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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Legal
Satisfied Customers: 110473
Experience:  JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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In 2007-08, I was convincingly sold on the idea, via online

Customer Question

In 2007-08, I was convincingly sold on the idea, via online ads you will not find anymore, to borrow private student loan funds that would "conveniently" be overnight delivered to my own home (that's illegal if a lender wants to call its product a student or, in legal vernacular, a "qualified educational loan"
Further, these private student loan lenders enticed me, the student with the belief I could receive a check overnight in any amount: "$20,000, $30,000 $40,000, even $100,000 (again illegal practice I later learned if a lender intends to market its product as a "qualified educational loan."
Finally, I was told the loan funds would be under my complete control to spend how and when I needed to (yet another factor disqualifying this type of loan as a qualified educational expense."
I learned, via FinAid, that in the early years after the law changed to make private student loans non-chargeable, that some well known student loan lenders were deliberately circumventing parts of the law in order to sell unsuspecting students like me what they called private student loans for the express purpose of trying to make them bindis chargeable in bankruptcy.
In reality, these loans are nothing more than unsecured direct to consumer loans.
Was this fraudulent behavior on the part of these lenders? In 2010 the BACPCA law changed such that a student coil not take out a private student loan until they had exhausted all available federal student loan funding.
But I got caught in this mess in 2007-08. I ended up on permanent disability, and these lenders hounded me day and night for payment. I paid when I could, but I also had medical expenses that came first.
Finally, with one lender, I made my last payment to them in October, 2014. I had received a collection call, and told the collector if they intended to send me a summons, I would take it to the courthouse and file a slow pay motion against them, and see them in court. The collector said "Now, now, now, we don't have to go down that path do we?" I never got another collection call from that lender.
I did get a collection call (the last one ever) from the other lender, who tried to plead with me "But we gave you that money to use any way you wanted." I told her that that right there was the problem and why this loan wasn't a true educational expense loan at all.
I never heard from that lender again either.
These loans remain on my credit report, showing $0 balances as charge offs. Due to my sudden onset disability that dropped our family income by 70%, my federal student loans were discharged without argument. We did have to file bankruptcy, I brought the lawyer all the supporting paperwork I had on these "fake" student loans, but he wouldn't even look at it, I wouldn't discharge these fake student loans.
But I'm wondering, was I defrauded by these private student loan lenders since what they sold me as private student loans in no way meet the legal requirements to be qualified educational expenses, and thus, indeed did chargeable in bankruptcy as direct to consumer unsecured loans?
With these fake student loans hanging around on our credit reports, we can't get a credit card, a loan for dental surgery I need (I'm going around with a missing left front tooth because of this).
I want to know if we were defrauded, and what we can do about it. I know a discharged bankruptcy can be reopened for adversary hearings, but is there more to this than that?
We have been through hell with these lenders for 5 years now. We were hounded and hounded, our lives were made miserable, we cannot obtain credit of any kind, if if one looks at our credit history, it's obvious we never mind sided one creditor payment ever, until this mess with the fake private student loans.
I do intend on contacting a different lawyer who maybe will take the time to read the documentation on this I have, complete with cited U.S. code to back up what is then explained in plain English.
If we were defrauded, do these lenders owe us back all we had managed to pay them? Maybe even damages for years of mental anguish and the fact if not for their fake loans, I might be able to secure the needed credit to get my front tooth replaced?
Submitted: 4 months ago.
Category: Legal
Expert:  Law Educator, Esq. replied 4 months ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
If the loans are showing zero balance and the lender is no longer around any longer, what you need to do is file a dispute to the credit reporting agencies on the negative remark on your report pursuant to the Fair Credit Reporting Act. You send each credit bureau a letter informing them that the debt reported is invalid and was the result of fraudulent lender conduct and ask for it to be removed. The credit bureaus will try to contact the lender, but if they are not around any longer, then within 30 days to 45 days pursuant to the Fair Credit Reporting Act the loans should be removed.
If not, your final recourse is you have to file suit in court against the lender for unfair and deceptive practices and seek to get damages plus the loan removal. If the company is no longer in business, then the court will award you a judgment by default which would allow the loans to be removed from your credit report.
Customer: replied 4 months ago.
Thanks for your assistance. I am having related issues over this matter. With the Big Three credit bureaus too. For 4 months now, I have been working with Lexington Law, LLC, just to generally clean up all incorrect data that may be on my credit reports.About 1.5 yrs ago, with the help of the Consumer Financial Protection Bureau, it seems the CFPB was able to get a response out of one of the lenders who had been, for years telling me it had no clause that allowed disabled students to apply for disability-related loan forgiveness.After just one letter regarding this issue was sent to the lender via the CFPB, lo and behold, the lender sent me an application for disability forgiveness to his lender's insurer, Minnesota Life.I completed and submitted all requested info to Minnesota Life, and it took approximately six months for a reply obtained via phone call to Minnesota Life. I was told that in Minnesota Life's opinion, I was indeed too disabled to work. There was one caveat: despite Minnesota Life's opinion I was totally and permanently disabled, which was the opinion, too, of both the Social Security Administration, and the Federal Department of Education, which forgave all of my federal student loans.without argument, in this case, the lender still had the right to deny my request for loan responsibility relief.What thisvlendervdecided was to transfer all loan repayment responsibility to my cosigner --- my husband. In effect, this provided us no relief at all.Since the time of their decision, all payment responsibility has been transferred to my cosigner-husband, although this lender after three attempts to request it remove any loan responsibility from my credit reports, continues refusing to do so, stating their records are correct, and this loans balance of some $34,000 remains on my credit report all the.same.What must one do to force the credit bureau to spend just a little more time researching the fact that, as they had told me personally, I no longer had any repayment responsibility for the loans?By the way, the two private student loan lenders are not the here today, gone tomorrow kind. One is Navient (formerly Sallie Mae) and the other is AES.Neither of these well known lenders offers much in the way of Private Student Loan products any longer, and CERTAINLY not the kind of "fake" direct to consumer unsecured loans I got roped into.It's worth noting, too, that my school was never informed I had received this so-called educational funding. Yet another infraction of the law defining what is/ is not a true educational loan.These lenders have wronglybpursued us for years about so-called non-dischargeable student loans that we could have been given medically related bankruptcy relief from as far back as February, 2011.But the greed and corruption of today's corporate world, having begun its takeover of the federal and state governments whose true mission is to serve the American people; not corporate America, began in the 70's based on what is known as the Powell Memorandum, meant to be seen only in corporate boardrooms (it is titled as CONFFIDENTIAL) but made its way outside America's corporate boardrooms around 1975.It is a blue print for how corporations using the lure of money the (former) middle class could not fight against, particularly when the American workers' only true lobbying power resided with worker's union representation whic, if you read the full 34 page Powell Memorandum was tops on their blueprint list to own the people's government.We are told how wonderful Supply Side Economics is for America. Show me how the American economy is booming after 30-some year as of this Supply Side Economics thing that has no support by way of empirical evidence, and the only thing to recommend it is how Republicans, who despise the idea of sharing the wealth were so easily taken in when told howb"trickle down" economics would mean that if only we gave more to those at the AMerican economic summit, it would then trickle down to all the rest of us, and we would all be the benefactors of the truly super wealthy who would open the hearts and their pocket books, so thankful would they be that we were the American majority who took such pride and reverence of those Americans among us we could point to as American success stories.You know, if you are given government financial aid in America, and you are already a wealth success story, what you are given is a reward. But if instead you've fallen on financially hard times and are given government aid, it's a hand out; never anything else.
Expert:  Law Educator, Esq. replied 3 months ago.
Thank you for your reply.
Legally, the definition of a co-borrower or surety or guarantor on a loan is someone who will be responsible to pay a loan if the primary person cannot pay. It is not illegal for the borrower to pursue payment from the co-signer, co-borrower or surety. People who receive money upon a promise to repay it are legally bound to repay unless you show fraud by the school or lender. So your ground to attack this is based on the fraud they committed, not based on the fact that you signed a contract and you are responsible or your co-signer is responsible if you do not pay it.
Customer: replied 3 months ago.
The lenders I borrowed from are bothe well known student loan lenders who provide both Federal DEPT of Ed student loans and (mostly formerly) private student loans as well. I expect this will this require going to court over. I just received a letter from a collection agency regarding the full outstanding balance ($27,000+) on the AES fraudulent loans. I received this letter after noting AES had changed my amount due to them to this collection agency instead. Does this likely mean the collection agency bought the debt from AES, and if so, will that change how I pursue this in court?As to collecting on damages, what damages might I collect on? Surely as a permanently disabled person this company's years and years of daily collection call attempts was not easy to take, and before our changed financial circumstances due to the loss of 70% of my former income had the chance to fully take its toll, I did attempt to make some payments toward these debts. Is that considered "damages" I have requested original documents from this company but what they did send had blacked out redactions in portions of what documentation I did receive. The redaction markings made it so that I could not even see what item was being redacted. What that was about, I have no idea.I thank you sincerely ***** ***** helpful advice and giving me the courage to pursue this in court, even though the original lawyer I attempted to provide with the U.S. Federal BACPCA private student loan discharge limitation laws was not interested in speaking with me about my concerns in this area, or allowing me to point out the portions of the U.S. Federal code I felt did indicate these loans were marketed fraudulently. All that did, for several years thereafter, was make me feel like just another dumb consumer who messed up and got myself stuck. Too bad, pay the lender was the impression I got.Given 30 some years now of more and more adverage Americans being made to feel backed into a corner permanently as I had done, I can understand the (seriously displaced) anger we see on TV durng this presidential election year. I can only hope the majority won't shoot off their own noses to spite their own faces, but indeed, it is true we've been made to feel we do not have a government. Instead what we, the American majority have are pre Magna Carta overlords with near total power to direct the course and quality of our lives.So very, very different now than when America's economy was booming, the government worked for the taxpayer majority (not the wealthy, providing high dollar gifts to our congress people), and a capitalist free market as envisioned by the founding fathers in which balance existed.Balance in the market is all but gone. There is only so much capital to go around in the free market, and it's natural competitors for the available capital used to be able to negotiate within our capitalist free market system on a level playing field.So long as all competitors had an equal chance in the acquisition for capital, the free market remained fair and balanced.Two natural free market competitors for capital are business owners vs business workers. All are vying for that same market share of capital, and at one time, both sides had lobbyists to assist these competitors in their attempts to acquire the best possible share of market capital possible. That meant negotiating (another term that is fading into the past).But with the emboldening encouragement of Justice Powell in his (meant to remain confidential) Powell Memorandum of 1971, all of the CEOs who received this manifesto did become emboldened to take up Powell's encouraging words insisting corporations (in nicer terms) essentially buy the U.S. Government with the much larger amounts of capital they could offer (furthered by the SCOTUS decision to make corporations people too and allow them to spend unlimited campaign sums the average American majority simply could not compete with) in order to ensure our government became American corporations' government and not the true living, breathing peoples' government. What right does SCOTUS have anyway acting as though it was God and could thus say who or what is or is not a person -- a true human being? To me that is outright sinful to believe one has powers equal to those of God.Anyway, that was one thing that unbalanced the market, and the other thing was the removal of lobbyists who petitioned the government on behalf of workers.Corporations are still allowed to lobby the government, but groups of workers no longer have that free market balancing right.Instead, it's a case of hearing out the corporations in their petitions to congress, and near enforced silence from the corporations' natural free market competitors for that same available market capital.The founding fathers would be so enraged! The felt corporations and government should never collude. And yet that is America today.
Expert:  Law Educator, Esq. replied 3 months ago.
Thank you for your reply.
If you can prove you are permanently disabled and not able to work at your field that you obtained your education in, then that is a ground to get the loan extinguished. You can file bankruptcy and upon proof of your total disability to the court, that is one reason the bankruptcy court can extinguish a student loan.
Customer: replied 3 months ago.
Thanks again for your help. That would work with one of the lenders, but I had a co-signer (my husband) for the two Sallie Mad private loans totaling around 40K. In time, due to my disability (Salle Mae / Navient), discharged me of all loan reponsibility, but transfixed that entire responsibility to my co-signing husband. So now he is making payments on that set of fraudulent loans wherein my school had no knowledge of the Suns, once again, disbursed directly to us at our home.It is irritating that I don't know more about the law at that time, and the fact that, at that time, our credit rating was such that the interest rate offered on those loans was lower than interest rates on the Federal Srudent Loans. Thankfully, even though they are tied to Libor, the poor economy has kept the interest rates for us right around 3.85%.But no matter, they're all fraudulent loans anyway.
Expert:  Law Educator, Esq. replied 3 months ago.
Thank you for your reply.
Actually, bankruptcy could still discharge the loans, all of them and furthermore, if you prove fraud on the school that led to the loans, not only is your disability the reason for discharge to you, if you file joint bankruptcy, then the fraud can discharge them to your husband as well. Even federally subsidized loans can be discharged in bankruptcy for disability and fraud (that is pretty much the only reason they can be discharged.

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