Consumer Bankruptcy Journal Summer 2015 - Page 46

Non-Bankruptcy Options pay the student loans. Use Chapter 13 As Leverage For Negotiation 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 46 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. Summer 2015 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 educational debts. 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