pay the student loans.
Use Chapter 13 As Leverage For
Even if your client won’t be able to
obtain a discharge of his or her student
loans in bankruptcy, Chapter 13 may
still prove to be a powerful solution
to manage payments - especially for
private student loans, which come
without any of the repayment options
available to federal loans.
More to the point, Chapter 13 can
provide you with the ability to engage
in what I call “offensive defense” when
it comes to student loans.
Under Federal Rule of Bankruptcy
Procedure 3001(c)(1), when a claim is
based on a writing, “a copy of the writing
shall be filed with the proof of claim. If
the writing has been lost or destroyed,
a statement of the circumstances of the
loss or destruction shall be filed with
CONSUMER BANKRUPTCY JOURNAL
the claim.” Federal Rule of Bankruptcy
Procedure 3001(c)(2) states that if, “a
claim includes interest, fees, expenses,
or other charges incurred before the
petition was filed, an itemized statement
of the interest, fees, expenses, or
charges shall be filed with the proof
of claim.” A lender that fails to comply
with the provisions of Federal Rule of
Bankruptcy Procedure 3001 may find
itself without the ability to collect on the
claim through the Chapter 13 Plan.
When reviewing a Proof of Claim filed
by a lender in a Chapter 13 bankruptcy
case, do so with a critical eye. As we’ve
already discussed, private student loan
companies in particular have a difficult
time proving ownership of the loan. That
may provide you with an opportunity for
a claims objection, which in turn may
give you an opening to either negotiate
the balance due with the holder of the
note or knock out the claim entirely.
The Value of Thinking Expansively
Student loans plague so many of our
clients that it’s impossible to go through
more than a few days without seeing
someone who could benefit from relief
from their educational debt burdens.
Though the bankruptcy laws make it
difficult for all but clients in the most
dire of situations, all hope is not lost.
By thinking expansively and being
proactive, we can all find ways to help
our clients effectively handle their
Jay S. Fleischman is a consumer
bankruptcy lawyer with offices in Los
Angeles and New York City. He is
a long-time NACBA member and a
partner in Shaev & Fleischman LLP.
National Association of Consumer Bankruptcy Attorneys