The Law Office of Paul Mankin

Letters About Student Loans May Violate FDCPA

Student loans are starting to be an epic problem in the U.S. College costs are rapidly rising, greatly outpacing inflation, which leads to higher levels of student loans. At the same time, there aren’t enough jobs being created for all of the new graduates, which leads to loan defaults.

Many of those individuals holding student loan debt fantasize about being able to discharge the loans in bankruptcy. However, student loans are presumed to be non-dischargeable in a bankruptcy. There are rare cases when student loans can be discharged, but only if the debtor can show that the repayment would impose an undue hardship on the debtor.

Showing an undue hardship is a tough burden to meet. In order to do so, the debtor must initiate a legal proceeding in which he or she proves that if forced to repay the loans, he or she will be unable to maintain a minimal standard of living, that additional circumstances exist that will mean that this problem is likely to persist, and that the debtor has made a good faith effort to repay the loans.

In a recent case in New York, a debtor filed for bankruptcy and indicated in her filing that she had student loans debts but that they were non-dischargeable. She subsequently got a letter from a debt collector that informed her that student loans were not eligible for bankruptcy discharge.
Technically, that is not true. Student loans can be discharged, there is just a higher standard on the debtor in order to do that. The debtor filed a lawsuit under the Fair Debt Collection Practices Act, claiming that the letter was false and deceptive, and led her to believe that it would be impossible to discharge loans. The court ruled in favor of the debtor, finding that the letter was a violation of the FDCPA.

Debt collectors frequently send out misleading communications such as this letter in an attempt to collect a debt.

If you have been the victim of a lie from a debt collector, you have legal rights. Call Paul Mankin, California FDCPA attorney, at 800-654-9517.