Student loans: CA woman sees nearly $350,000 discharged while serving as her own lawyer

[Demovictory9]

Court filings show that the Education Department (ED) and the Los Angeles-based woman, Mis Loe, agreed on August 30 that Loe would pay $7,200 of her $356,637.82 in outstanding loans (at a fixed monthly rate of $60 for 10 years or until October 1, 2031).

Once Loe completes the $7,200 payment by October 2031, according to the agreement, she “shall be discharged of the remaining balance of the student loan debt, pursuant to her Chapter 7 discharge order.”

The case highlights the growing number of student loan debtors obtaining relief through personal bankruptcy and further dispels the notion that student loans are exempt from court-ordered discharge.

urthermore, the case shows that regular people — especially those in extraordinary personal circumstances — are able to win for student debt discharges without a lawyer.

“It’s not a straightforward, easy process… [but] the data has been consistent over the past decade — folks with attorneys don’t do any better than individuals who don’t have attorneys in this specific context of litigating the adversary proceeding,” Jason Iuliano, associate professor at the University of Utah and an expert on student loan bankruptcy law, told Yahoo Finance. “They both tend to get about the same level of favorable outcomes. And I can’t think of another area of law where that’s true, where having an attorney makes you worse off.”

https://www.msn.com/en-us/money/personalfinance/student-loans-california-woman-sees-nearly-350-000-discharged-in-personal-bankruptcy-while-serving-as-her-own-lawyer/ar-AAPnT6X?ocid=msedgntp

[Celerity]

1. she is an extraordinary case, a massive outlier

Originally from Olympia, Washington, Loe began her undergraduate degree at the University of Washington in 1992. Within a year, she became ill was diagnosed with Type 1 Insulin Dependent Diabetes. Her struggle to find a proper treatment plan led her to be in and out of hospitals for multiple years, causing her to fall behind on her bachelor’s degree. “I got a lot of zero-point-zeros on my transcript because I didn't know how to report medical illnesses to the University of Washington,” Loe told Yahoo Finance. “And that ruined my grades. I was embarrassed. I was embarrassed to be sick.” In 1997, Loe re-enrolled in school, but she attended sporadically because she worked at a coffee shop 30-60 hours a week so that she could qualify for health insurance. Loe's health issues worsened over the years as she was diagnosed with a brain tumor, and had to stop school again in 2005 to focus on her health. She eventually re-enrolled again in 2012 and earned her bachelor’s degree in cinema studies in 2013. Loe then moved to Los Angeles to find work in the film and television industry while also applying for graduate school at the American Film Institute Conservatory. She found part-time work at coffee shops until she earned a master's degree in film and television in December 2018.

After her education, she made ends meet while working entry-level temp jobs on film and TV sets by driving for Postmates and and asking for more hours at the coffee shop. “I did all that just so I could barely pay my monthly bills each month,” said Loe, who had also accumulated about $40,000 in credit card debt. “I always had my expenses down to a minimum, but it’s LA.” Her adversary proceeding — a crucial step for student debtors looking for financial relief through personal bankruptcy — stated her thinking at the time: “She thought if she could get off the repetitive cycle of taking out PayDay loans and depending on overdraft protection to make ends meet that she could reduce her monthly expenses and allow her to take on an internship which could maybe lead to a job.”

The coronavirus pandemic in early 2020 delivered a crushing blow to Loe’s finances: She lost her coffee shop job in March 2020, stopped driving for Postmates “due to health concerns and her compromised immune system,” according to the complaint, and saw film work dry up. In May 2020, Loe filed a bankruptcy petition using free software tools provided by Upsolve, a non-profit startup that helps low-income individuals file for bankruptcy, and served as her own lawyer in a process known as “pro se.” Months later, she filed an adversary proceeding to discharge her student loans as part of the personal bankruptcy. In the complaint, Loe listed all the payments she made to student loan servicer Nelnet since 2014, all of the dates when she had been in forbearance, deferred payments, and when she had been on an income-based repayment plan in 2014, 2016, and 2019. According to court filings, the “highest amount she has ever earned [in one year] was $33,445 in 2011.” “I made so many mistakes, it’s ridiculous, God knows I tried,” Loe said, recalling the process of preparing her papers. “The law is like its own language. And that to me was the most frustrating part.”

‘Tragedy of the American legal system’

Very few Americans opt to file for bankruptcy for their student loan debt for three primary reasons, according to Upsolve Co-Founder and CEO Rohan Pavuluri. First, “they don’t know that they can discharge student loans in bankruptcy — there’s this narrative that’s been perpetuated by the media and by lawyers that it is impossible to discharge your student loans in bankruptcy, no matter what,” Pavuluri told Yahoo Finance. “The second issue is that it’s extremely complicated.” The third reason is that on top of preparing an adversary proceeding, which is a detailed lawsuit, the debtor also takes on the federal government — "and that is such a complicated and intimidating thing to do,” Pavuluri noted. Furthermore, although Loe was able to navigate through the system by herself, fees can add up for debtors going in with a lawyer. “The cruel irony is that the folks who are a good fit for discharging their student loans in bankruptcy or folks who face an undue hardship … those are the people who are least likely to be able to afford legal fees,” Pavuluri said. “This is the sort of tragedy of the American legal system that … so many rights aren't accessible to people unless they can afford legal fees.”

[Demovictory9]

3. she picked a really tough field to break into: Film/TV and trying to do so in her 40s/50s...

age discrimination to face also...

[Roy Rolling]

5. Much is hard work

Production is often physically demanding—long hours, irregular schedules, physical challenges—younger people are generally better-suited. Starting at new career at middle-age is challenging for anyone.

But the age discrimination is more in the “talent” end than the “crew” end. Nobody cares how old the crew is as long as they don’t drop equipment on somebody foot. I prefer seasoned crew—they won’t drop a sandbag behind you to trip over during night shoots on the St. Louis cemetery. 😂😂

[Amishman]

6. Yup, she must be exceptional herself and had a sympathetic judge

An old friend works in a county DA's office and he has mentioned that judges hate when people try to represent themselves, and often come down rather hard against them.

[PoindexterOglethorpe]

2. Student loans are such a burden.

I do wish that more young people would think a whole lot harder about the loans, and their specific degree, and if they'll be able to get a job in that field.

It bothers me enormously that young people are told they must go to college, get a four year degree, any four year degree, to get a decent job.

The reality is that most college majors do not lead to any kind of significant paid work. The kind of vocational training community colleges offer is vastly better. Become a paralegal, learn plumbing, learn to be an electrician, or any other of the many blue collar trades that actually offer real, steady, well paid employment. THAT'S what high schools should be pushing, not "Everyone should go to a four year college." nonsense.

Some years back an acquaintance told me her daughter was staying in school, continuing to borrow money, even though she had no idea what she wanted to do in the long run, because the clock was stopped on repayment so long as she was in school. I was horrified. The semi good thing about this was that my friend, the parent, was not on the hook for repayment. We've since lost contact, so I have no idea the final outcome, but I suspect the daughter wound up in serious and unresolvable debt.

[Demovictory9]

4. its tough.. the culture says your nobody unless you have a desk job

[Rorey]

7. I completely agree

I know plenty of people who are doing very well and never spent a day in college. It's not a luck thing. It's a dedication thing.

If I had my life to do over again, I wouldn't have set foot in my university. It was a lot of fun, but definitely not worth the cost.

[MichMan]

10. Really easy to find out how much salary certain degrees are likely to earn before borrowing

[PoindexterOglethorpe]

13. True. Unfortunately, most students and their parents don't bother

to learn that. Nor do they research what jobs are actually out there for a given major.

The vast majority of people would be far better off going to a community college and enrolling in a career specific program. The community colleges are generally excellent for those things.

Also, most colleges, whether two year or four year, have some kind of career advancement department -- they go by different names -- which are there specifically to help students figure out what jobs they can get down the road. They can often place students in internships, often paid internships, along the way. Sadly, most students never bother to visit that department.

[bucolic_frolic]

8. Another fine investment in education

Negative ROI as far as the eye can see. Forever. Fail. Surely many will disagree with me, but THAT is a slap on the wrist. 10 years at $60 a month. Not even accelerating into the student's peak earning years. Was the judge in on it?

[MichMan]

9. $350,000 wow!

I realize there is interest included, but how does one borrow that kind of money for a degree in cinema studies ?

Did she end up using a large portion of it for living expenses as well as tuition ? Said she also discharged $40k in credit card debt too.

[Trailrider1951]

11. It's called "capitalized interest"

All that time that she was in forbearance or didn't pay anything or pay enough to cover the interest, that interest (used to be over 8%) was accrued and added to her principle. That's how you can pay and pay and pay and still end up owing more than you borrowed. Same thing happened to me. She didn't borrow "that much", but after years of not earning enough to cover both principle and interest and still be able to afford to live, she ended up owing that much. Capitalized interest is an abomination.

[MichMan]

12. Current tuition at the American Film Institute Conservatory is now $68k per year