Friday, March 31, 2017

Student Debtors in the Bankruptcy Courts and the Battle of Britain: "Never have the few come from the ranks of so many"

The Battle of Britain was perhaps the most thrilling episode of the Second World War. During the summer and autumn of 1940, Hitler sent the Luftwaffe to bomb London, hoping to pummel the British into submission.

But Hitler failed. A handful of young pilots in the Royal Air Force clawed their way into the skies day after day and inflicted unacceptable casualties on the German Air Force. Before the year was out, Hitler gave up, and the Battle of Britain was won.

You may think it inappropriate to attach a military analogy to the ongoing battle between oppressed student borrowers and the federal government's debt collectors that is taking place now in the bankruptcy courts. But the comparison is apt.

Eight million people have defaulted on their student loans and at least 15 million more aren't paying them back.  If these people were indebted for any other reason than college loans, they would get relief from their debt in the bankruptcy courts.

But most oppressed debtors don't even try. Jason Iuliano reported that almost a quarter of a million people with student loans filed for bankruptcy in 2007, but only a few hundred even attempted to discharge their student loans.

But a few brave souls have filed adversary proceedings, where they've fought the U.S. Department of Education and its loan collectors--notably Educational Credit Management Corporation. Incredibly, some of them have been successful, and important appeals are now in the federal appellate courts.

Alexandra Acosta Conniff, an Alabama school teacher, acting without an attorney, defeated ECMC in 2015. ECMC appealed, but Alexandra is now represented by an eminent attorney, retired bankruptcy judge Eugene Wedoff.  I believe Alexandra will ultimately prevail.

Alan and Catherine Murray, a Kansas couple in their late 40s, beat ECMC last year, winning a partial discharge of their student loans, which had ballooned to almost a third of a million dollars. They were ably represented by George Thomas, a Kansas lawyer and ex-Marine.  Again, ECMC appealed, but I am confident Mr. Thomas and the Murrays will win through.

Overburdened student-loan debtors have been hounded and harassed by the U.S. government and its predatory agents for years, but some are now fighting back and they are beginning to find sympathetic bankruptcy judges.

Winston Church, in one of the immortal sentences in the English language, paid this tribute to the pilots of the RAF. "Never was so much owed by so many to so few."

And Boris Johnson, author of The Churchill Factor, pointed out that most of the RAF pilots came from the English working and middle classes. Few Oxford men climbed into those Hurricane fighter planes during the summer of 1940. And so Johnson added this fitting epitaph to Churchill's tribute: "Never have the few come from the ranks of so many."

So here is a message for the millions of oppressed student-loan debtors: Hang on! A few courageous individuals, aided by sturdy lawyers, are fighting for you in the federal courts. And they will ultimately win. The bankruptcy laws are going to change and become more compassionate toward honest but unfortunate individuals who were victimized by our corrupt and unjust student loan program.


"Never have the few come from the ranks of so many."


References



Acosta-Conniff v. Educational Credit Management Corporation, No. 12-31-448-WRS, 2015 Bankr. LEXIS 937 (M.D. Ala. March 25, 2015).

Cloud, R. C. & Fossey, R. (2014). Facing the student debt crisis: Restoring the integrity of the federal student loan program. Journal of College and University Law, 40, 101-32.

In re Roth, 490 B.R. 908 (9th Cir. BAP 2013).

Iuliano, J. (2012). An Empirical Assessment of Student Loan Discharges and the Undue Hardship Standard. American Bankruptcy Law Journal, 86, 495-525.

Murray v. Educational Credit Management Corporation, Case No. 14-22253, ADV. No. 15-6099, 2016 Bankr. LEXIS 4229 (Bankr. D. Kansas, December 8, 2016).




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