Student Loans Remain Forever (Part I)

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The subject of student loans and bankruptcy has been prominently featured in the news of late. It is, indeed, a problematic issue that needs to be dealt with in a neutral financial and social environment. In a particular case study reported on by Ed Palattella in the Erie Times-News, Mary L. Morgan had graduated from Mercyhurst College 21-years-ago with an associate degree in business management…as well as $11,830 in student loan debt. Ms Morgan’s debt has now doubled although she has, reportedly, tried to repay it. Morgan, a resident of Waterford, Pennsylvania earns $1,100/month as a customer service representative at a mail-order company; she relies on food stamps to supplement her salary. She has filed Chapter 7 bankruptcy hoping that the bankruptcy judge will discharge her student loan, freeing her from decades of overwhelming debt. Morgan will get little or no help from the law since the U.S. has made student loans, which are unsecured debts, extremely hard to eliminate via the bankruptcy process. The news story states, “’Morgan will have to show, among other things, that her poor financial condition is likely to persist for the rest of her life — that, in the parlance of bankruptcy law, her situation has ‘a certainty of hopelessness’.’” Morgan and her lawyer are hoping that she will win a discharge “by proving repayment of her student loan debt would impose an ‘undue hardship’ — the sole exception the Bankruptcy Code allows for a discharge of student loan debt to occur”, Palattella reports. During this past summer, President Obama enlarged  upon the Pay-As-You-Earn repayment plan for student loans. Some members of Congress have suggested further changes to deal with the issue of mounting student loan debt. U.S. Representative Frederica Wilson, (D-Miami, FL) introduced legislation that would lift the restrictions for discharging student loans in bankruptcy. Her Student Loan Borrowers’ Bill of Rights Act is presently in committee. As of June 30, 2014, student loan debt, at $1.12 trillion, is the largest form of debt in the U.S. except for mortgages. According to the Federal Reserve of New York, student loan debt is even larger that auto loans and credit card debt. In a March 2013 report, the FRNY stated, “Student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008.” The attorneys at Client First Bankruptcy have represented thousands of clients in their bankruptcy filings. If you are contemplating filing for a Chapter 7 or Chapter 13 personal bankruptcy due to piles of unpaid student loan bills or other overwhelming debt, do not proceed without an experienced and knowledgeable bankruptcy attorney from Client First Bankruptcy at your side. For your free initial consultation, please call us toll-free at 800-383-6004; we answer our phone 8:30 a.m.-6:00 p.m. Central Time for your convenience. And please log onto www.clientfirstbankruptcy.com for important information about your personal bankruptcy anytime.

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Tennessee Hospital Files Chapter 7 Bankruptcy

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Crittenden Regional Hospital, located in West Memphis, Tennessee, has recently filed an unexpected Chapter 7 bankruptcy. According to the Memphis Business Journal, the medical center listed debts of between $500,000 and $1 million in their bankruptcy filing. The 140-bed hospital closed in late August, reports Michael Sheffield, “despite Crittenden County passing a five year sales tax increase to fund the financially troubled hospital. However, right before the vote, the hospital was damaged by a fire and the smoke and water damage from the firefighting effort.” Federal Insurance Co. filed an interpleader in the bankruptcy case, asking the judge how to determine to divide the $2.7 million it owes the hospital. The money is related to the summer fires that damaged the main hospital and the MRI building. To date, Federal Insurance has paid the hospital $8.2 million for the damage to the main hospital and advanced it $40,000 for the MRI claim. D&A Enterprises Inc., which does business as Servpro, contends that it has a claim of $2.4 million against the hospital for the clean-up and repairs following the two fires. Baldwin & Shell Construction Co. may also have a claim of $442,000 for work it did after the fire, according to the insurance company’s filing. The Journal reports that Crittenden County officials have held discussions with potential operators to replace the hospital. “The bankruptcy filing is the first step toward resolving the hospital’s debt. The county owns the building and land, but the hospital owes nearly $7 million on revenue bonds. An arrangement to pay those bonds would have to be made with the bondholders before the building could be reopened. Once the bankruptcy hearings are completed, [county officials will] put together a…team to either find a new operator or determine the feasibility of opening a new hospital in Crittenden County.” If you are facing piles of unpaid credit card bills, medical bills and deficiencies on foreclosed mortgages or repossessed cars due to long-term unemployment, filing for Chapter 7 or Chapter 13 personal bankruptcy with a Client First Bankruptcy attorney at your side may be the key to your financial freedom. For your free initial phone consultation, please call us at 800-383-6004 Monday-Friday from 8:30 a.m. – 6:00 p.m. Central Time. For up-to-date information on filing your personal bankruptcy, you can log onto www.clientfirstbankruptcy.com anytime. We have helped thousands of clients discharge their debt; we may be able to help you too. Stop struggling with bills; and start living debt-free.

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