Sunday, May 3, 2015

An episode of The Walking Dead: Why did the U.S. Department of Education oppose bankruptcy relief for a quadriplegic student-loan debtor?

America's insolvent student-loan debtors are the walking dead

America's student-loan crisis is beginning to resemble an episode of The Walking Dead.  Like zombies, millions of distressed student-loan debtors stumble around the American landscape, basically pushed out of the economy and suffering in silence.

Just as Deputy Sheriff Rick tries to elude the zombies in Walking Dead, President Obama treads lightly, hoping to avoid encountering the millions of student-loan defaulters. Deputy Sheriff Rick doesn't have enough shotgun shells to dispatch all "the walkers" if they show up en masse; and the Obama administration doesn't have the intellectual or moral resources to deal with the masses of people whose lives were destroyed by their student loans.

Insolvent student-loan debtors: The Walking Dead

Basically the culprits who created the student-loan crisis or helped hide its magnitude--Congress, colleges and universities, think tanks like the Brookings Institution, the Department of Education, the College Board--are huddled in their bastions much like the characters in The Walking Dead, who holed up in an abandoned department store for awhile, hoping someone with a little courage and intelligence would come to their rescue.

Of course, if the United States was a humane society--which it isn't--people who were overwhelmed by student-loan debt could discharge their loans in bankruptcy. But Congress passed several laws making it quite difficult for insolvent student-loan debtors to get relief from the bankruptcy courts.

Still--a few brave souls make the effort, filing adversary actions in the bankruptcy courts, often without lawyers. And recently, the bankruptcy courts have begun to take notice of the nightmare that the student-loan program has become; and the courts have been discharging some student loans.

But every time an intrepid spirit tries to get relief from oppressive student loans in a bankruptcy court, lawyers for the Department of Education or one of the government's private debt-collection agencies show up to oppose relief. In fact, it is fair to say that the official position of the U.S. government--President Obama's government--is that no one should be relieved of student-loan debt in bankruptcy.

In virtually every student-loan bankruptcy case, the lawyers for DOE and the debt-collection companies argue that student-loan debtors should be put in 25-year income-based repayment plans (IBRPs) rather than have their loans discharged. Of course, this is a heartless position to take, and in some cases it is downright ridiculous.

In Stevenson v. Educational Credit Management Corporation, for example, Educational Credit Management Corporation argued that a woman in her 50s, who had a record of homelessness and was living on less than $1000 a month, should be put in a 25-year IBRP in spite of her record of poverty and in spite of the fact that this woman didn't file for bankruptcy until 25 years after she took out her first student loan.  And the bankruptcy judge agreed! I don't know what ultimately happened to this poor woman, but apparently she was forced into a repayment plan that would not end until a half century after she first borrowed money to go to college.

Myhre v. U.S. Department of Education: DOE opposes bankruptcy relief for a quadriplegic student-loan debtor

But for utter, depraved heartlessness, my nomination goes to the bankruptcy case of Myrhe v. U.S. Department of Education, in which the Department of Education opposed bankruptcy relief for Bradley Myhre, a quadriplegic student-loan debtor who had no muscle control below his neck.  Myhre had suffered a catastrophic spinal injury in a swimming-pool accident, but he borrowed money to attend college and was able to work full-time. Unfortunately, his salary wasn't enough to cover the cost of paying his full-time caregiver--the person Myhre employed to feed, dress and bathe him and drive him back and forth to work.

Incredibly, DOE--Arne Duncan's DOE--opposed bankruptcy relief for Myhre and argued that he shouldn't have spent money for cable television since that was money he could have applied to paying off his student loans.

Fortunately for Mr. Myhre, the bankruptcy court rejected DOE's arguments and granted him relief from his student loans. In fact, the court praised him for his courage. "Mr, Myhre is an articulate and personable young man," the court observed, "whose mobility is determined by his wheelchair and dexterity is only sufficient to operate a directional stick control." Myhre's daily life required "bravery and tenacity," the court wrote," and Myhre had "made a truly admirable effort to return to work in order to support himself financially rather than remain reliant on government aid" (Myhre v. U.S. Department of Education, 2013, p. 704).

The Department of Education's lawyers are like Daryl in The Walking Dead

Why did the Department of Education take such a heartless position regarding Mr. Myhre's student loans? I'll tell you why. DOE is driven to stop every student-loan bankruptcy because if the bankruptcy courts ever begin reviewing the plight of insolvent student-loan debtors from a humane perspective, the judges would start granting bankruptcy relief to these unfortunate souls. And if that ever happenes, millions of honest but unfortunate people--and I mean literally millions--will be filing for bankruptcy, which would topple the entire corrupt and putrid student-loan program.  DOE simply can't let that happen.

Much like a DOE lawyer opposing bankruptcy relief for student-loan debtors, Daryl quietly dispatches zombies
And so when DOE's lawyers go to court to oppose bankruptcy relief for student-loan debtors, they behave much like Daryl in The Walking Dead.  Daryl kills zombies silently with his crossbow, dispatching them efficiently without making a noise that would attract other zombies. Likewise, DOE attorneys overwhelm student-loan debtors who go to bankruptcy court without lawyers, beating them down with canned legal briefs they keep on the hard drives of their government computers for just such contingencies.

The metaphor isn't perfect, of course. The "walkers" that Daryl drills through the brain with his arrows are frightening creatures, while the poor folks dispatched by DOE's lawyers are decent human beings entirely deserving of our pity and our aid. And of course, I would be  slandering Daryl to compare him to a DOE attorney!

But overall, I like the metaphor. Our insolvent student-loan debtors are very much like the zombies in The Walking Debt, and the Department of Education's lawyers are quite like Daryl, quietly picking off the "walkers" who make their way into the bankruptcy courts.

I don't know how this series will end, but I feel pretty sure some scary episodes lie ahead. If there is any justice in the world, distressed student-loan debtors will rise up one day by the millions; and America's cowardly politicians, college presidents, and policy wonks will wind up eating stale canned goods while holed up in the real-life equivalent of The Walking Dead's abandoned Center for Disease Control.

Quiet! Don't let the walkers hear you.
References

Myhre v. U.S. Department of Education, 503 B.R. 698 (Bankr. W.D. Wis. 2013).

Roth v. Educational Credit Management Corporation, 490 B.R. 908 (9th Cir. BAP 2013).

Stevenson v. Educational Credit Management Corporation, 436 B.R. 586 (Mass. Bankr. 2011).


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