Educational Credit Management Corporation [ECMC] is the Department of Education's premier student-loan debt collector.
ECMC has appeared in literally hundreds of student-loan bankruptcy cases, and it knows all the legal tricks for defeating a student-loan borrower's efforts to discharge student loans in bankruptcy. And most of the time ECMC wins its cases.
But not always.
Last June, Judge Catherine Furay, a Wisconsin bankruptcy judge, ruled in favor of Thomas Rowe, who sought to discharge a student loan he said he didn't owe. ECMC claimed Rowe signed a student loan on behalf of his daughter. Rowe said he didn't sign the loan and that any signature appearing on the loan document must be a forgery.
Rowe declared bankruptcy and filed an adversary proceeding to discharge the student loan ECMC claimed he owed. A trial date was set, but neither Rowe nor ECMC filed the disputed loan document with the court.
Judge Furay ordered the parties to file briefs on the burden of proof and concluded the burden was on ECMC to prove Rowe owed on the student loan. Since ECMC did not produce the loan document, Judge Furay discharged the debt.
What the hell happened?
How could ECMC,, the most sophisticated student-loan debt collector in the entire United States, not produce the primary document showing Rowe had taken out a student loan?
I can think of only two plausible explanations. First, ECMC may have had the loan document in its possession but didn't produce it because the document would show Rowe was right-- he hadn't signed the loan agreement.
Second, the loan document may have gotten lost as ownership of the underlying debt passed from one financial agency to another.
Here is the lesson I take away from the Rowe case. If you are a student-loan debtor being pursued by the U.S. Department of Education or one of DOE's debt collectors, demand to see the documents showing you owe on the student loan.
Most times, the creditor will have the loan document, but not always. And, as Judge Furay ruled, the burden is on the creditor to show a loan is owed.
And so I extend my hearty congratulations to Thomas Rowe, who defeated ECMC, the most ruthless student-loan debt collector in the business. Thanks to Judge Furay's decision, Mr. Rowe can tell ECMC to go suck an egg.
Rowe v. Educational Credit Management Corporation, No. 17-0033-cf ( Bankr. W.D. Wis. June 28, 2018) (unpublished).