Friday, January 17, 2020

Two Homeless People Were Shot in Their Blankets Under a Baton Rouge Overpass: What Can We Do to Alleviate the Homelessness Crisis


Last month, two homeless people were shot to death while sleeping in their blankets under a Baton Rouge overpass. Christiana Fowler, age 53, and 43-year-old Gregory Corcoran Jr. were found dead near a roadway not far from the Bishop Ott Homeless Shelter.

Violent death has become almost routine in most American cities. In 2019, Baton Rouge experienced 83 murders, and the toll in many US cities is much higher.

But for me at least, the deaths of Fowler and Corcoran were especially poignant. As Advocate news writer Jacqueline Derobertis reported, both victims had people in their lives who loved and cared about them. Ms. Fowler had a daughter and an ex-husband who had offered to get her hotel room on the night she died just to get her off the streets. Mr. Corcoran left four children under the age of 18.

The Advocate published photos of Fowler and Corcoran, which powerfully attested to the fact that neither one had always been homeless. Fowler appears radiant with a smiling face and a confident gaze. Corcoran's photo shows him wearing a coat and tie, serenely looking at the camera.

Homelessness is an urgent problem in America. Thousands of Americans live on the streets or in tent jungles.  According to some reports, almost half of America's homeless are in California, but who knows the truth of the matter? Almost every American city has a significant homeless population.

The experts say homelessness is linked to mental illness, joblessness, and drug abuse. Indeed, Fowler suffered from drug addiction, and Corcoran had been thrown out of work. But to better understand the nation's current homelessness crisis, we might learn something from studying the last great period of homelessness in America--the Great Depression.

That era was powerfully depicted in John Ford's great movie, The Grapes of Wrath. Based on John Steinbeck's Pulitzer Prize-winning book of the same name, the movie tells the story of the Joads, a family of Oklahoma tenant farmers who were forced off their farm by a heartless landowner.

The Joads were fictional, but more than a million homeless people flocked to California during the 1930s, where they hoped to find jobs and a better life. Thanks to World War II, most of the Okies were able to regroup. Many found work in the defense and construction industries. Others settled in California's Central Valley and became truck farmers. The great Merle Haggard, who penned the song Okie from Muskogee, was the son of Okie parents.

The homelessness crisis of the Thirties differs from today's homelessness epidemic. Many of the homeless people of the 1930s survived as intact families. The Joad family, for example, was made up of four generations. And the Okies of the Thirties had job skills. Most had been smalltime farmers, who knew something about construction, agriculture, and mechanics.

It should not take another war to solve America’s homelessness crisis. Our communities have the resources to alleviate this human tragedy. Expanding mental health services will help, along with more treatment options for drug addiction. But all of us have a personal responsibility to nurture young people to develop job skills, to become self-reliant, and to be resilient. 

And we should recognize our fellow citizens who help unfortunate people get back on their feet. Ivy Alford, my father-in-law, has cooked meals for homeless men at the Bishop Ott Homeless Shelter for more than 25 years. Over the years, Ivy and his family have cooked more than 5,000 meals for the homeless.

Ms. Fowler and Mr. Corcoran had family members who reached out to them. Had there been more time, both might have lifted themselves out of homelessness. Tragically, they were murdered.  Let’s hope their death underscores the urgency of the homelessness crisis in Baton Rouge.

Christiana Fowler and Gregory Corcoran Jr.



Tuesday, January 14, 2020

Little v. U.S. Department of Education: Should middle-aged people take out student loans to attend college?

Walter Lee Little and Linda Leticia Little, a married couple, are 58 years old. About thirteen years ago, they both took out student loans to take courses at various community colleges; but they never obtained degrees. They filed for bankruptcy in 2017 and applied to have their student-loan debt forgiven.

Like many student-loan debtors, they dived into the world of bankruptcy law without an attorney. The U.S. Department of Education was represented by a lawyer from the U.S. Attorney's Office.

The Littles filed an adversary action to obtain student-loan debt relief, but their case never went to trial. In June 2019, the Department of Education (DOE) filed a motion for summary judgment against the Littles, and Bankruptcy Judge Robert L. Jones granted DOE's motion in October.

In ruling against the Littles, Judge Jones applied the three-part Brunner test to determine whether the Littles met the Bankruptcy Code's "undue hardship" standard.  Regarding part one, Judge Jones said there was a factual dispute regarding whether the Littles could maintain a minimal standard of living if they were forced to repay their student loans.

Regarding Brunner's other two tests, Judge Jones flatly ruled against the Littles. The Judge ruled that the Littles could not show that "additional circumstances" would persist for "a significant portion of the repayment period of the loans . . ." (p. 859, quoting Brunner). Remarkably, Judge Jones said the Littles must show "a certainty of hopelessness" about their financial future, a standard that some other courts have rejected. 

The Littles argued that they were in their late 50s and nearing retirement. And they also pointed out that Mr. Little suffered from a variety of medical conditions and was disabled.

Judge Jones was entirely unsympathetic. "Mr. Little says that he suffers from a variety of medical conditions," the Judge observed, but those conditions "do not prevent Mr. Little from collecting disability payments or pension payments" (p. 860).

Regarding Mrs. Little's age and health prospects, Judge Jones said that "Mrs. Little was older when she went back to school and knew she would have to make payments in her later years" (p. 862).

In sum, Judge Jones ruled,  "The Littles chose to go to school later in life; the repayment of debts will thus last into their later years. Age... does not prevent the Littles from collecting pension payments; instead, their monthly income should increase upon turning 65" (p. 861).

As to Brunner's good faith test, Judge Jones ruled against the Littles as well. The Judge emphasized that the Jones had not made a single payment on their student loans

My sympathies are entirely with the Littles.  Judge Jones' decision partly rested on the fact that the Littles will receive pensions when they turn 65 based on their employment with ATT.  But those pensions are quite small. Mr. Little will receive about $850 a month and Mrs. Little anticipates getting $700 a month.  Judge Jones also noted that Mr. Little is entitled to receive a $900 disability check.

But these three sources of income together only amount to a gross income of $2450 per month--barely enough to live on.  It is completely unreasonable to expect the Littles to make student-loan payments during their retirement years to pay for educational experiences that apparently did not benefit them financially.

Would the Littles have a better case had they made some student-loan payments? Perhaps. But the Littlesstruggled financially for a variety of reasons that were beyond their control. They submitted documentation that they had been on food stamps for a time and had significant medical expenses (p. 857).

Judge Jones fortified his decision with citations to many legal opinions, but his opinion failed to note how much the Littles had borrowed to attend college or the interest rate on their loans. Nor was it clear from Judge Jones' opinion how long the Littles' loans were in forbearance or deferment, periods when they had no legal obligation to make student-loan payments.

In my opinion, the Department of Education considers Mr. and Mrs. Little to be collateral damage from an out-of-control student loan program that shovels federal money to colleges and universities without regard to the quality of their programs.

Judge Jones' Little decision shows that it is risky for middle-aged people to take out student loans to attend college. Moreover, although Judge Jones may not realize it, his decision in Little v. U.S. Department of Education undermined the ability of Mr. and Mrs. Little to live securely and in dignity when they reach their retirement years.


References

Little v. U.S. Department of Education, 607 B.R. 853 (Bankr. N.D. Tex. 2019).














Monday, January 13, 2020

Rosenberg v. ECMC: A NY bankruptcy judge cuts through the crap and discharges $221,000 in student-loan debt

Less than a week ago, Bankruptcy Judge Cecelia G. Morris cut through the crap and granted a student-loan discharge to Kevin Rosenberg, a Yeshiva University law graduate. Judge Morris's opinion was so compassionate and surprising that the lyrics of a traditional Christmas carol come to mind: "A thrill of hope, the weary world rejoices, for yonder breaks a new and glorious morn."

Judge Morris's decision may be appealed. If so, and her ruling is affirmed by the Second Circuit Court of Appeals, it will have enormous implications for millions of student loan debtors.

As even the nation's politicians now realize, the federal student-loan program has run amok like a crazed bull in Pamplona. Millions of distressed but honest student debtors need bankruptcy relief from crushing student debt, which now totals $1.6 trillion.

Unfortunately, many bankruptcy judges have denied student-loan debt relief even under the most heartwrenching circumstances. In most cases, these harsh judges have relied on the famous Brunner test to plunge the knife into the hearts of desperate student-loan borrowers.

The Brunner test, first articulated by the Second Circuit Court of Appeals in 1987, requires the debtor to show three things to discharge student-loan debt: 1) The Debtor cannot pay off the loan and maintain a minimal standard of living, 2) The debtor's precarious financial circumstances are likely to persist over the term of the repayment period, and 3) The debtor made good faith efforts to repay the student loans.

Educational Credit Management Corporation (ECMC), the Department of Education's designated assassin in the bankruptcy courts, almost always takes the position that the debtor cannot meet even one of the Brunner test's three prongs. The debtor is often forced to defend against ECMC's tactics without a lawyer; standing like Christ before Pontius Pilate--depicted by ECMC almost like a common criminal who deserves a public flogging.

Again and again, ECMC has argued to the courts that a debtor is unworthy of bankruptcy relief because the debtor lived above a minimal lifestyle. Maybe a debtor eats at fast-food restaurants a few times a month--what a spendthrift! Maybe the debtor has a pet-- an outrageous extravagance! Maybe the debtor rents an apartment with an extra bedroom or makes modest deposits into a retirement account--how recklessly irresponsible!

A summary of Judge Morris' opinion

And then--just a few days ago--a remarkable thing happened: Judge Morris cut through ECMC's crap and applied the Brunner test the way it was originally meant to be applied.  Applying a correct and well-reasoned interpretation of Brunner, she concluded that Kevin Rosenberg was entitled to relief from his student debt--about $221,000.

Here is a summary of Judge Morris's reasoning.

First, to determine whether Rosenberg can maintain a minimal standard of living if forced to repay his student loans, Judge Morris simply looked at the schedule of income and obligations that Rosenberg filed when he applied for bankruptcy. That schedule attested that Rosenberg's net monthly income was $2,456 and his expenses amounted to $4,005. Clearly, Rosenberg met the first prong of the Brunner test.

Second, the judge applied the Brunner test's second prong, which asks whether Rosenberg's financial circumstances were likely to persist over the "repayment period" of the student loans. Judge Morris pointed out that Rosenberg's repayment period had ended after his creditor accelerated his loan and demanded payment in full. Thus, it was evident that Rosenberg passed the second prong of the Brunner test.

Finally, Judge Morris ruled that Roseberg met Brunner's third prong; he had made good faith efforts to repay his student loans. According to the Judge's analysis, Rosenberg had only missed six payments over a 13-year period.  Indeed, for 10 of those 13 years, his loan was in forbearance or deferment and he wasn't required to make any payments.

Judge Morris ruled in favor of Mr. Rosenberg by interpreting the Brunner test as it was originally meant to be interpreted. Brunner, she noted, dealt with a debtor who filed for bankruptcy only a few months after graduating from college. Over the years, however, courts have incorrectly applied punitive standards to Brunner, making it almost impossible for worthy student-loan borrowers to obtain bankruptcy discharges.

"This Court will not participate in perpetuating these myths," Juge Morris wrote. She then applied Brunner to Mr. Rosenberg's situation as she believed the Second Circuit meant for the test to be applied.

What does the Rosenberg decision mean for 45 million student-loan debtors?

As I stated above, if Judge Morris's Rosenberg opinion is appealed and upheld by the Second Circuit, the implications are enormous.  A majority of federal circuits rely on the Brunner test to determine whether a debtor's student loans constitute an undue hardship and are dischargeable. Most federal courts have misinterpreted Brunner so harshly that many legal commentators maintain that student loans are never dischargeable in bankruptcy.

If the Second Circuit endorses Judge Morris's opinion, then bankruptcy courts across the country that have relied on Brunner for the past three decades will feel pressure to abandon their misinterpretation of Brunner in order to harmonize with Judge Morris' ruling.  Hundreds of thousands of student-loan debtors who do not qualify for student-loan relief under the bastardized Brunner standard will be eligible under the Rosenburg ruling.

Additionally, and perhaps most importantly, Judge Morris's Rosenburg decision undercuts a central argument made by both the U.S. Department of Education (DOE) and ECMC.  Both maintain that virtually all student debtors should be required to sign up for long-term, income-based repayment plans (IBRP) in lieu of getting bankruptcy relief.

Many courts have bought this specious (and I might say vicious) argument, which has led to absurd results. For example, in Butler v. ECMC, a bankruptcy judge refused to discharge Brenda Butler's student-loan debt in spite of the fact that the judge explicitly ruled that she had made good faith efforts to repay her student loans over a period of 20 years. Bankruptcy Judge Mary Gorman ruled that Ms. Butler should sign up for an IBRP, a plan that would end in 2037--42 years after Ms. Butler graduated from college!

Judge Morris pointed out that the Brunner test asks whether the debtor's financial circumstances are likely to improve over the "repayment period" of the loan, not whether the debtor can make token loan payments for 25 years. This simple change in the interpretation of the Brunner standard obliterates arguments made by DOE and ECMC that all distressed student debtors should sign up for repayment plans that last as long as a quarter-century.

So let's watch the Rosenberg litigation closely. If the Second Circuit puts its seal of approval of Judge Morris's ruling, the federal government will need to hire a lot more bankruptcy judges. And ECMC, which has made a nice living hounding student debtors in the bankruptcy courts, will have to look for another line of work.

References

Butler v. Educational Credit Management Corporation, Case No. 14-71585, Chapter 7, Adv. No. 14-07069 (Bankr. C.D. Ill. Jan. 27, 2016).
Rosenberg v. Educational Credit Management Corporation, Adv. No. 18-09023 (Bank. S.D.N.Y. Jan. 7, 2019).









Tuesday, January 7, 2020

Juber v. Conklin: Parents' loan to son's fiancee to enable her to pay off student loans is dischargeable in bankruptcy

No good deed goes unpunished. That's the lesson we learn from Juber v. Conklin.

Kevin and Linda Juber were delighted to learn that their son Christopher (Kip) was engaged to marry Liana Sue Conklin. Kip and Liana had begun dating when Liana was a student at the University of New Haven.

Liana had financed her college studies with scholarships, federal student loans, and three private loans. The interest rate on the private loans was high--bearing a weighted average of  9.5 percent. The total amount borrowed through private loans was almost $90,000.

Mr. and Mrs. Juber wanted Kip and Liana to begin their married life unencumbered by burdensome debt, and they offered to pay off Liana's three private student loans. The Jubers obtained the money to pay off the loans by drawing on their home-equity line of credit (HELOC), which had a very attractive interest rate: only 1.99 percent.

Apparently, the arrangement called for Liana to make $500 bi-weekly payments to the Jubers for about a year, when the Jubers expected to sell their home. Liana and Kip would then refinance the debt at a low-interest rate to repay the Jubers, which would allow the Jubers to pay off their HELOC loan.

Fortunately or unfortunately, Liana broke her engagement with Kip. For a while, Liana made regular payments to the Jubers on the debt, but she later filed for bankruptcy and attempted to discharge the Jubers' loan through the bankruptcy process.

The Jubers sued Liana in a North Carolina bankruptcy court, arguing that their loan to Liana was a student loan that could not be discharged in bankruptcy unless Liana could establish that repaying the Jubers would impose an undue hardship.

Judge Laura T. Beyer, a North Carolina bankruptcy judge, conducted an exhaustive statutory analysis to determine whether the Jubers' loan to Liana Conklin was dischargeable. In the end, Judge Beyer sided with Liana.

In Judge Beyer's view, "the Jubers issued a private loan to [Liana] that served a personal purpose rather than an educational one" (p. 680). Thus, Judge Beyer concluded, "the Jubers' purpose, although generous, was not meant to help [Liana] but, rather, their son" p. 681).

As a matter of law, the Judge ruled, the Jubers' loan to Liana was a "general unsecured debt" that could be discharged through bankruptcy like any other unsecured debt. The Jubers are appealing Judge Beyer's ruling, but the judge's legal analysis is sound.

My sympathies are with Kevin and Linda Juber. They loaned Liana nearly $90,00 in a spirit of generosity in order to help Kip and Liana begin their marriage "somewhat free of debt." Had the Jubers not paid off Liana's private student loans, those loans would not have been dischargeable in bankruptcy.

It is unjust in my opinion for the Bankruptcy Code to protect private lenders like Wells Fargo Bank and Sallie Mae, who are loaning students money at high interest rates, while kind-hearted people like Kevin and Linda Juber are not given similar protection.

References

Juber v. Conklin, 606 B.R.664 (Bankr. W.D.N.C. 2019).

Note: Judge Beyer's opinion did not specify the amount of money that the Jubers lent to Liana. The Jubers stated in their appellant brief that they loaned her $89,186.

University of New Haven: An expensive college


Sunday, January 5, 2020

Bankruptcy judge denies relief to student debtor who provides 24/7 care for elderly mother: What's the friggin' point?

In 1998, Guy DiFrancesco enrolled in a bachelor's degree program at Luzerne County Community College. He transferred to Bloomsburg University of Pennsylvania and obtained a degree in political science in 2005. Later, DiFrancesco enrolled at East Stroudsburg University, where he earned a master's degree in American politics in 2008.

Continuing his studies, DiFrancesco enrolled in a PhD program at Marywood University, and he began another program at King's College, where he sought a teaching degree. He dropped out of both programs in order to provide around-the-clock care for his mother, who suffered a debilitating stroke in 2010.

According to a Pennsylvania bankruptcy court, DiFrancesco's last job was at an auto parts company, which he left in  2009 or 2010.  He financed his college and university studies by taking out student loans. By the time he filed for bankruptcy in 2019, DiFrancesco's accumulated student debt had grown to $200,000, which constituted 99 percent of his total indebtedness.

DiFrancesco attempted to clear all this debt in bankruptcy, but Pennsylvania Bankruptcy Judge Robert Opel II was unsympathetic. In Judge Opel's view, DiFrancesco had not made good faith efforts to repay his loans and thus they were nondischargeable.

It was uncontested, Judge Opel observed, that DiFrancesco had not made a single payment on his student loans. Furthermore, he had not maximized his earning potential. Indeed, according to Judge Opel, DiFrancesco had not sought employment of any kind.

Judge Opel conceded that DiFrancesco's mother's stroke and her need for 24/7 care were beyond DiFrancesco's control. Nevertheless, "his decision to not actively seek any form of employment since 2010 was well within his reasonable control." After all, the judge pointed out, DiFrancesco was "a healthy, forty-year-old man with no disability who holds a bachelor's degree, a master's degree, and credits toward a PhD." Even taking his mother's incapacity into account, Judge Opel wrote, "this fails to establish that [DiFrancesco] could not have found any employment opportunities in the last ten years" (p. 168).

Perhaps Guy DiFrancesco is not the most sympathetic person to seek bankruptcy relief from massive student debt. Nevertheless, Judge Opel acknowledged that DiFrancesco and his mother lived on Social Security benefits totally only $15,000 a year. This paltry sum was the sole source of income to pay food, utilities, and roughly $4,000 a year in property taxes. Clearly, DiFrancesco and his mother lived at or below the poverty level. Is it good public policy to refuse bankruptcy relief to a man who is his mother's full-time caregiver and is too poor even to own a car?

But there is a more basic question that needs to be answered, which is this: What is the friggin' point of hanging $200,000 in debt on a man who hasn't worked since 2010 and is totally responsible for caring for his incapacitated mother?

Will Mr. DiFrancesco ever pay back this debt? No, he will not. Even if he signs up for a long-term, income-based repayment plan and makes token monthly payments on his student loans for 25 years, his debt will grow larger every month due to accumulating interest.

References

DiFrancesco v. Educational Credit Management Corporation, 607 B.R. 463 (Bankr. M.D. Pa 2019).

East Stroudsburg University: "Where Warriors Belong" (whatever that means)



















Saturday, December 21, 2019

Raquel Welch's earring bomb: Passing thoughts on gun control

I like to watch old movies on television on Saturday afternoons, and I don't care whether the movie I watch is good or bad. This afternoon, I watched Fathom, a 1967 film starring Raquel Welch.

Raquel is involved in some sort of international terror plot. A guy with a British accent gives her a pair of lime green earrings, which happen to match the lime green bikini she is wearing. The left earring is a small bomb, the guy tells her. Just drop it down a ventilator shaft and it will explode in 30 seconds.

In the next scene, Raquel entices the villain, a creepy looking character wearing a green-tinted monacle, into the master suite of a luxury yacht.  He is so enchanted by Raquel's beauty that he doesn't notice her throw her left earring down a conveniently located ventilator shaft. Sure enough, in 30 seconds (maybe less), the earring explodes and sinks the yacht. Raquel gets away on a speedboat being driven by the guy who gave her the earrings.

This movie got me to thinking about gun control. I have a Remington 20-gauge shotgun for quail hunting and a  Remington 12-gauge shotgun for shooting ducks. I would be very sorry if Michael Bloomberg confiscated them should he be elected president. I wouldn't go postal, but I wouldn't be happy about it.

I'm a reasonable guy, and I'm not totally against all gun control. Nevertheless, I think the Democrats should start small with their campaign to take guns away from Americans.  Let them start by banning those dangerous earring bombs like the one Raquel Welch used to sink a yacht. I for one would not object.

Fortunately, earring bombs are rare. After the movie ended, I drove to my local Academy store and asked if they carried earring bombs. (I guilefully told the sales associate I was shopping for a Christmas present for my wife.)

The associate told me the store was sold out of earring bombs and wouldn't restock them until after the holidays.  He also said the lime green model had been discontinued.

Returning to my discussion of the movie Fathom, I highly recommend it. It is true the plot is a little thin but no thinner than an Ingmar Bergman movie. It is also true that Roger Ebert gave Fathom a "thumbs down." But the New York Times described the movie as "crackling good fun," and who would argue with the New York Times over matters of culture and the arts?


Raquel Welch, sans earring bomb.

Thursday, December 19, 2019

Let's kick California off the island: When bad things happen to a good state

You don't know me but you don't like me,
You say you care less how I feel
How many of you that sit and judge me
Ever walked the streets of Bakersfield?

Streets of Bakersfield
Sung by Buck Owens

I love California, which I've visited many times. Napa Valley is lovely and produces terrific wines. The landscape around Santa Barbara is the most beautiful in the world, surpassing Tuscany and the Li Valley in southwestern China, in my opinion.

Unlike (I suspect) California's politicians, I appreciate the great literature of California. I've read Frank Norris' The Octopus, Nathanael West's Day of the Locust, some of Joan Didion's essays, Richard Henry Dana's Two Years Before the Mast, and many of the works of Jack London and John Steinbeck. I love T.C. Boyles' California novels, particularly The Tortilla Curtain and Budding Prospects.

And Californians are great people. Although I haven't met them all, I've never met a Californian I didn't like. (I might not like Charlie Manson or HarveyWeinstein, but we don't run in the same circles.)

But let's face it. The Californians insist on sending wingnuts to Congress, and these nut jobs are ruining the country.  I'm talking Nancy Pelosi, Adam Schiff, Maxine Waters, etc., etc.  It's got to stop.

So let's vote California off the island. I realize a state can't secede from the Union, but with a constitutional amendment, we can surely vote to kick a state out of the club.

Who could oppose such a move? Texas? North Dakota? Hell, the Californians would jump at the chance to have their own nation.

If California was a country it could do whatever it damn likes. It could have open borders, free sex-change operations for illegal immigrants, and no-charge facelifts. It could require corporations to put convicted rapists on their governing boards and make it a criminal offense for Christians to go to college. The People's Republic of California could give citizens the constitutional right to crap on the sidewalks instead of restricting that privilege to San Francisco.  What's not to like?

Of course, my proposal has some limitations. First of all, the town of Bakersfield--home of Buck Owens, Merle Haggard and the Bakersfield sound--would continue to be part of America.  And the Ronald Reagan Library.  That goes without saying.

And America would keep the military bases and Disney Land.  But Hollywood would be happier if California were a separate nation, and Americans are tired of Hollywood movies anyway.

Think about it. Kicking California out of the USA would solve a lot of problems, and I can think of no downsides. And if Americans get nostalgic about the old California, they can watch classic movies: Vertigo, The Big Lebowski, and The Maltese Falcon.

The Dude abides, man.