. For National Collegiate, this is a high price to pay for missing paperwork. For Watson, “It was such a relief,” she told The Times.

Unfortunately, most borrowers will not experience this happy ending like Watson.

Defendants often settle with National Collegiate or ignore the summons altogether.

 “…And most student debt holders don’t owe National Collegiate. More than 44 million Americans hold a total of $1.4 trillion in student loan debt — the $12 billion that belongs to National Collegiate is a small amount,” the article says.

So, how do you stay clear of such a mess and keep it from happening to you?

First, be smart about financing your degree; Do avoid taking out private loans or attending for-profit colleges. Private loans may come with high-interest rates which over time can make your monthly payments huge. They also lack the consumer protection benefits of federal loans.

In the end, before you take out a private loan be sure to take advantage of your federal student loan options. The Institute for College Access and Success reports that 47 percent of private loan borrowers could have used more affordable federal loans, according to the New York Times article.

Additionally, private loan borrowers disproportionately attend for-profit colleges. The College Board reports the average cost of attending a for-profit institution is $16,000 a year, that’s about 4.5 times more than the cost of the average two-year college and 1.7 more than the cost of the average four-year public college for in-state students, it adds.