Help Center

State Regulators Want Debt Relief for Former Corinthian Students

 

 

 
 

May 14, 2015

 
home | newsroom | chart of the day | blogs | bankruptcy code and rules | statistics | legislative news | volo
  NEWS AND ANALYSIS

STATE REGULATORS WANT DEBT RELIEF FOR FORMER CORINTHIAN STUDENTS

U.S. Department of Education Secretary Arne Duncan yesterday received a letter from 11 state attorneys general expressing concerns about information provided by the Department to students affected by the sudden closure of 28 colleges operated by now-bankrupt Corinthian Colleges Inc., Collections & Credit Risk reported today. The letter urges the Education Department to provide debt relief to students who do not qualify for a "closed school" discharge but were harmed by misconduct by the school. The letter asserts that such students should be permitted to raise Corinthian's misconduct as a defense to repayment of their student loans. The letter further urges the Education Department to provide clear guidance to students on how to assert a claim for relief. The letter was co-signed by the attorneys general of Connecticut, Hawaii, Illinois, Kentucky, Maine, Maryland, Minnesota, Missouri, New Mexico, New York and Oregon. Read more.

STUDENT LOAN STUDY COUNTERS COMMON CREDIT ACCESS VIEW

TransUnion released a new study showing that student loan obligations have not inhibited younger consumers' ability to access and repay other consumer credit categories such as auto loans and mortgages when compared to their peers without student loans, Collections & Credit Risk reported yesterday. Consumers ages 18-29 with a student loan in repayment are in fact generally able to gain access to new loans, according to the study, and perform on those loans as well as or better than similarly aged consumers without student loans. The study found that in only three to six years, it has been observed that student loan consumers in their 20s often surpass similarly aged consumers without a student loan in overall loan participation rates on mortgages, auto loans and credit cards. The percentage of consumers ages 20-29 with student loans has skyrocketed from 32 percent in 2005 to 52 percent at the end of 2014. In the last five years alone, student loan balances have increased from $589 billion in Q1 2010 to $1.1 trillion in Q1 2015, according to TransUnion data. Read more.

For further analysis of student loans and bankruptcy, be sure to pick up a copy of ABI's Graduating with Debt: Student Loans under the Bankruptcy Code.

COMMENTARY: BANKRUPTCY CAN HELP FINANCIALLY STRUGGLING SENIORS PROTECT ASSETS

Bankruptcy can bring much-needed financial relief for some older Americans from debt brought on by medical expenses or helping needy children, and experts say that it can be a valuable tool to protect retirement assets, according to a New York Times commentary today. "People usually postpone bankruptcy for several years before filing," said Deborah Thorne, an associate professor of sociology at Ohio University who has studied older Americans and bankruptcy. "When finances head south, they should file right away." By spending retirement assets, Thorne said, retirees risk a downward financial spiral from which they are less likely to recover than younger people. Retirement income and savings are usually untouchable during bankruptcies under federal law. Pensions, 401(k)'s and qualified profit-sharing plans are exempt from creditors, as are individual retirement accounts worth up to $1.245 million. Social Security payments are also exempt. However, seniors should try negotiating with creditors over outstanding debt, even medical bills, before filing for bankruptcy, according to Johanna Sweaney Salt, a certified public accountant with Gray, Salt and Associates. "In many cases, hospitals have even cut balances in half," she added. Read the full commentary.

PUERTO RICO TALKS SEEKING TO AVOID RECEIVER, ACCORDING TO HEDGE FUND

Creditors of Puerto Rico's power utility are pursuing negotiations to shore up the cash-strapped agency, seeking to avoid putting a receiver in charge of a debt restructuring, said the co-founder of a hedge fund that owns the utility's debt, Bloomberg News reported yesterday. "Rather than go that route, we and other bondholders have put forward a proposal," said Tom Wagner, the co-founding partner of New York-based hedge-fund firm Knighthead Capital Management. "We are focused on trying to find a capital markets solution to resolve the problem." Knighthead, which manages about $4.3 billion and invests in distressed debt, is part of a group of hedge funds and creditors that hold about $5 billion of Puerto Rico Electric Power Authority bonds and are negotiating with the agency over how to restructure its debt. Creditors have agreed not to take action against the agency until June 4. The two sides have been trying to come to an agreement for nine months as Puerto Rico struggles under the burden of $72 billion of obligations issued by the commonwealth and its agencies. While the public utility, which has more than $8 billion of municipal-bond obligations, hasn't yet submitted its own restructuring proposal, it has thrown barbs at the one bondholders proposed in April. Wagner is the second hedge fund executive to advocate in the last week for the creditor plan ahead of a June 1 deadline for the utility, known as Prepa, to deliver a counter-proposal. Read more.

BLOOMBERG AND ABI'S "EYE ON BANKRUPTCY" WEBINAR ON MAY 28 EXAMINES LEADING BANKRUPTCY OPINIONS FROM APRIL

ABI members are invited to watch the next edition of Bloomberg's complimentary "Eye on Bankruptcy" webinar from 1-2 p.m. ET on May 28 to examine the latest opinions. The program is jointly prepared by ABI and Bloomberg Law, and features Bill Rochelle, editor-at-large and bankruptcy columnist for Bloomberg News, talking with G. Eric Brunstad, Jr. of Dechert LLP and Prof. Charles J. Tabb
of the University of Illinois College of Law and an editor of Bloomberg Law: Bankruptcy Treatise.

This webinar is the third in a series of monthly presentations designed to keep you up to date on changes in bankruptcy and restructuring; track recent filings, motions, and decisions; and implement revisions to bankruptcy rules and forms. For your complimentary registration, please register here.

TAKE ADVANTAGE OF THE "EARLY ADOPTER" PROMOTION FOR THE AUDIO ABI JOURNAL FROM MODIOLEGAL!

Subscribe now to our new streaming audio Journal, offered by ModioLegal. Narrated articles from each issue of the ABI Journal are accessed through your web browser -- on your computer, smartphone, or tablet -- for a low monthly fee. For a limited time, subscribe to this new service now for just $9.95 a month (regularly $12.95) with coupon code abi-early.Sign up now for your free 1-month trial to ABI Journal Audio Edition. Go to http://www.modiolegal.com/subscribe to learn more, or send an email to accounts@modiolegal.com for a free demo.

NEW CASE SUMMARY ON VOLO: RAEL V. WELLS FARGO BANK (IN RE RAEL; 10TH CIR.)

Summarized by William Wallo of Weld, Riley, Prenn & Ricci SC

The Tenth Circuit ruled that the creditor in the case did not violate the stay or the terms of the individual debtors' confirmed chapter 11 plan when it sought to enforce its preserved lien rights in state court rather than returning to the bankruptcy court.

There are more than 1,700 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI's Volo website.

NEW ON ABI'S BANKRUPTCY BLOG EXCHANGE: NO EVADING ILLINOIS PENSION WOES

The Illinois Supreme Court issued its unanimous opinion this past Friday putting a stake through the heart of the legislature's latest attempt to evade its responsibility for woefully underfunding four of the state's five public pensions, according to a recent blog post. The Court pointed out that it wasn't the legislature, but the people of Illinois, who imposed the pension protection restriction...and it seems now the people will likely have to revisit the idea of vastly increased state income taxes and the like, as "[a]dherence to constitutional requirements often requires significant sacrifice, but our survival as a society depends on it."

To read more on this blog and all others on the ABI Blog Exchange, please click here.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

 

 


NEXT WEEK:

ABI/St. John's Forty-Hour Bankruptcy Mediation Training
May 17-21, 2015
Register Today!

14th Annual Litigation Skills Symposium
May 19-22, 2015
Register Today!

UPCOMING EVENTS:

"Eye on Bankruptcy" Webinar: Leading Bankruptcy Opinions for April 2015
May 28, 2015

5th Annual Memphis Consumer Bankruptcy Conference
June 5, 2015
Register Today! (Early Bird Rate Expires Friday!)

22nd Annual Central States Bankruptcy Workshop
June 11-14, 2015
Register Today!
Rates Go Up Friday!

Cross-Border Insolvency Symposium
June 18, 2015
Register Today!

22nd Annual Northeast Bankruptcy Conference
July 9-12, 2015
Register Today!

10th Annual Northeast Consumer Forum
July 9-11, 2015
Register Today!

Beijing Insolvency & Restructuring Symposium
July 13-14, 2015
Register Today!

20th Annual Southeast Bankruptcy Workshop
July 23-26, 2015
Register Today!

11th Annual Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015
Register Today!

23rd Annual Southwest Bankruptcy Conference
Sept. 10-12, 2015
Register Today!

20th Annual Views from the Bench Conference
Oct. 9, 2015
Register Today!

 
   
  CALENDAR OF EVENTS
 

2015

May
- Forty-Hour Bankruptcy Mediation Training
May 17-21, 2015 | New York, N.Y.
- Litigation Skills Symposium
May 19-22, 2015 | Chicago, Ill.
-"Eye on Bankruptcy" Webinar
May 28, 2015

June
- Memphis Consumer Bankruptcy Conference
June 5, 2015 | Memphis, Tenn.
- Central States Bankruptcy Workshop
June 11-14, 2015 | Traverse City, Mich.
- Cross-Border Insolvency Program
June 18, 2015 | New York

July
- Northeast Bankruptcy Conference
July 9-12, 2015 | North Falmouth, Mass.
- Northeast Consumer Bankruptcy Forum
July 9-11, 2015 | North Falmouth, Mass.

 

 



- Beijing Insolvency & Restructuring Symposium
July 13-14, 2015 | Beijing, China
- Southeast Bankruptcy Workshop
July 23-26, 2015 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015 | Hershey, Pa.

September
- Southwest Bankruptcy Conference
Sept. 10-12, 2015 | Las Vegas, Nev.

October
- Views from the Bench Conference
Oct. 9, 2015 | Washington, D.C.

 

 
 
FDICABI Endowment FundFDIC
 
Article Tags: