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What Will Happen With My Tuition Answer Private Student Loans?

Question:

Dear Steve,

I have Tuition Answer loans and did a Chapter 7 in 2013. My loans were not discharged, not even mentioned, since they were deemed “cannot be discharged” in bankruptcy.

At that time, I was unemployed and collecting state welfare, still paying on my loans so I would not go into default.

Now I pay about $12,000-15,000/ year on just INTEREST with no relief in sight. If Navient loses, can I return and re-open this case to get my balance discharged?

If Navient loses the bankruptcy class action, can I get relief even though my Chapter 7 from 2013 did not include my Tuition Answer loans since they were listed as non-dischargeable student loans?

Jason

Answer:

Dear Jason,

Navient is still deep in fighting the underlying case Homaidan v. Navient. You can read all my Tuition Answer posts here.

The law is a strange beast. I’ve seen very few guaranteed wins.

However, in this case, the underlying facts have created a picture, for a long time, that Tuition Answer loans should have been technically discharged in bankruptcy.

If you go back to this 2016 post of mine I talked about how the loans were already labeled as dischargeable in bankruptcy to investors.

I would expect the court battles to continue, and we will have to wait for a ruling, appeal, and then a final enforceable verdict.

However, I would expect Tuition Answer loans to be put on pause from collections once the appeal court rules on the Temporary Restraining Order (TRO) issued by the Judge.

Plaintiff’s attorneys have submitted documentation to support the TRO. A recent court document says, “For over ten years, Defendants Navient Solutions, LLC and Navient Credit Finance Corp. (together, “Navient” or “Defendants”) have illegally collected on the discharged student loans held by Plaintiffs and the proposed class. In recognition of the ongoing irreparable harm incurred by Plaintiffs and the proposed class they seek to represent, on July 08, 2022, this Court issued a memorandum-decision granting in part Plaintiffs’ Motion for a Temporary Restraining Order, temporarily enjoining Defendants from continuing these illegal collection activities until September 20, 2022. Dkt. No. 341. The same reasons relied by the Court in its well-reasoned decision granting the Temporary Restraining Order remain true and applicable to Plaintiffs’ Motion for a Preliminary Injunction. In addition, several courts have issued relevant decisions relying on fundamental principles of bankruptcy law in the past three years that lend further support to Plaintiffs’ Motion.” – Source

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The document goes on to say, “Thus, Navient has always had the ability to determine whether a loan was within the cost of attendance, and indeed the responsibility to make such a determination post discharge prior to restarting collections. It makes no sense for Navient to now complain that requiring it to make such a determination is somehow overbroad. It particularly makes no sense here, because there is overwhelming evidence that thousands of loans on their face exceed even maximum formulations of the amount of the borrower’s cost of attendance. Instead of at least stopping collections on those loans, where it is so plainly obvious that Navient is breaking the law, Navient claims that an injunction requiring it to now determine the cost of attendance for its post discharge loans is overbroad and somehow this fact gives Navient the right to continue collecting on all its loans. That is a perversion of the discharge injunction and the operation of Bankruptcy law.”

I predict what will happen here in the months ahead. Navient will pause the collection of Tuition Answer loans while the rest of this case unfolds.

I would anticipate that you fall under the consumer class in this suit. A recent document described it as “Put simply, the proposed class is composed of the thousands of borrowers with loans that exceed the cost of attendance who received a bankruptcy discharge and were nonetheless subjected to Defendants’ continued attempts to collect on these discharged loans. The only facts needed to ascertain membership in the class are (1) whether borrowers attended or intended to attend Title IV institutions; (2) received private loans owned or served by Defendants that exceeded the cost of attendance as defined in 26 U.S.C. § 221(d); (3) received a discharge order from a U.S. bankruptcy court after January 1, 2005; and (4) have not reaffirmed their loans.” – Source

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I would not recommend doing anything different on your loan right now. But carefully watch for all correspondence about your Tuition Answer loans because I think important news is coming from the servicer.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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