Rescind The Student Lender’s Bankruptcy Protection Law

(Study Tips, Dealing With Stress, Maintaining a Social Life, Financial Aid, Internships, Bar Exam, Careers in Law . . . )
User avatar
Renne Walker
Posts: 546
Joined: Sat Jan 29, 2011 2:12 am

Rescind The Student Lender’s Bankruptcy Protection Law

Postby Renne Walker » Sat Aug 20, 2011 11:12 pm

As a Lender, one primary reason for lending $$ to college students is because students cannot declare bankruptcy on their loan(s). When they fall behind in their payments the lender can dun the student from graduation to grave. Unless, the lawmakers rescind the lender’s bankruptcy protection law. This possibility is already gathering momentum in [some] political circles, especially since this law was passed in the dead-of-night. Given our economic state, some (mainly commentators) are already arguing that the law is unfair and prejudicial.

Whether the lawmakers would rescind bankruptcy protection for both government loans and private loans is difficult to determine. For me, this is question #1 for anyone I would consider voting for. If they skirt the question, they are toast.

If they did rescind the law, could it be made retroactive or would it only apply to new student borrowers? If rescinded, can you imagine how difficult it would be for a new law student to secure a loan for a school outside the T-14 or Tier 1. Without bankruptcy protection would you loan +$100K to someone going to Law Schools R Us.

Finally, given that this is the political season, you would have to believe there are hundreds of thousands of students (past, present and future) that could force this into a real political issue. As a voting bloc, students carrying loans must be in the hundreds of thousands. Now exactly, Mr./Ms. Candidate, what is your position?

sccjnthn
Posts: 81
Joined: Tue Jun 09, 2009 7:58 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby sccjnthn » Sat Aug 20, 2011 11:27 pm

Can you imagine the interest rates after this? I'm skeptical about whether it would really lead to tuition reductions or whether it could actually help students

User avatar
Sherwood2014
Posts: 54
Joined: Sun Jul 31, 2011 6:21 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby Sherwood2014 » Sun Aug 21, 2011 12:05 am

Interesting questions. Especially on how it might effect interest rates.

No one wants to carry the stigma of bankruptcy, especially an attorney. However, as long as lenders flood the legal job market because of bankruptcy protection, this is not good either.

Good point about making this political.

User avatar
gwuorbust
Posts: 2087
Joined: Tue Sep 22, 2009 11:37 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby gwuorbust » Sun Aug 21, 2011 12:14 am

not going to happen, because everyone would simply declare bankruptcy. and the people holding those student loans + the educational-industrial-complex would spend gobs of money on lobbying meaning this will never happen.

User avatar
Renne Walker
Posts: 546
Joined: Sat Jan 29, 2011 2:12 am

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby Renne Walker » Sun Aug 21, 2011 1:18 am

Do you really believe so? I would think declaring bankruptcy is a very big deal―certainly far worse than missing a few payments. Although missing payments might lead to garnishment―ugh, how would that fly with your new law firm? Hopefully some firms (perhaps mid-law) are empathetic about the weight of student loans.

As far as the lobbyist, that is one tough nut to crack. As a bloc, we would need to influence politicians running for office to vote to rescind the current law. Fail or succeed, at least it would become part of the 2012 dialogue.

Given Washington’s Modus operandi, they would likely compromise by delaying payments for 99 weeks, or something of that nature. The D.C. way.

User avatar
PDaddy
Posts: 2073
Joined: Sat Jan 16, 2010 4:40 am

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby PDaddy » Sun Aug 21, 2011 1:53 am

Renne Walker wrote:
Without bankruptcy protection would you loan +$100K to someone going to Law Schools R Us.


I am having trouble understanding the wording of your question. Your post seems to advocate for the recision of the bankruptcy laws prohibiting the discharge of student loans. However, the "bankruptcy protection" you speak of currently exists, if the question is related to the risks banks face when lending to students who might easily discharge the loans.

Your question should be, "If Congress extends bankruptcy protection to cover student loans, will banks and the USDE still lend to students at the same rate?" In other words, how risk-averse will they be? How much will interest rates increase? In the event of a repeal, what quid pro quo(s) will be needed to appease the banks and the government?

Currently, "undue hardship" is the one loophole available for discharging student loans, but its definition is highly restrictive. In a nutshell, unless you have been paralyzed in an auto accident, you're stuck.

Re-defining "undue hardship" might be as far as we need to go. If a student struggles for 10 years to pay back student loans because of lack of work or an amalgamation of several factors out of his control, some or all of the student loan debt should be dischargable. Moreover, banks that received bailouts recently should be required to lower interest rates and forgive some portion of student loans.

If the banks got bailouts, and failed to increase hiring and lending, while continuing to raise interest rates and extraneous fees, students deserve to receive bailouts from those same banks - which should be first in line to eat the profits they would have reaped from hamstrung graduates who still cannot find work, partially as a result of their greed.

gwuorbust wrote:not going to happen, because everyone would simply declare bankruptcy. and the people holding those student loans + the educational-industrial-complex would spend gobs of money on lobbying meaning this will never happen.


I disagree. There are available safeguards against this. Out of laziness, the government failed to explore them back when they changed the bankruptcy laws and instead made a sweeping change that has lopsidedly benefitted lenders ever since.

User avatar
Renne Walker
Posts: 546
Joined: Sat Jan 29, 2011 2:12 am

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby Renne Walker » Sun Aug 21, 2011 12:42 pm

I certainly agree with your idea of re-defining "undue hardship."

As a lender, I would be unwilling to loan money to 45,000 law students knowing only 30,000 jobs existed. Thus, less loan money would be available. Fewer law students flooding the market is a win-win for both the student and the lender. However, without redefining “undue hardship,” every year there will be 15,000 students on the hook unable to repay their loan, with no escape from dunning lenders.

From my perspective, the real upside of creating a new “undue hardship” policy: If the lender only has a 50:50 shot of collecting their loan back from a third of the borrowers, the practice of flooding the market with law students should greatly decease.

nymario
Posts: 239
Joined: Mon Apr 05, 2010 7:57 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby nymario » Sun Aug 21, 2011 1:05 pm

Renne Walker wrote:I certainly agree with your idea of re-defining "undue hardship."

As a lender, I would be unwilling to loan money to 45,000 law students knowing only 30,000 jobs existed. Thus, less loan money would be available. Fewer law students flooding the market is a win-win for both the student and the lender. However, without redefining “undue hardship,” every year there will be 15,000 students on the hook unable to repay their loan, with no escape from dunning lenders.

From my perspective, the real upside of creating a new “undue hardship” policy: If the lender only has a 50:50 shot of collecting their loan back from a third of the borrowers, the practice of flooding the market with law students should greatly decease.


This assumes that lenders will compensate for increased risk by somehow ascertaining which students present a higher risk and refusing to lend to them (or pricing them out individually with increased interest rates). This also allows for a certain level of moral hazard, because students with nothing to lose are now incentivized to take a gamble on BigLaw or bust, knowing that if they fail, they'll be able to walk away with lessened repercussions.

Lenders can "discriminate" based on your credit score -- a mechanism that as highly objective and has been used in the industry for ages. They aren't going to be able to determine whether you are a good risk. That means they'll be compensating by increasing interest rates for EVERYONE.

So while you *might* succeed in reducing overall enrollment (though this is a point I don't concede; I think you'll just end up with even less qualified lawyers as previously unadmitted applicants will step up to take the place of the price sensitive applicants who forego law school), this suggestion will only serve to make the situation even more dire for those who remain.

So the effects:
1. Higher interest rates for students leading to a lower quality of life for attorneys
2. Lower quality of attorneys as strong applicants are priced out and choose a next-best option career choice
3. No change for the banks since they'll reprice their products in light of the new rules

User avatar
Renne Walker
Posts: 546
Joined: Sat Jan 29, 2011 2:12 am

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby Renne Walker » Sun Aug 21, 2011 3:31 pm

This assumes that lenders will compensate for increased risk by somehow ascertaining which students present a higher risk and refusing to lend to them (or pricing them out individually with increased interest rates).
The student with a 3.0/150 going to Laws R Us should be viewed as a higher risk. Decline the loan, decrease the risk.

This also allows for a certain level of moral hazard, because students with nothing to lose are now incentivized to take a gamble on BigLaw or bust, knowing that if they fail, they'll be able to walk away with lessened repercussions.
How is that different from “find employment or bust?” As far as lessened repercussions, doesn’t bankruptcy follow you for life?

Lenders can "discriminate" based on your credit score -- a mechanism that as highly objective and has been used in the industry for ages. They aren't going to be able to determine whether you are a good risk. That means they'll be compensating by increasing interest rates for EVERYONE.
Doesn’t seem like a credit score is much of a gauge, given that most students go from high school directly to college, I doubt if their credit score is a primary factor in most circumstances (unless they have abused their credit). Lenders should place more weight on one’s grades, like the law schools do. Take it to the next step, better your grades, the better your rate. . . and the choice of school should also be factored.

So while you *might* succeed in reducing overall enrollment (though this is a point I don't concede; I think you'll just end up with even less qualified lawyers as previously unadmitted applicants will step up to take the place of the price sensitive applicants who forego law school), this suggestion will only serve to make the situation even more dire for those who remain.
The truly dire scenario is no employment because of flooding.This creates the probability of decreased pay. Some say it already exists. Have you seen the threads where grads are working doc review for a wage on par with retail sales?

So the effects:
Higher interest rates for students leading to a lower quality of life for attorneys.
Perhaps slightly higher rates for some. Upside, higher % of students employed, thus decreasing loan defaults.

2. Lower quality of attorneys as strong applicants are priced out and choose a next-best option career choice
Strong Applicants might be given preferential treatment. Today a student with a 4.0/177 is treated like a 3.0/150 student. Lenders should discourage loans to students heading for Laws R Us schools with exorbitant tuitions.

3. No change for the banks since they'll reprice their products in light of the new rules.
With fewer defaults, the situation might improve.

Given the recent high level of defaults and employment difficulties (because of the economy and flooding), the bottom line is that today’s system is not working for a third of the grads.

User avatar
IAFG
Posts: 6665
Joined: Mon Jun 15, 2009 1:26 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby IAFG » Sun Aug 21, 2011 3:34 pm

It's a neat thought experiment: if lenders didn't have the guarantee of being repaid and only gave loans to people who they thought would be able to repay, what would happen to tuition? To TTTs? To the over-supply of lawyers?

User avatar
swc65
Posts: 1003
Joined: Wed Jul 22, 2009 11:27 am

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby swc65 » Sun Aug 21, 2011 3:53 pm

Aren't all loans originated by the federal government now anyway? So if the qualifications and interest rates are statutory then changing the bankruptcy laws would not change the number of loans made or the interest rate.

User avatar
Sherwood2014
Posts: 54
Joined: Sun Jul 31, 2011 6:21 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby Sherwood2014 » Mon Aug 22, 2011 9:13 am

Good points being made by all. My favorite is the question about what would happen to all those lower ranked USWR law schools. Perhaps they would hang a big “Burger Doodle coming soon to this location” sign. Former law students taking your orders . . . tips accepted!

Growing up I would hear the saying (referring to certain occupations), “they are a dime a dozen.” My bet is that “they” did not go $125,000 in debt to get one of those dime jobs.

I also remember hearing that some professions, like Medical or Psychologist, somehow restrict the number of people entering those professions? I just scanned the net for such a control and I could not locate any restrictions. Perhaps it is an urban legion.

User avatar
bandenjamin
Posts: 172
Joined: Thu Mar 10, 2011 3:25 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby bandenjamin » Mon Aug 22, 2011 9:59 am

This also allows for a certain level of moral hazard, because students with nothing to lose are now incentivized to take a gamble on BigLaw or bust, knowing that if they fail, they'll be able to walk away with lessened repercussions.
How is that different from “find employment or bust?” As far as lessened repercussions, doesn’t bankruptcy follow you for life?


Nope, bankruptcy follows you for 10 years as a negative on your credit report. In many cases it can actually be preferred to "no credit" as lenders will view circumstances around the bankruptcy before declining you outright. Usually you will pay a MUCH higher interest rate for a loan/credit card, but you will still have your previous payment history to show that you are capable of handling credit. If the circumstances around your bankruptcy are sympathetic (i.e. bankruptcy due to major medical bills) then some of the lenders on the edges of respectability will certainly give you a chance. I would wager that many lenders would be somewhat sympathetic to "I went to law school based on bad employment information the school gave me. I was never able to secure gainful employment to pay off my $125,000 student loans, as well as pay living expenses. I had no choice but to file bankruptcy. Without that debt I am able to pay my house payment." Especially since they will be granting a secured loan, likely with a higher interest rate than what the original loan was at.

I think a better solution would be to hold the schools more accountable on their end of this equation. Perhaps making the first $61,500 ($20,500 per year) of the loan non dischargeable, and any remaining amount would be on the school to reimburse the lenders for. This would leave the schools more accountable to not take students who are marginal at best. Schools where they are accepting people with 3.0/150 scores would likely be more hesitant to take on the higher risk.

Z3RO
Posts: 526
Joined: Thu Sep 03, 2009 11:57 am

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby Z3RO » Mon Aug 22, 2011 10:05 am

bandenjamin wrote:
This also allows for a certain level of moral hazard, because students with nothing to lose are now incentivized to take a gamble on BigLaw or bust, knowing that if they fail, they'll be able to walk away with lessened repercussions.
How is that different from “find employment or bust?” As far as lessened repercussions, doesn’t bankruptcy follow you for life?



I think a better solution would be to hold the schools more accountable on their end of this equation. Perhaps making the first $61,500 ($20,500 per year) of the loan non dischargeable, and any remaining amount would be on the school to reimburse the lenders for. This would leave the schools more accountable to not take students who are marginal at best. Schools where they are accepting people with 3.0/150 scores would likely be more hesitant to take on the higher risk.


This would shut down almost the entire T3 and T4 overnight.

User avatar
bandenjamin
Posts: 172
Joined: Thu Mar 10, 2011 3:25 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby bandenjamin » Mon Aug 22, 2011 10:14 am

Z3RO wrote:
bandenjamin wrote:
This also allows for a certain level of moral hazard, because students with nothing to lose are now incentivized to take a gamble on BigLaw or bust, knowing that if they fail, they'll be able to walk away with lessened repercussions.
How is that different from “find employment or bust?” As far as lessened repercussions, doesn’t bankruptcy follow you for life?



I think a better solution would be to hold the schools more accountable on their end of this equation. Perhaps making the first $61,500 ($20,500 per year) of the loan non dischargeable, and any remaining amount would be on the school to reimburse the lenders for. This would leave the schools more accountable to not take students who are marginal at best. Schools where they are accepting people with 3.0/150 scores would likely be more hesitant to take on the higher risk.


This would shut down almost the entire T3 and T4 overnight.


Problem solved :-)

areyouinsane
Posts: 208
Joined: Tue Jun 14, 2011 3:22 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby areyouinsane » Mon Aug 22, 2011 10:17 am

The bullshit "reason" given for making student loans non-dischargeable was that the lender has nothing to repossess, unlike a car loan or mortgage.

It's complete bullshit because in 99% of Ch. 7 bankruptcy cases, the trustee does not go after any belongings of the debtor anyway. I did a Ch 7 for a buddy of mine last year who owed about 35 K on credit cards, and took out about 180 K in HELOC against his house, which after the housing bubble pop was worth about 90 K (the house itself).

He bought about 30 K worth of equipement with the loans & credit cards to start a landscape business (which failed), as well as tons & tons of "toys": plasma TV's, Bose stereos, about 500 Blu-Ray discs, every Wii game, etc. etc. Also of course the Viking stove & fridge and other luxury appliances and such. Basically he just pissed away most of the $$$ on junk/toys, and used the rest to live off of when his landscape business failed (he got a DWI and was unable to drive for 6 months, so that pretty much killed the business).

At the Ch 7 hearing the trustee just went thru the motions and discharged the whole nut. He didn't have to fork over a single toy or item he'd bought: not the lawnmowers, the backhoe, the pickup trucks- NOTHING. It was like he hit the lottery.

It pisses me off to no end that this guy got to enjoy a 5 year unlimited shopping spree and not only have all the debt forgiven, but also got to keep ALL of the stuff he bought. He basically pulled off legalized highway robbery. The only thing he "lost" was his house as the note/mortgage was discharged, but get this: The bank still hasn't even begun the foreclosure proceeding, so he''s still living there for FREE! So on top of all the toys and goodies, he now also has a "free" house to live in. He hasn't paid a dime towards the mortgage, property taxes, or insruance since June 2010, and will probably get at least another year there for free given the mess that foreclosure has become with all the doc problems and such.

Meanwhile, I borrowed about 115 K for a solid Tier 1 lawschool, struggled to pay loans during periods of unemployment and low wage doc review and shitlaw, and now am totally unemployed and hounded day and night by Sallie Mae and Access Group. It's only 10 am and I've already gotten 7 calls from the collection agencies about my deliquient student loans. The fuckers are simply relentless. At this point the interest and penalties have essentially destroyed the rest of my adult life. I'll never own a home, get a car loan, or be able to "rebuild." That debt will dog me forever unless I leave the country, which I plan on doing in November or December. My only other choice is suicide (which, sadly, is also becoming more common among those in my position). Once you fall behind by 8 to 10 months, it's all over. I've used up all my deferments, so now there's nothing left but being endlessly hounded for $$$ I don't have. Go to the "Student Loan Justice" website and there's thousands of horror stories just like mine. A Mafia don couldn't dream of the collections powers these bastards have. They're exempt from the FDCPA, usury laws, you name it. They even call all day on Sundays and holidays- I had to get an extra cell phone battery b/c all the robo-calls and messages usually kill my battery by 1 or 2 pm on the average day.

Thus we are in the ironic policy position of meting out the stiffest "punishment" to those who actually borrowed $$$ to become educated and better themselves, while the most reckless and irresponsible clowns (like my buddy) get to walk away from their fuck-ups scot free.

Sadly, the law will never change. As a poster above said, the lenders have millions to spend on lobbying. The 2005 BK code revisions were essentially written by the legal team at Access Group.

We're really in uncharted waters here w/ regards to this mess. Never in history have people in their early to mid 20s been saddled with such toxic shitloads of debt. The economy gets worse by the day and if UE was measured honestly we'd be close to 1933-1934 levels of joblessness. And the few jobs there are out there don't pay enough to service the debt.

As I've said before, if you have a $1000 a month loan payment and work doc review for $25 an hour, your "real" wage is closer to $16 to $17 an hour once loans are deducted from salary. That's why the "2% unemployment rate" among professional degree holders is a joke, since a large % of those people aren't earning any more money than a high school dropout. Their "edcuation" was essentially a complete and total waste of time. The legal market is not coming back, and in fact will continue to contract as the larger economy swirls deeper & deeper down the toilet.

NotMyRealName09
Posts: 1394
Joined: Mon Nov 09, 2009 5:50 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby NotMyRealName09 » Mon Aug 22, 2011 4:51 pm

Renne Walker wrote:Do you really believe so? I would think declaring bankruptcy is a very big deal―certainly far worse than missing a few payments. Although missing payments might lead to garnishment―ugh, how would that fly with your new law firm? Hopefully some firms (perhaps mid-law) are empathetic about the weight of student loans.

As far as the lobbyist, that is one tough nut to crack. As a bloc, we would need to influence politicians running for office to vote to rescind the current law. Fail or succeed, at least it would become part of the 2012 dialogue.

Given Washington’s Modus operandi, they would likely compromise by delaying payments for 99 weeks, or something of that nature. The D.C. way.


After this recent recession, bankruptcy has lost some of it's stigma, in my opinion. On the other hand, the reason Congress will never address this issue is because Uncle Sam is the gurantor on many student loans, and as the laws of priority in bankruptcy tells us, the government ALWAYS gets paid first.

User avatar
gwuorbust
Posts: 2087
Joined: Tue Sep 22, 2009 11:37 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby gwuorbust » Mon Aug 22, 2011 6:13 pm

areyouinsane wrote: I had to get an extra cell phone battery b/c all the robo-calls and messages usually kill my battery by 1 or 2 pm on the average day.


Have you tried switching phone numbers?

Thanks for the post, TLS needs more of this.

User avatar
sunynp
Posts: 1899
Joined: Tue May 24, 2011 2:06 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby sunynp » Mon Aug 22, 2011 6:18 pm

Didn't law school and undergraduate student loans used to be dischargable? I thought it was a relatively recent change in the law that made them non-dischargable. What were the interest rates like then? I think that people didn't just declare bankruptcy because of ethical rules- but I don't actually know.

User avatar
gwuorbust
Posts: 2087
Joined: Tue Sep 22, 2009 11:37 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby gwuorbust » Mon Aug 22, 2011 6:20 pm

Renne Walker wrote:Do you really believe so? I would think declaring bankruptcy is a very big deal―certainly far worse than missing a few payments. Although missing payments might lead to garnishment―ugh, how would that fly with your new law firm? Hopefully some firms (perhaps mid-law) are empathetic about the weight of student loans.

As far as the lobbyist, that is one tough nut to crack. As a bloc, we would need to influence politicians running for office to vote to rescind the current law. Fail or succeed, at least it would become part of the 2012 dialogue.

Given Washington’s Modus operandi, they would likely compromise by delaying payments for 99 weeks, or something of that nature. The D.C. way.


If you have a biglaw job, you are making enough where - without student loan payments - not having a credit card is probably not an issue. AND by declaring BK they would save 120k+.

If you don't have a biglaw job, declaring BK on 120k in debt when you are only making 60k would be a no brainer.

so which group, exactly, would payback their student loans? Seems like the obvious answer is nobody.

EDIT: only issue is, of course, the implication that BK would have on disbarment. But I don't think it leads to automatic disbarment, probably just financial counseling and probation review for a year or two by the state local bar.
Last edited by gwuorbust on Mon Aug 22, 2011 6:27 pm, edited 1 time in total.

User avatar
gwuorbust
Posts: 2087
Joined: Tue Sep 22, 2009 11:37 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby gwuorbust » Mon Aug 22, 2011 6:23 pm

sunynp wrote:Didn't law school and undergraduate student loans used to be dischargable?


prior to 1976....

User avatar
Renne Walker
Posts: 546
Joined: Sat Jan 29, 2011 2:12 am

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby Renne Walker » Mon Aug 22, 2011 11:41 pm

Under the current system, the only person responsible is the student. The school receives their tuition $$. The Government and Bank receives the loan money back with interest (even though they may need to hire an army of collectors).

The only way to make the lender(s) responsible is to rescind the policy disallowing students from declaring bankruptcy. Or as one poster suggested, redefine “undue hardship,” enabling students to legitimately discharge their debt.

Law Schools R Us is a undoubtedly the biggest culprit in creating this mess, and they are [by far] the biggest winner. They receive a boatload of $$ no matter if none of their law students secure a job to satisfy their debt.

Our present system is a unique blend of Bernie Madoff meets Sub-Prime Loans. . .a rosy future without having to pay a nickel for three and a half years. All they need is a mark. How does the adage go? If you cannot spot the mark in the room. . . you are the mark.
Welcome to Law Schools R Us.

schooner
Posts: 374
Joined: Sat May 14, 2011 6:50 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby schooner » Tue Aug 23, 2011 1:08 am

Not too long ago, one of my credit cards gave me like a 40,000 credit line. (They've halved that even though my creditworthiness hasn't changed.) I always wondered if I could just use one of those "cash checks" to pay off my undergrad students loans, then declare bankruptcy to get rid of the debt. I wouldn't do that for a bunch of reasons, but still, I'm curious if this is legal?

shoeshine
Posts: 1241
Joined: Wed May 04, 2011 10:58 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby shoeshine » Tue Aug 23, 2011 1:17 am

schooner wrote:Not too long ago, one of my credit cards gave me like a 40,000 credit line. (They've halved that even though my creditworthiness hasn't changed.) I always wondered if I could just use one of those "cash checks" to pay off my undergrad students loans, then declare bankruptcy to get rid of the debt. I wouldn't do that for a bunch of reasons, but still, I'm curious if this is legal?


Anything that looks "structured" to benefit the filer can be (and often is) reversed by bankruptcy courts. They usually look about two years back and see if you tried to structure or hide assets. I have not heard of people specifically doing what you said but I have heard of them reversing the sale of real estate for this reason.

User avatar
Kirk
Posts: 40
Joined: Tue Jul 19, 2011 2:58 pm

Re: Rescind The Student Lender’s Bankruptcy Protection Law

Postby Kirk » Tue Aug 23, 2011 11:11 am

The link below does not address the oversaturation of law school students or how to remedy the bankruptcy law for student loans but it does tackle several of the practices and scams plaguing our system.

http://blogs.wsj.com/law/2011/08/22/a-qa-with-the-creator-of-inside-the-law-school-scam/




Return to “Forum for Law School Students”

Who is online

Users browsing this forum: Google Feedfetcher and 4 guests