Tag: student loans

Bankr.  M.D.N.C.: In re Price- Separate Classification of Student Loans in Chapter 13Bankr.  M.D.N.C.: In re Price- Separate Classification of Student Loans in Chapter 13

Summary:

The Prices, who are above median income debtors, but nonetheless have negative projected disposable monthly and no non-exempt assets, proposed an estimated 15% dividend to the class of dischargeable general unsecured creditors, which totaled $11,728.38.  They also proposed to separately classify the  $10,463.48 claim by Navient for non-dischargeable student loans.  The Chapter 13 Trustee supported confirmation, but the Bankruptcy Administrator filed a limited objection to such treatment.
The bankruptcy court first addressed whether the prohibition in  §1322(b)(1) against “unfair discrimination” in favor of one class of unsecured creditors was applicable as  §1322(b)(5) allows the a plan to cure and maintain payments on “any unsecured claim … on which the last payment is due after the date on which the final payment under the plan is due.”  While recognizing a split in opinions on this question, the court held that since §1322(b)(5) specifically applies despite the limitations in §1322(b)(2), it does not similarly explicitly override the “unfair discrimination” restrictions in §1322(b)(1). … Read More

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Law Review: Taylor, Aaron & Sheffner, Daniel – Oh, What a Relief It (Sometimes) Is: An Analysis of Chapter 7 Bankruptcy Petitions to Discharge Student Loans

Law Review: Taylor, Aaron & Sheffner, Daniel – Oh, What a Relief It (Sometimes) Is: An Analysis of Chapter 7 Bankruptcy Petitions to Discharge Student Loans

Abstract:

Conventional wisdom dictates that it is all-but-impossible to discharge student loans in bankruptcy. This contention, however, misstates the fact that bankruptcy discharge of student loans is possible—and it happens. This Article presents a statistical analysis of what happened when Chapter 7 bankruptcy petitioners in the First and Third federal judicial circuits filed 523(a)(8) adversary proceedings—or proceedings to discharge their student loan debt due to an “undue hardship.” In our analysis, we found undue hardship discharge rates of 54% in the First Circuit and 24% in the Third Circuit.… Read More

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Wall Street Journal: Bankruptcy Lawyers Cheer White House Focus on Student Debt

Bankruptcy Lawyers Cheer White House Focus on Student Debt


President Barack Obama signs a Student Aid Bill of Rights in the Oval Office of the White House in Washington, D.C., March 10, 2015.European Pressphoto Agency

The White House is exploring whether to make it easier for Americans to get rid of student loans through bankruptcy, joining consumer advocate groups and federal lawmakers who’ve been pushing for that type of investigation for years.

“We’re glad they’re making this a priority and hope Congress does also,” said Ed Boltz, a North Carolina bankruptcy lawyer who is president of the National Association of Consumer Bankruptcy Attorneys.… Read More

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THE BIG STORY: SENIOR AMERICANS BURDENED WITH STUDENT DEBT

The Big Story

SENIOR AMERICANS BURDENED WITH STUDENT DEBT

— Sep. 10, 2014 4:17 PM EDT

WASHINGTON (AP) — Rosemary Anderson could be 81 by the time she pays off her student loans. After struggling with divorce, health problems and an underwater home mortgage, the 57-year-old anticipates there could come a day when her Social Security benefits will be docked to make the payments.Like Anderson, a growing percentage of aging Americans struggle to pay back their student debt. Tens of thousands of them even see their Social Security benefits garnished when they cannot do so.

Among Americans ages 65 to 74, 4 percent in 2010 carried federal student loan debt, up from 1 percent six years earlier, according to a Government Accountability Office report released Wednesday at a Senate Aging Committee hearing.

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U.S. News and World Reports: Student Loan Debt Lasts a Lifetime

http://www.usnews.com/opinion/blogs/letters-to-the-editor/2014/08/26/federal-bankruptcy-law-almost-never-forgives-student-loan-debt… Read More

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N.C. Court of Appeals: Hensel v. Xerox Business Services- Accord and Satisfaction of Student Loan

Summary:

Hensel had student loans of more that $90,000. In November 2012, he received two bills for late fees in the total amount of $68.28. In response, on December 9, 2012, Hensel sent XBS a check for $68.28 attached to a letter that asserted the late fees violated the FDCPA, that assessment of the late fees had harmed his ability to purchase a home, and proposing to release his claims if XBS cancelled his remaining student loans, with cashing of the $68.28 to constitute acceptance. XBS did deposit the check and Hensel eventually sought a declaratory judgment that the student loans had been settled through accord and satisfaction.… Read More

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Bankr. E.D.N.C.: In re Sutton- Separate Classification of Student Loans in Chapter 11

Summary:

The individual Chapter 11 plan proposed to pay approximately a 4% dividend to general unsecured claims, but separately classified his $235,871.00 in student loans, proposing to pay that class in full.  No impaired class accepted the plan.

Accordingly, the plan could only be approved by fulfilling the requirements of 11 U.S.C. § 1129(b), which provides that the bankruptcy court shall confirm a plan that “does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that is impaired under, and has not accepted, the plan.”

The bankruptcy court held that a plan may discriminate in favor of nondischargable student loans, but only if such discrimination is not unfair under the four factor test from Ownby v. Read More

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Bankr. E.D.N.C.: In re Sutton- Separate Classification of Student Loans in Chapter 11

Summary:

The Debtor proposed a plan that would have paid roughly a 3.8% dividend to general unsecured claims, but would have separately classified his non-dischargeable student loans and paid them in full.  The general unsecured class did not accept this plan.

11 U.S.C. § 1129(b)(1)  provides the bankruptcy court shall confirm a plan that “does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that is impaired under, and has not accepted, the plan.”

“There can be ‘discrimination,’ so long as it is not ‘unfair’’” 7 Collier on Bankruptcy ¶ 1129.03[3] (16th ed. Read More

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Bankr. E.D.N.C.: In re Harris- Debtor Not liable for Student Loans Signed by Mother without Authority

Summary:

The Debtor’s mother signed the Debtor’s signature on 11 student loans.  After filing bankruptcy, the Debtor objected to the validity of the claims.

The Court began by reiterating that under 11 U.S.C. § 502(b0, ‘[claims that are unenforceable against the debtor or against property of the debtor . . . are simply not allowable for purposes of a right to share in a distribution of the debtor’s assets.” In re Easthaven Marina Group, LLC, No. 08-05453-8-JRL (Bankr. E.D.N.C. May 7, 2009) (Leonard, J) (quoting 4 Collier on Bankruptcy (15th ed. rev.) ¶ 502.03[2][b][iii]).

Pursuant to N.C.G.S. § 25-3-401, “A person is not liable on an instrument unless (i) the person signed the instrument, or (ii) the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented  person under G.S.… Read More

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