The Corona Virus Pandemic is wreaking havoc on our economy and many who thought they were on firm financial ground are now facing job loss and an uncertain financial future. An unprecedented number of individuals and businesses are expected to turn to the bankruptcy courts for assistance.
In her January 7, 2020 ruling, Chief Bankruptcy Judge Celelia Morris discharged $221,385.49 in student loan debt for Navy veteran and lawyer Kevin Rosenberg under chapter 7 bankruptcy. Not surprisingly, Educational Credit Management Corporation (ECMC) — a nonprofit that guarantees and services student loans on behalf of the Department of Education (ED) — is challenging the decision.
Recently in New York, Chief Bankruptcy Judge Cecelia Morris discharged more than $220,000 in student loans for a borrower. In her ruling she criticized the fact that many lawyers "believe it impossible to discharge student loans." She stated, "This Court will not participate in perpetuating these myths."
That’s the message that watchdog Mike Calhoun is shouting around the country. In a recent NPR article Chris Arnold reports how Calhoun is trying to get lawmakers to listen just like he did back when he recognized the recklessness of the subprime mortgage market. Back then he projected over 2 million subprime mortgage foreclosures but was ridiculed by the industry. The cost of ignoring his warning was waves of defaults and foreclosures that propelled the country into the worst recession in generations. Now Calhoun is focused on the Student Loan Crisis.
The National Consumer Law Center recently published a report on state exemption laws titled Still No Fresh Start in 2019: How States Still Let Debt Collectors Push Families into Poverty. After surveying all 50 states, they concluded that none of these jurisdictions have adequate laws in place to protect debtors.