Re: Youssef v. Navient Solutions LLC, et al., Adv. Pro. No. 17-1085, in the U.S. Bankruptcy Court for the Eastern District of New York.
CLAIM SITE: NavientStudentLoanSettlement.com
Borrowers are eligible for free money under $16 million student debt settlement – but you need to file a valid Claim Form by November 20, 2023. There is no cost to do so.
The new means test numbers came out:
It hasn’t changed much for Florida except – down 3k for family of 3 though. Very odd, but whatever.
New as of Nov 1: https://www.justice.gov/ust/eo/bapcpa/20231101/bci_data/median_income_table.htm.
I ran across this statistic and wanted to share with you about the DOJ attestation process to discharge federal student loans. A great many are still pending.
Say you have a private student loan and you have previously filed a bankruptcy. Was your private student loan discharged? I’m presuming you did not file an adversary case to obtain a specific ruling as to dischargeability of these loans.
Loans that could have been discharged as beyond the cost of attendance, that portion that was over and above tuition, books, room and board etc. may be the subject of Homaidan. My understanding is that you can remain a class member for a discharge of any amounts that are outside of the cost of attendance and you’d remain responsible for anything else. You can also opt out and pursue relief on your own of that or the remainder of the loans, or seek alternative grounds for relief such as ineligible institution, non-dependent borrower or undue hardship.
The Supreme Court decision of United Student Aid Funds v. Espinosa (2010) 559 U.S. 260 is usually cited for the proposition that a court may not make an order on whether student debt is discharged without an adversary proceeding.
In USAF v. Espinosa, the issue was whether confirmation of a chapter 13 plan which provided for discharge of the student loan debt could be reversed. Rafael “Ted” Cruz lost in his quest to convince the Supreme Court to void the plan by means of FRCP Rule 60(b)(4).
But bankruptcy judges and practitioners were cautioned to always use an adversary proceeding for determinations on whether educational debt is discharged by § 523(a)(8).
I just put a client together with a reporter doing a story about high interest vehicle loans. I’ll leave the details to him and post here when the story comes out — but I did want to remind folks that there are ways out of these loans.
This particular loan was for 17.45% interest loan. The client made low six figures in income from a very reputable employer at the time. Why such high interest? I’m not sure what her credit score was at the time, but the incredibly high interest rate caused her to pay $58k for a used vehicle she bought at $35k. She made payments for approximately two years, but with a mortgage, and everyday expenses going up, she couldn’t keep it up.
Her solution was to file bankruptcy and surrender the car. This way they couldn’t come after her for the deficiency balance. Other things were addressed in the bankruptcy as well. But this vehicle and the 17.45% interest rate was a leading cause. We assist clients in obtaining other more sustainable vehicles during the bankruptcy – usually with a reasonable interest rate, warranty, sustainable payment. We get that you need a vehicle. You just need one that makes financial sense.
The Navient settlement today reflects a broad shift in the understanding of higher education debts that can be summarily discharged in bankruptcy.
The case is Homaidan v. Sallie Mae Inc., Bankr. E.D.N.Y., No. 17-01085, motion filed 7/21/23.
If you are considering bankruptcy to fix your finances, make sure to get your student loans taken care of also. We do both, and if you’d like to set up a strategy session to discuss your specific situation (credit card debt, house, student loans, income and assets) and understand your options (and you’re in the Tampa area or its surrounding counties), please see the link below. We freely discuss any options you can take advantage of if bankruptcy is not a good option as well.
Parent Plus loan borrowers and grad loan borrowers have received the short stick for all the recent announcements post the Supreme Court decision on student loan forgiveness. The new bankruptcy rule will allow debtors to create a Chapter 13 Plan to easily provide IDR credit:
Changes: We have revised §685.209(k)(4)(iv)(K) to provide that the Department will award credit toward IDR forgiveness for months where the Secretary determines that the borrower made payments under an approved bankruptcy plan.
While there is a process for this to occur now it is not widely understood and rarely used. In most cases, borrowers owe more in federal student loans when they exit bankruptcy than what they owed before filing. There is no reason why borrowers should not receive IDR credit towards their student loans during a Chapter 13 bankruptcy which often is five years. This has been a big bone of contention of ours for several years. Depending upon how the new change will be applied (the regs aren’t out yet), debtors should be able to obtain IDR credit while making a court approved payment plan which could be substantially lower than the normal IDR payment amount outside of bankruptcy. This may be the only recourse available to those with Parent Plus loans who don’t or can’t double consolidate their loans in time to avoid ICR. It may also be the only way to address a high payment for those with grad loans who have high medical, housing or family expenses and are stuck with an unaffordable IDR payment even under SAVE. It will be particularly good for those in the next 12 months who won’t see the SAVE payment reductions until July 2024.
Can I do All This Myself or Do I Need an Attorney?
Yes, dealing with your debt is something you can do yourself. But like anything, sometimes it is better to hire someone who does this day in and day out. Particularly if you have a lot of debt or assets to protect. Many of the borrowers we speak with are unaware of key governmental programs and how to jump through the various hoops to qualify. The student loan system itself is the least transparent of any system that I have ever seen in my 30 years of practicing law. For private loans, negotiation or litigation can be involved; both of which a borrower is not well suited for in most cases. We know deadlines that may apply for tax free relief.
If it’s a bankruptcy, we know all the trustees, the rules, the loopholes, basically how to not only get things done, but also to obtain the best result.
Basically, a Rule 2004 exam is just like any other deposition. In every bankruptcy case, a 341 creditors meeting is set approximately five weeks after a bankruptcy petition is filed. A 341 examination is usually short (about 15 minutes on average) and viewed as the only opportunity for a creditor, trustee or other interested person to ask questions of debtor under oath. Rather than the “only” opportunity to test the debtor on the merits of his or her case, a 341 meeting is actually only the “first” opportunity to ask a debtor questions about their financial history or other relevant matter. A much lesser used option exists to get a debtor under oath – the Rule 2004 Exam.
A 2004 exam can cover your pre-filing actions or conduct. Often a debtor’s financial condition and debts are the prime focus of the exam. Many 2004 exams are associated with a possible action to deny a bankruptcy discharge or some other adversarial case. It is more formal and often involves production of documents.
Don’t forget-under § 727(a)(3), a discharge can be denied if the debtor, “failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor’s financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case…”
Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog