There Are No Shortcuts or Easy Outs for Student Loan Debtors – And No Santa Clause!

Sorry Virginia …. There is No Santa Clause!

In 1897, Dr. Philip O’Hanlon, a coroner’s assistant on Manhattan’s Upper West Side, was asked by his then eight-year-old daughter, Virginia O’Hanlon (1889–1971), whether Santa Clause really existed. O’Hanlon suggested she write to The Sun, a prominent New York City newspaper at the time, assuring her that “If you see it in The Sun, it’s so.”

“In so doing, Dr. O’Hanlon had unwittingly given one of the paper’s editors, Francis Pharcellus Church, an opportunity to rise above the simple question and address the philosophical issues behind it.”

The Sun’s Editor, Francis Pharcellus Church made the historic statement “yes Virginia there is a Santa Clause” based on zero evidence and espousing “faith, fancy poetry, love (and) romance” as the answer to little Virginia’s finding the truth about the reality of Santa Clause.

For those of you who are new to my blog here, let me give you a brief summary of my student loan debt history. Three years ago, at the age of 67, retired, disabled, unemployed, living on social security and a small federal pension, (both of which were being “garnished” by the Department of Education), I was living with my youngest child and her husband on just $1,200.00 a month. My income was being offset by the U.S. Treasury in an attempt to pay the interest on my consolidated and defaulted 27-year old student loan. A debt which originally was $55,000.00 borrowed when I returned to earn a bachelors degree when I was 40 years old.

Of that debt, I had paid back nearly $14,000.00 in spite of the fact that from 2002 until I turned full retirement age, the Social Security Administration was deferring my loan due to my being awarded SSDI (Social Security Disability Insurance/Income). Once I reached what was described as “full-retirement status” my SSDI was changed over to “a straight social security annuity”. Then I was notified that my student loan was now due in full and had grown to nearly $130,000.00. And then I was notified that my monthly annuities were going to be garnished. The reality is that the 15% they are allowed to garnish was not enough to cover the interest, that keeps growing adding to the principal each and every day!

With the reality of never seeing my loan paid off in my lifetime, I began to look for answers as to how to stop the nonsense by the loan servicers of garnishing nearly a third of my income to pay interest that was not even the needed amount to cover the “true interest” every month. What kind of insanity is that?

No Easy Outs

One thing that I did gain from a college education is that I learned how to do research. So with computer access, I began to look for answers. I looked at every possible way to deal with trying to negotiate for a better deal regarding the student loan debt. The result was I learned that the deck was stacked against me in so many ways there was no way out — at least from the standpoint of the so-called loan servicing agents and lenders who I soon learned do not care one iota about any one’s situation!

I looked into the so-called “Loan Forgiveness” programs, and all of it. Based on my disability, I tried twice to seek a full discharge under the TPD (Total Permanent Disability) allowed by the Department of Education. However, I was denied. The loan forgiveness programs are restrictive and I did not meet the requirements for any of the plans offered. At that point, I realized I may just have to live with the folly being perpetrated against me and allow the nonsensical garnishing continue until I died.

Having made several inquiries to lenders, loan servicers, the Department of Education, and a phone call to the “Omsbudman” for student loan issues, I soon ran out of options for help. Not one agency or person was able to offer me a solution or a plan to help me.

At some point in my research, I learned about the Bankruptcy rules regarding student loans. Having filed personal bankruptcy twice before in my lifetime, I was not too keen on doing it again. Besides, on those two occasions, I was told by my attorney that student loans were not allowed to be discharged in bankruptcy. Why would these lawyers say that if there were rules governing student loans within the Federal Bankruptcy Code? More on this later!

With the discovery of the rules known generically as “the undue hardship clause” , and further defined under 11 U.S.C. §523 (a)(8) “Exceptions to Discharge”, I learned that there is a way to possibly have the debt from student loans discharged through a personal bankruptcy.

Alright then… if there was a “possibility” within the law, then how does one go about using the law to remove the debt? Well, the law says that the student debtor must prove “undue hardship”. That is where the real work began! I had to learn what the courts meant by undue hardship, and what was required to prove I was “suffering” from “undue” hardship. I knew I was having a hard time financially — so what else was involved?

All I can say is at that point in time my work and research went to a new level! For the next year, I spent nearly every waking moment trying to understand and learn what it was going to take to prove that I was never going to be able to pay off the debt, and the court needed to be convinced that what I was saying was fact.

What I discovered nearly shocked me! I discovered that not even the courts could agree on what constituted an undue hardship and what criteria they should use to make a standard ruling on when the metric of hardship was met by the debtor. Unbelievable! (While I could provide details of my findings here I will defer and ask that you read my other blog articles regarding this — in fact, my very first blog article written on May 5, 2015, covers the topic fairly well.

No Shortcuts!

At this point, I knew I had to not only file another Chapter 7 personal bankruptcy, but in order to “prove undue hardship” I would need to file what the Court calls an “Adversary Proceeding” (basically a claim or a lawsuit against the creditor(s) as a plaintiff in a Federal Bankruptcy Court). WOW! Just think about ‘that’ for a minute!

My ‘chapter’ as they refer to a case of bankruptcy, was going to be filed in the Eastern District of Virginia United States Bankruptcy Court. Yes, it is “Federal Court” and can be intimidating! As part of the court’s rules, I would have to agree to and attend a Bankruptcy Clinic. Now as I had stated, I had been working nearly a year preparing myself ahead of filing a chapter 7. In fact, I had contacted several lawyers who specialized in Bankruptcy, asking them if they could help me via a “pro-bono” arrangement since I had no money to pay for legal help. I also contacted the area Bar Association who advertised they have attorneys who offer services pro-bono. What I learned was — there is No Santa Clause!

Not only did I not find one Attorney to offer to help me from the legal community, even the Attorney who held the required Bankruptcy Clinic, flat out told the class — “Student loans are not dischargeable in Bankruptcy”

Now being who I am, I spoke up and challenged this lawyer! What she said next was also not completely the facts… She said, “Well, yes, you can try and file what is called an Adversary Proceeding, but no one ever wins a discharge!” And she said, “no lawyer will take your case.”

Well, she got part of that right! No lawyer I could find would take my case. Now let me give you why I think that…

Number One — Most lawyers (even those who claim to specialize in Bankruptcy – BR), know that in order to seek a discharge using 11 U.S.C. §523, that they will have to spend a tremendous amount of time on the case. And if you ever dealt with a lawyer who works on Bankruptcies, (as I have), you will know that they have a system which they use over and over to file chapters and that it is practically a “rubber stamp” operation between the Court (i.e. BR Judge) and the BR Attorney. Believe me, it is a system!

Number Two — The second reason no lawyer will tell you that you can’t discharge your student loans is that I believe they believe it! I actually think most BR Attorneys have been told or taught in Law Schools, that student loans are not dischargeable! Now even If they do know, they have made the conscious decision to go ahead and tell a lie, so as not to have to deal with it! (My opinion of course— but I am entitled to my opinions)

Number Three — Even if you could get a lawyer to take your case and file all the required documents, not one of them will do it for you for free! How does it makes sense that you are filing Bankruptcy to get rid of personal debts and your student loans and you have the money to pay an Attorney upwards of $300-$600 an hour? Now Virginia… ‘THAT’ IS FANTASY!

‘That’ Virgina is the “Philosophical Issues Behind It!

No Virginia there is no Santa Clause in the sphere of Student Loan Discharge! There are no ‘benevolent fairies” or Santa’s little helpers to make your wish come true! The plain and simple truth is… You have to work very long and very hard and very smart to beat the system set up by the greedy and corrupt Department of Education (DOE) and their minions with whom they have contracted to keep you in debt for the rest of your days!

The DOE also has their own ‘vicious cadre’ of ‘voracious high paid lawyers’ to fight you! And they do not give you a break — they will spend thousands of dollars and tie you up in court for years to keep you from winning a discharge. In my case, I won because I had spent months reading cases — both of winners and more importantly of losers!

My case was prepared even before I filed my Chapter 7. I had my “complaint’ written already (my 65 page Adversary Proceeding and over 2,500 pages of exhibits and proofs) complete with law citations and a full defense of my proof of undue hardship based on not only the 3-part ‘Brunner Test’, but also referring to the ‘Johnson Test’ and the ‘Totality of Circumstances Test’ — “Tests” used by other courts across the United States. In short, I became my own Attorney as a Pro Se Plaintiff.

To the point that the clerk of courts complimented me on more than one occasion for having my paperwork correct, even to saying “You do better work than most lawyers”. I have also been complemented by a good friend and fellow student loan blogger, Dr. Richard Fossey, who has written, “Mr. Precht should have been a lawyer!” Dr. Fossey also included my case in his recent book: “The Student-Loan Catastrophe: Postcards From the Rubble”. Fossey also told me once that my win against the DOE “was a Miracle”!

Miracle? Yes perhaps! In that regard I will have to agree with The Sun’s Editor, Francis Pharcellus Church who told Virginia “that only faith can push aside that curtain” Yes Mr. Church, “faith” did play a role in my being able to push aside the curtain of doubt that I could beat the adversary we know as the DOE. As a Christian, I relied on my faith to help me. I could never have written and won my case without God’s help. Yes, it was a miracle!

Is There No Santa?
Yes perhaps… But only for those who are not afraid to work for what they have. Looking for someone to give you something for nothing is pure childish behavior. Even the fictional story of Santa asks the question “have you been naughty or nice?”

I was recently emailed by someone who asked me to “give them” a copy of my adversary proceeding! This person claims to be an Attorney, and stated that they are seeking to get a copy of my adversary proceeding to “help” other student loan debtors? This person wrote me three emails attempting to persuade me to “give” over my work. Here is part of one of the emails: “(Mr. Precht), I think it’s so important that your story and adversary proceeding be shared further. Thousands of borrowers despair that they will ever be released from their debts. Further, the professionals working to assist borrowers cannot create a new process for each of the millions of people dealing with their educational debt. It is simply not possible to get the work done in this manner. It is essential that we create reusable templates.”

“Fancy Poetry?”

While I may find it plausible to give some degree of accolades to this Attorney for their implied desire to help student debtors, I, on the other hand, find it a bit unprofessional to ask someone to just turn over a year or more worth of work.

This person states: “It is essential that we create reusable templates” Gee, that would be nice! No one provided me a “Template”… I spent over a year reading and re-reading thousands of cases both winners and losers in order to develop my own case! I thought that is what lawyers did?

So now… High paid ‘legal eagles’ work from templates? And they just want to go to a Bankruptcy Court and present this “template” and get a pass and ‘a rubber stamp’ approval?

How about these so-called ‘patron saints’ start to work to get the laws changed? And how about these “justice warriors” petition the Congress and the President to stop the Department of Education from hiring and paying billions of dollars to shills like ECMC (Education Credit Management Corporation) who’s high paid crooked lawyers even file “Motions to Intervene” into student loan cases that they never had any business being involved in? HELLO???

Who the hell is running this Ponzi Scheme anyways? And that is what it is! And who is benefiting? None other than lawyers! Go to hell Attorneys! We don’t need no stinking Attorneys!

Let me repeat… Sorry, Virginia… There is No Santa Clause!

This article by Richard A. Precht first appeared on Undue Hardship – Poverty Required and was distributed by the Personal Finance Syndication Network.

The post There Are No Shortcuts or Easy Outs for Student Loan Debtors – And No Santa Clause! appeared first on Personal Finance Syndication Network.

About Damon Day

As a Debt Coach and a Financial Advocate, I have saved my clients Millions of Dollars by exposing the debt relief scams that other consumers fall victim to. I work directly for my clients to create custom debt relief strategies based on their own unique circumstances. Consumers who speak with me first, come out far ahead of those who don't, every single time. Guaranteed. +Damon Day