Bankruptcy of Your Student Loans

Bankruptcy of Your Student Loans

Tuesday, February 20, 2018



I just read this article posted today by Steve Rhode, the "GET OUT OF DEBT GUY" SM

Steve titled his blog article..."Department of Education Seeks Input Regarding Student Loan Bankruptcy Discharge:"

"It sure feels ironic that the Department of Education is seeking feedback and input regarding their current policy of allowing for the elimination of student loan debt in bankruptcy. It’s not a process they even really adhere to now.
Since their infamous letter laying out how they would approve student loans for bankruptcy, they have fought discharges every step of the way. For example, there is the story of Kristin Price.
The Department of Education is under the misimpression those entities holding federal student loans actually agree to discharges, they regularly fight back." [re: Steve Rhode, Feb. 20, 2018]
“Department regulations currently require holders to evaluate each undue hardship claim to determine whether requiring repayment would constitute an undue hardship. If a holder determines that requiring repayment would impose an undue hardship, the holder must concede an undue hardship claim by the borrower in an adversary proceeding.
The Department’s current guidance to guarantors and educational institutions in defending bankruptcy proceedings is summarized in a July 7, 2015, Dear Colleague Letter (GEN-15-13 and provides for a two-step analysis when evaluating whether or not to object to a borrower’s claim of undue hardship. The Department follows the same two-step analysis when defending bankruptcy proceedings for Direct loans. After receiving input from this notice, we will consider whether that analysis is still appropriate.”News Alert: It’s not appropriate. Far too many debtors are being pushed into income-driven repayment programs at $0 per month only to leave them indebted rather than receive a discharge.
The Department of Education would like to hear from you. Here is the feedback they are requesting:
“The undue hardship standard established under either test requires a variety of factors to be evaluated when determining whether repaying a debt will cause a debtor and his or her dependents an undue hardship, such as, but not limited to, the debtor’s: medical, work, or family history; history of mental illness; level of educational attainment; future employment prospects; payment history, including a borrower’s willingness to avail himself or herself of all available repayment plans, including income-driven repayment plans; and necessary expenses in excess of ordinary unique to the debtor.
The Assistant Secretary for Postsecondary Education invites the public, including individuals, advocacy groups, and professional organizations, as well as other State or Federal agencies or components, to provide comment on, and offer information regarding: (1) factors to be considered in evaluating undue hardship claims; (2) weight to be given to any such factors; (3) whether the use of two tests results in inequities among borrowers; (4) circumstances under which loan holders should concede an undue hardship claim by the borrower; and (5) whether and how the 2015 Dear Colleague Letter should be amended. The Department will review the data collected to determine whether there is any need to modify how undue hardship claims by student loan borrowers in bankruptcy are evaluated.
You may provide comments in any convenient format (i.e., bullet points, charts, graphs, paragraphs, etc.) and may also provide relevant information that is not responsive to a particular question but may nevertheless be helpful.”
To submit comments and feedback go to and search for [Docket ID ED-2017-OPE-0085] Request for Information on Evaluating Undue Hardship Claims in Adversary Actions Seeking Student Loan Discharge in Bankruptcy Proceedings.
Feedback should be allowed for submission after 2-21-2018."



I wholeheartedly plan to send in my input!  I encourage all of my followers to do the same!

Any of my followers who have read my posts know that I was successful under the "Undue Hardship Clause" and won without a trial in Federal Bankruptcy Court and that I believe I won because I "cited" the July 7th, 2015 Department of Education Policy Letter as one of the key factors - asking the court "to prove how Plaintiff’s facts presented in this Adversary Proceeding DO NOT MEET the U.S. Department of Education policy directive, DCL ID: GEN15-13, dated July 7, 2015.   

"Well, Mr. Coulter, what are you going to do about this letter?"

Coulter, the defending lawyer for the Dept. of Ed. stated: "Well your honor, we don't know!"

To this Judge Mayer stated: Mr. Coulter, you have until Friday to answer Mr. Precht's complaint!"

Now this was on a Tuesday morning.  On Friday afternoon at about 4PM I got a call from Mr. Coulter the U.S. Attorney for the Eastern District of Virginia, and he stated: "Mr. Precht, the Department has discharged your student loan debts!"

As I had written back on August 28, 2016: 

"My case was settled without a trial and to me that has only further exasperated the student loan crisis and continues the suffering for tens of thousands of student loan debtors!  Not having my trial resulted in no formal decision being recorded for others to cite as case law precedent!

"Why did they not take this case to trial? Well I have a theory as to why, and I wrote about those thoughts.  You can read my thoughts on this here":  Here is part of that article:

"Consider this --- Had the DOE persisted on going to trial, and with the fact that I was challenging the DOE with their own July 7th policy directive, is it possible that the DOE and Coulter were reluctant to go to trial BECAUSE they were afraid that Judge Mayer would rule in my favor and write a decision brief that would be the key to opening a Pandora's Box for other courts to rule with?
By NOT writing an official public trial decision, there is not that much publicity or factual case information that gets posted to the legal networks.  Therefore the DOE continued to cover over the  results of my case, and in the process continued to avoid a landslide from taking place?
My case is not out there like (a mutual debtor who won his case - and wants to remain anonymous) or any of the others who's student loan cases went to trial and were decided upon, is there something to my theory?"


At the end of the above article I concluded by saying: "There is a change coming!  I pray I have become one of the agents of change?  But there are thousands of people in crisis just like I was who need a "fresh start", please help me and others like me, get the word out that the current laws that prevent bankruptcy or forgiveness of inflated and corrupted student loan debt need to be changed."

Please join me in becoming AGENTS OF CHANGE! Let the Department of Education hear from you!

Here is your opportunity to tell them your situation and request that "something" be done to help the millions of student loan debtors who like I once did, had no way to ever pay off the ever increasing loan due to predatory interest and penalties adding to the balance each month.  Not to mention that my social security was being "garnished" every month by over $300.00 which did not even cover that interest!


Everyone who reads this can be a part of needed changes!  One more time here is the link for your input: To submit comments and feedback go to and search for [Docket ID ED-2017-OPE-0085] Request for Information on Evaluating Undue Hardship Claims in Adversary Actions Seeking Student Loan Discharge in Bankruptcy Proceedings.
Feedback should be allowed for submission after 2-21-2018.

Thank you!
If you enjoy my posts here, please let me know.  And if you have any questions I will be happy to answer them. You can receive email notice of my latest posts by inserting your email information in the box on the upper right of this page. 

Sincerely, Richard Allan Precht

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