Resources to Learn More About For Profit Student Loan Forgiveness

Student loans are a big problem for folks in the Middle Tennessee area. After I gave an interview on the “for profit” student loan forgiveness story last week, my phone started ringing off the hook.

One of the statements I made (which didn’t make the interview) was that a borrower who wants to make a forgiveness request may not need to hire a lawyer to help them with this process.

I mean, I love taking client money as much as the next lawyer, but there are resources online that you should review before talking to a lawyer.

I think the official Federal Student Aid website was a great resource. The site is written in good, clear text and contains a a link at the bottom, under the “How to Repay Your Loans” tab. The specific link is “Forgiveness, Cancellation, and Discharge.” This section contains a comprehensive “Frequently Asked Questions” section, as well links to the application to utilize the forgiveness process.

Lawyers are great and can be a benefit in any process like this. But, before you hire one, I’d suggest that you read the website and get an understanding of the issues first. Then, you know, bring in the big guns.

Loophole Under Federal Laws May Allow Some “For Profit” College Student Loans to be Forgiven

 

Last week, I talked to NewsChannel5 about a loophole under federal law that may allow borrowers to have their student loans forgiven, where they attended a “for profit” college that has either closed or made clearly false claims to attract students.

NewsChannel5

The law doesn’t apply to traditional colleges or universities, but, instead, to “for profit” colleges, a list of which can be found here.

These colleges generally target non-traditional students (i.e. older students with full time jobs), generally offer only night or online courses, and are known for advertising aggressively.

A great background “primer” on these issues can be found in “The Rise and Fall of For Profit Schools,” which suggests that the “advertising aggressively” part is the root of the trouble. Saying that “these schools made promises they couldn’t keep,” the article says that the industry may misrepresentations to get the attention of prospective students. This generally involves advertising inflated post-graduation job placement rates, misleading claims about potential future earnings, and lies about their faculty and facility quality.

With the economic downturn, as unemployed workers were looking for work and new job skills, those prospective students were the perfect marks for such alleged claims. Because many were unemployed or low income, the student body relied on federal student financial aid to pay the tuition.

The NewsChannel5 report drew from this Wall Street Journal article, which presented the shocking numbers of students availing themselves of the loan forgiveness process. Five years ago, the government had received only a handful of such requests; in the past 6 months, the story says, “more than 7,500 borrowers owing over $164 million have made applications.

Yikes.

Teaching CLE on Social Media for Lawyers: Do you really want your Lawyer as a Facebook Friend?

Because I’m an expert level blogger–or, well, I am when I actually, you know, blog–I’ve been asked to teach the audio CLE seminar “Marketing Your Legal Practice: Websites, Blogs, and More,” presented by M. Lee Smith Publishers. This seminar takes place on Thursday, August 27, 2015, at 2pm CST.

Just like the title says, I’ll be talking about all the things in social media and online that lawyers need to be thinking about. Plus, if you know me, I shoot pretty straight and offer my opinions when I think certain things are a waste of time.

Tune in, follow my advice, and watch the referrals roll in. Or, maybe, watch the scam emails from fake clients roll in (watch that CLE too).

Let’s Get Political for a Moment: My Endorsements for the 2015 Nashville Elections

I stay away from politics. I make sure to always vote, but, aside from the occasional sign in my yard, I tend to read the news, pick who I think would do a good job (regardless of party affiliation), and go back home. I don’t even wear the “I Voted” sticker.

But, this year is a little different, because I personally know some candidates and really think they’d do a great job. (And, if you know me in real life, you know that I wouldn’t go to this trouble unless I was sincere.)

First Endorsement: Charles Robert Bone for Mayor. (Disclaimer: I work with CRB.) When Charles Robert first announced he was running for mayor, I hated the idea, but not for any good reason. Instead, because he’s one of the smartest, hardest working lawyers at our firm. Why should Nashville’s gain be my firm’s loss, right?

Here at the firm, when we have a complicated case that needs some strong, smart firepower, my practice group has always roped Charles Robert in. He’s a great lawyer, smart, practical, and a leader at our firm. Plus, he’s sincere, nice, and funny. He’s got a real “Nashville” vibe, and he’s the type of person I want representing my city as we make some tough decisions in the next few years. I’m voting for him.

Second endorsement: David Briley for Vice Mayor. You think you’re seeing a pattern here, don’t you? Yes, I work with David Briley. Again, if you know me, you know I don’t give compliments easily, but I think he’d be great in this position. Briley is a leader at our firm and helped guide the firm through a tough economy over the past few years–both by leading the firm through hard decisions in lean financial times and also winning really big cases.

Last year–here’s where I’m biased–he and I worked together on a case against a Fortune 100 company (and won), and I was impressed with his strategy, decorum, and intelligence. He’s a guy I want on my side.

Third endorsement: Bob Mendes for Metro Council at Large: Wow, another lawyer? You really think I’m biased now. But here’s a secret: I hate having cases with Mendes. He’s smart, analytical, and great at strategy. When I see that he’s on the other side, I know I have to bring my “A game.” That’s what he would bring to this office. He would go to sleep thinking about the city and wake up the next morning thinking about the city. He would be a great councilman.

My other endorsements: I like John Lasiter for Metro Council At Large. I think he has an interesting perspective, and he seems engaged with the city.

I also like Peter Westerholm and Anthony Davis. I’m not in either of these Metro Council Districts, but they both are smart, engaged incumbent leaders who seem to really be looking out for Nashville’s future.

If a Debt Isn’t Scheduled in a Chapter 7, Is it Discharged?

Growing up, my dad liked the saying, “If a tree falls in the woods and nobody is there to hear it, does it make noise?” (Actually, he used the alternate version, involving a bear, bear poop, and the resulting odors).

But, let’s get back to creditor rights talk: “If a Debt isn’t Scheduled in a Chapter 7, Is it Discharged?

The general thought is, if you want to discharge the debt, you have to list and send notice that creditor. Most Debtor Bankruptcy attorneys err on the side of listing any and everybody: paid debts, unpaid debts, potential debts, everything.

This comes from 11 U.S.C. § 523 (a)(3), which says that all debts are discharged under § 727, unless those debts that are:

“…neither listed nor scheduled under section 521(a)(1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit–

(A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing; or

(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request…”

Based on the text above, it’s pretty clear, right? If it’s not listed, it’s not discharged, right?

Well, the Sixth Circuit Court of Appeals has very convincingly ruled otherwise, in In re Madaj, 149 F.3d 467 (6th Cir. 1998). In that case, the debtor intentionally hid the bankruptcy from the creditors (who, coincidentally, were his foster parents). They weren’t listed, weren’t warned, and, in fact, the debtors actively kept the case a secret from mom and dad.

But, nevertheless, the Bankruptcy Court noted that the case was a no-asset case, meaning no Proof of Claim deadline was ever set, such that the § 523 (a)(3) timelines and deadlines were never implicated. The Court said that, because no claim deadline was ever set in this no asset case, then it didn’t matter when the creditors learned of the Bankruptcy Case: the instant they learned about the Bankruptcy, the debt was discharged. Subpart (A) above never came into play, because no Proof of Claim was ever set. Heck, the Court reasoned, the creditor could file a Claim today and still be technically “timely.”

“Their learning of the bankruptcy after the entry of the discharge order did not transmogrify the debt into one that is excepted from discharge under some provision of the Code other than § 523(a)(3)(A).”

Once upon a time, when a creditor wasn’t listed, the debtor would file a Motion to reopen the closed bankruptcy case and then amend their Schedule F to include the debt. The Court expressly rejected that practice. Instead of imposing administrative hassle on the Clerks and counsel, the Court found that such debts–listed or unlisted–are discharged. In a no asset case, “the fact that the debts were not listed becomes irrelevant.”

So, in these situations, that sound you hear is the debt getting discharged.

Davidson County Chancery Court Case and Pleading Access Online

Last year, I noted that the Davidson County Chancery Court had started a service that showed case dockets online. This Chancery Court Public Records Access site provided the names and dates of filings, but not copies of the actual pleadings. Last year, I predicted that electronic copies of pleadings can’t be far behind.

I was right. Now, the Chancery Court has a second site, called Chancery Information Access, on which you can actually view copies of pleadings. It is a subscription service. Here is information on how to register.

It costs $15 a month. If you think that’s expensive, well, wait until you need a copy of pleading and have to walk to the Courthouse to get it.

Now, I’m hoping that the next step will be for Chancery Court to accept remote electronic filing of pleadings.