AP for 220K in Private Student Loans

[justbroke]

The only issues I see for a pro se debtor going against a private loan creditor, is that the United States Department of Education (DOE) tends to jump in as amicus and uses its attorneys (U.S. Assistant Attorneys) to try to persuade the judge in the case. A well prepared case is a well prepared case, whether it's prepared by an attorney or pro se plaintiff! I was lucky to have such a case recently against a very large corporation.

I especially like being pro se because my "resources" are limitless. That just means that I'm not paying a attorney $300/hr to prosecute my complaint. I have all my "spare" time to work on a case and that could mean upwards of 40 hours a week to dedicate to the case. That will sometimes scare a defendant, but the procedural issues are surely the ones to overcome. Again, the book that HHM cites is a must read if you're going to trial in a Federal court.

[backtoschool]

The only issues I see for a pro se debtor going against a private loan creditor, is that the United States Department of Education (DOE) tends to jump in as amicus and uses its attorneys (U.S. Assistant Attorneys) to try to persuade the judge in the case. A well prepared case is a well prepared case, whether it's prepared by an attorney or pro se plaintiff! I was lucky to have such a case recently against a very large corporation.

I especially like being pro se because my "resources" are limitless. That just means that I'm not paying a attorney $300/hr to prosecute my complaint. I have all my "spare" time to work on a case and that could mean upwards of 40 hours a week to dedicate to the case. That will sometimes scare a defendant, but the procedural issues are surely the ones to overcome. Again, the book that HHM cites is a must read if you're going to trial in a Federal court.

Private student loan non-dischargeability is fought as vigorously as federal student loan dischargeability. For someone in their twenties that is currently working and is able bodied, I simply don't see the standards that would be applied to win this case. If your salary can be garnished to pay for the loan, how can a hardship case be made?

I don't think that excessive loans represent a hardship of the type needed to meet a lifetime inability to pay on some of the loans. To spend as much time as would be needed to fight this pro-se seems to an uphill battle to say the least. Don't get me wrong, I would love to see someone win simply because they are a in a low paying career and have a lot of loans, but this in no way resembles the types of hardships that have won in 99% of hardship cases.

Maybe this makes me "negative" and certainly legal reform starts with the trailblazers willing to challenge the law. But a LOT of time is going to have to be devoted to the case. (many hundreds of hours in my opinion) And the case would be challenged even if won, so years and years would go by fighting this. Wouldn't that time be better spent moving on, and figuring out a way to live?

Just my opinion....

[k10]

In re Carnduff, 367 B.R. 120 (9th Cir. BAP 2007)
A bankruptcy court has the power to grant a partial discharge of a student loan even when the debtor’s earning capacity is expected to improve, if that improvement will be insufficient for the debtor to pay the full balance without an undue hardship. But the burden is upon the debtor to establish undue hardship as to any portion of the debt sought to be discharged.

In re Nys, 446 F.3d 938, 941 (9th Cir. 2006)
Second prong of the Brunner test "does not require an exceptional circumstance beyond the inability to pay now and for a substantial portion of the loan’s repayment period."

[HHM]

Also, its official Dept of Education position to oppose hardship discharge, or the more politically correct way of putting it, to encourage institutions to contest dischargeability.
34 CFR 674.49(c)(4)-(5)
and 34 CFR 682.402(f), (g), (h) and (i).
[CFR = Code of Federal Regulations]

The criteria is interesting under 674.49 is that the agency (NelNet, Sallie Mae, etc) should contest if the cost of doing so is less than 1/3 the amount owed. The unintended consequence of that is it may be easier to reach a settlement on smaller balance student loans than on larger ones.

to K10, yes, there are cases all over the map on student loans, some favorable, some not. But, the bottom line is that most cases are examples of student loans not being discharged. Heck, there was a recent case (I think I posted it elsewhere and can't find it) where the loan servicer didn't even respond to the AP; so you would expect the debtor to win by default? NOPE, the bankruptcy judge still did an inquiry, required the debtor to offer proof of the Hardship (Brunner standards), and DENIED discharge.

[edit, found the case IN MATTER OF SKIPWORTH (N.D.Ala. 412010)]

[backtoschool]

In re Carnduff, 367 B.R. 120 (9th Cir. BAP 2007)
A bankruptcy court has the power to grant a partial discharge of a student loan even when the debtor’s earning capacity is expected to improve, if that improvement will be insufficient for the debtor to pay the full balance without an undue hardship. But the burden is upon the debtor to establish undue hardship as to any portion of the debt sought to be discharged.

In re Nys, 446 F.3d 938, 941 (9th Cir. 2006)
Second prong of the Brunner test "does not require an exceptional circumstance beyond the inability to pay now and for a substantial portion of the loan’s repayment period."

You don't meet the second prong of the Brunner test because you can pay now and for a substantial portion of the loan's repayment period because you have a job. This is how most courts will interpret what you put in your example.

[backtoschool]

Also, its official Dept of Education position to oppose hardship discharge, or the more politically correct way of putting it, to encourage institutions to contest dischargeability.
34 CFR 674.49(c)(4)-(5)
and 34 CFR 682.402(f), (g), (h) and (i).
[CFR = Code of Federal Regulations]

The criteria is interesting under 674.49 is that the agency (NelNet, Sallie Mae, etc) should contest if the cost of doing so is less than 1/3 the amount owed. The unintended consequence of that is it may be easier to reach a settlement on smaller balance student loans than are larger ones.

to K10, yes, there are cases all over the map on student loans, some favorable, some not. But, the bottom line is that most cases are examples of student loans not being discharged. Heck, there was a recent case (I think I posted it elsewhere and can't find it) where the loan servicer didn't even respond to the AP; so you would expect the debtor to win by default? NOPE, the bankruptcy judge still did an inquiry, required the debtor to offer proof of the Hardship (Brunner standards), and DENIED discharge.

I just think that the precedence that would be set by an able-bodied, employed person in their 20's contesting the loans successfully simply because the loan balance was too much, would be enough to have every bank lawyer, and Department of Ed lawyer, (behind the scenes of course) bringing in the biggest guns they could find to bake sure the discharge was not allowed.

[k10]

You don't meet the second prong of the Brunner test because you can pay now and for a substantial portion of the loan's repayment period because you have a job. This is how most courts will interpret what you put in your example.

If I could pay now I wouldn't meet the first prong. Educate yourself on the matter. You should also read through my posts in their entirety, as well as decisions in the various circuits.

[backtoschool]

If I could pay now I wouldn't meet the first prong. Educate yourself on the matter. You should also read through my posts in their entirety, as well as decisions in the various circuits.

With 100k of student loans of my own, I have read many cases on this trust me.

I have read all of your posts as well, and you seem to have convinced yourself that you are going to win this case. I really do hope you win because it will set a precedence that would be favorable to most of us.

I simply was trying to insert some pragmatism into the thread.

This board is not to simply agree with and validate what you have convinced yourself of already. I think precedence and court bias are against you and that with a job, it is going to be even more difficult to prove you are unable to pay an amount equal to what would be garnished from your wages. You pointed to a passage that shows you need to be able to pay the loans in full or they will be discharged, but that is not the standard that most districts are using.

[backtoschool]

Here are some other standards used to determine hardship. These are taken from case law and are often still used in current hardship cases.

Other standards besides Brunner v NY HESC that are sometimes cited by courts include:

* Johnson Test. PHEAA v. Johnson (In re Johnson), 5 Bankr. Ct. Dec. 532 (Bankr. E.D.Pa. 1979). This test considers the borrower's current and future ability to repay the debt while maintaining a minimal standard of living. It considers the borrowers current and future employment and other factors that may affect income, such as education, health and dependents. It compares this income with the federal poverty line. This test also considers good faith efforts to repay the debt, such as whether the borrower tried to maximize income and minimize expenses and whether the borrower was responsible for causing his or her current financial situation through irresponsible or negligent behavior.

* Totality of Circumstances Test. Andrews v. South Dakota Student Loan Assistance Corporation, 661 F.2d702 (8th Cir. 1981). This test considers the combined impact of all the various factors affecting the borrower's ability to repay the debt on a case-by-case basis. It considers the borrower's past, present and future financial resources, using reasonable estimates of future resources. It also calculates the reasonable living expenses of the borrower and his/her dependents and calculates debt to income ratios. It considers the duration of the hardship, such as whether the borrower is permanently or temporarily disabled. It also considers whether the borrower has sought other available options for relief.

* Bryant Poverty Test. Bryant v. PHEAA (In re Bryant), 72 B.R. 913 (Bankr. E.D. Pa. 1987). This test considers whether the borrower's after-tax net income is near or below the federal poverty level as the primary means test for undue hardship.

In my opinion after reading your situation, k10, you do not meet these standards, since you have not pursued all other alternatives, you are working and your salary is going up and you aren not below the federal poverty level. Pursuing a forbearance is a step in the right direction, but the court most likely will not see that as pursuing all alternatives. My point in posting these cases is that for every case you find that might help you make your argument, there are probably 10-20 cases that will hurt your argument.

If you have the hundreds of hours to try this, then it should end up being a learning experience. I just think you are fighting an uphill battle.

[justbroke]

BTS, no I wasn't saying that the pro se debtor would win, but it did read like that. My issue is that this is a young "newly" graduated individual already looking to discharge debt that they really just encumbered themselves with. I don't see it passing the sniff test either. Without a disability, the case would be difficult at best.

I know the case the HHM is talking about as I read it on an attorney blog where the otherwise non-dischargeable student loan lender didn't respond to an AP and the plaintiff/debtor moved for summary judgment. The smart judge didn't grant it because summary judgment still requires you to have proven the facts through the record.

Everyone on this board wishes they could just discharge student debt because they can't afford it at the moment. I think there's a long line and we've had another forum member here last year -- if I remember correctly -- that had over $300K in student debt between them (post doctoral) and their spouse.

[backtoschool]

BTS, no I wasn't saying that the pro se debtor would win, but it did read like that. My issue is that this is a young "newly" graduated individual already looking to discharge debt that they really just encumbered themselves with. I don't see it passing the sniff test either. Without a disability, the case would be difficult at best.

I know the case the HHM is talking about as I read it on an attorney blog where the otherwise non-dischargeable student loan lender didn't respond to an AP and the plaintiff/debtor moved for summary judgment. The smart judge didn't grant it because summary judgment still requires you to have proven the facts through the record.

Everyone on this board wishes they could just discharge student debt because they can't afford it at the moment. I think there's a long line and we've had another forum member here last year -- if I remember correctly -- that had over $300K in student debt between them (post doctoral) and their spouse.

I didn't think you were saying the OP could win justbroke. And frankly, if you did say that you thought the OP could win, since I respect and trust your judgment so much, I would go out and file my own AP tomorrow.

[k10]

I read two recent cases (w/in last 2 yrs) where partial discharge was granted given magnitude juxtaposed with income; the totality test was used. citations coming

[backtoschool]

I read two recent cases (w/in last 2 yrs) where partial discharge was granted given magnitude juxtaposed with income; the totality test was used. citations coming

Like I said in an earlier post, for every citation you put here we can come up with 10-20. I don't think the courts are going to see you as having tried hard enough to pay the debt.

[k10]

Since you're so young and you are over the median for the State of New York in income. You would have to absolutely prove that there is no way you can pay back the loans. That's going to be tough without some sort of medical expert testifying that you can't earn income... or someone else.

However, you may just win on a default. I hope that you study more than just looking at complaints in PACER> You need to familiarize yourself with the FRBP, FRCP, FREv and be extremely good with local rules on filing papers (captioning, citations, etc)... so that you don't fall into the pro se trap and have a Motion for Summary Judgment filed by the defendant.

Also, be aware that you'll have to motion the court to re-open your case for the purpose of filing a complaint to discharge student debt and that will cost you $260 (unless they waive it).

Best of luck... we are really interested in these types of cases! Even though we may sound negative.

It's been asserted in numerous cases that a medical condition needn't necessarily exist to prove an additional circumstance. other citations pending

In re Nys, 446 F.3d 938, 941 (9th Cir. 2006)
Second prong of the Brunner test "does not require an exceptional circumstance beyond the inability to pay now and for a substantial portion of the loan’s repayment period."

[k10]

"Having tried" has nothing to do with the character of the case. It's a 3rd prong matter, and I've never seen a plantiff satisfy the 1st two prongs only to walk with an unsatisfied 3rd.