loan forgiveness

[music] all right, so thanks fortuning in to debtbytes, our youtube channel. i've got steve rhode with me. steve's a good friend ofmine and a debt relief and credit expert, has been workingin the field for decades. look at him. >> [laugh]>> steve, we have a purpose. you and i get together andwe can get on and

off topic all the time. but our main topic todaythat we wanna try and focus on is borrower defense and what the means to studentloan borrowers right now. in the last six months, sinceit's become all the rage, and on a moving forward basis too. so you cover student loans morethan i think anybody i know of online, any of the personalfinance blogs, or anything. so listen, first,straight out of the gate,

what's your take onborrower defense? >> so, borrower defenseis this idea that you can ask to have all of yourfederal student loans forgiven if you were screwedover by the school. fraudulent recruiting practices, they lied to you aboutsuccess rates, etc. and this is, i think it's nowbeen more than a year since i first wrote about it, andit was a little tiny known section of law that nobody everutilized before last year.

and department of educationhad put out a little warning, saying they expected the numberof people to use it to increase, which made me go, hm? >> [laugh]>> [laugh] so, i think it could bea very valuable tool for people who were actually screwedover by their schools and deceived to enroll,only to incur massive debt. however, for most peoplethis could be a sand pit. and i'm sure you'lltalk about that.

>> okay, so look, what we've got here in some datathat's available from the second report by joseph smith that wasavailable in december of 2015. we're recording this right now,and it's mid-march, right, of 2016. and the last available reportwas is that, historically, up until last year,there were five submissions, three approved over a coupleof decade period of time. so this, for all intents andpurposes didn't exist.

so the doe departmentcoming out and saying, hey, we're expecting a few moreof these, boy, did they. because in that reportit talks about close to 15,000 submissions up to,from last summer to december at the time he was, well,actually even november 18th was the last date that he gave forupdated numbers. so, we saw that influx, right? and in that amount of time, i'vebeen dealing with phone calls, i've been dealing with emails,

corresponding with peoplein virtually every way and even other debt relief andcredit experts. and, the resounding kindof response to this, at least initially,is that people aren't prepared, to put forward withthat information. >> no.>> they're not in a position to understand what itis essentially. and i think you do a fantasticjob at reporting on this, but i think that there's a, i guessit's an excitement, right?

because at least from my->> i would say that the problem facing this borrower defensea way to get your student loans forgiven is the same basicproblem that you and i face in helping people withall sorts of debt relief. which is people, i love people,but it seems like a lot of people, when they're inthis situation, they're not necessarily in a mindset toresearch all the ins and outs. and they go as far asthe headline or the title and then they think everythingapplies to them.

and that's just not the case. whether it's studentloan assistance or this borrower defense thing,there is a huge pothole that could actually cause peopleto increase their student loan balances if theyare not prepared. [sound] for submitting theseborrower defense claims. and i->> sure, cuz they go into deferment,yeah. >> you and i have talkeda lot on the phone.

it feels like we talkalmost every day or every other day about this now. and this is something that ithink that, while it seems simple, it requires eithera professional touch, professional approach,some expertise. and it's just not somethingyou throw against the wall and hope that your loans go away. >> all right, so let me justtalk about a technicality, right, where it's like,i'm excited!

everybody's talking about this. it's all abuzz in the socialmedia and a branch of occupy wall street or occupydebt or however that's worded. has got ahold of this, right and there's just a lotof energy behind it. fine, great, right? >> yep,getting people excited about it. >> yeah,here's a technicality, right? and this is right in smith's,and he's the special master for

borrower defense, appointed bythe department of education, that's who he reports to. and he talks about in his secondreport about what students are getting, orwho they're looking for. they're looking for studentswho relied upon false or misleading placement ratedisclosures in enrolling. and he specifically callsout heald colleges, which were part ofthe corinthian colleges, who have established a borrowerdefense claim as to which relief

would be grantedunder california law. well, this report andmuch of the submissions are coming out of corinthiancampuses out of california. the vast, vast majority of them that hehad up to date in this report. so what they're looking foris, and what they're talking about is something thatwas already pre-established. it was a attorney general actionagainst the colleges, right? they have->> this is all unintended

consequences. >> yeah.>> i mean, the department of education really raised this outof this dark closet it was in, this defense, because theyhad to deal with all those corinthian loans that they hadalready felt were deceptive. so once they opened that door,[sound] >> well, and you know what, it does apply, right? so here,here's a good example, right?

so we're talking about this. in different states,the corinthians, but amount of art institute,for example. >> right.>> these aren't corinthian college campuses. they were up just under 14%, 13.9% of the submissions[crosstalk] yeah, itt was 2.4. and of course, just after thisreport we saw that sensational claim, which you covered on yoursite, about that tallahassee

campus for itt tech, and thatwhistleblower lawsuit there. so, i expect to see moreof these things, sure. but i mean, right now as oftoday, i have had consults, emails andcomment exchanges online. where i've only really had onethat kinda came at me with like no, they were ready, right? they understood what'srequired of them to submit for borrower defense. and they had a reallygood situation.

they'd all readydone the homework. >> now here's the importantthing, while we're talking about corinthian,devry, itt tech, wyotech, all these schools that's gettingall these negative press, these very same principlesapply to every college. for years now, i have covered that fact thatcolleges have been deceiving and just downright lying toprospective students. but even four-year colleges,

non-profit colleges,that fudge their numbers. and there are now, finally, in the last year there'ssome good online tools for checking to see exactly whattheir performance rate is, and up until now they didn't haveto tell people the truth. so this will becomemore mainstream and it's why people need topay attention to this now. >> i'll put a couple of linksup, when i publish this video, when it's availableto the public.

you'll be able to look above andsee a couple of links to some of those tools where you can checkon the completion rates and the employment rates at yourdifferent colleges cuz those tools are really helpful. so steve, you actually showed mea app that was created to submit these borrower defense claims,right? so this is a problem,or it's again, it's great to have the attentionand the excitement but there's a problem inthat i looked at the app.

i saw what they're justthree bulleted items as far as the most importantaspect of your submission is that what went wrong? whatever it was, why, okay? and three bullet points thatyou're just saying yes or no to, does not. yeah, here's what smith'sasking for, right? so their team at the borrowerdefense team that is reviewing all of these.

they're talking about, in thisregard, it is important to note that the statements byclaimants, in their own words, of how they were treated by theschools against which they have made a claim will be helpfulto our resolution of claims. so how is it than an apphighlighting three maybes, maybe nots, yes, no. does somebody even havesomebody to encourage them to, why are they checking no,why are they checking? there's none of that.

and none of it is somethingthat is contained in their own words, right? so, i think it's problematicthat okay, let's get excited about these things, but at thesame time, let's do it right. like you said, okay, sothe religious objection organization [crosstalk]>> that is an objection that i like to put inthe category of bullshit. [laugh]>> yeah, and i just wonder how many, i mean it's a lot like,okay, so i'm gonna tie this

into something probablymore consistent, especially in the debt reliefspace, is credit repair, okay? so, you've got thesethings on there, you don't want them on there. you've got thisstudent loan debt. you don't wantthe student loan debt. and if wishes were fishes,right? so, you send off this bullshitdispute to the credit reporting agencies that has no bearing infact, these are accurate things.

you just don't want todeal with it, right? >> yeah, but you know theinteresting thing is that doing that doesn't have the sameconsequence of sending in this borrower defensethat we're talking about. the huge pothole in thatborrower defense claim is once you submit your applicationwhether it's total bullshit or not the problem is it triggersa process that puts your loan in forbearance, whichsounds wonderful, no more payments fora while, and

removes you from collectionsagain, sounds wonderful. but that process can last up toa year and for these initial waves of people submitting themthe numbers are gonna be huge. the department of education isnot gonna be able to handle these submissions and whileyour loan is in forbearance the balance continue to increase,so if you submit a crap claim, and a year later your claim isdenied the only thing that's going to happen out of thisyou're gonna owe more money. >> you owe more, yeah.

couple of things thatare interesting that have come out of this recently though is astudent loan borrower assistance which is a program that ithink ron's still with, nclc, the nationalconsumer law center. and a whole bunch of otherconsumer advocate organizations put out a report tothe doe wanting them to consider certain things andthere are active discussions and dialog>> mm-hm. >> going on right?

>> yeah.>> so, some interesting stuff on there is that parent plusloans apply, right? that it's clear thatffel loans apply. and so while much of this borrowthe fence so much of it consists of things dating around acertain time frame of loans and it's most of coverage is,again, like you talked about tech corinthian colleges,the hill colleges. that it has much, vast,wider applicability and even now, we're just starting totalk about this in this video.

but it's been, like you said,you covered it a year ago. we're gonna see a whole bunchmore, and what i'd love to see is that people actually geta grip and start to factor in. and i don't care, i'll have a one hour a week livegoogle hangout or something. and we'll have nine heads, or ten heads talkingon the screen and coming together with the stateissues right, the state laws. let's put a finer tippoint pen to this and

really start to designatewhy you're submitting. what state laws, if it's udap,if it's unfair, deceptive acts and practices that every statehas, okay, are you finding that? let's talk about that stuff andgive consumers, give student loanborrowers more of a chance. >> yeah, chance toactually have it forgiven. now, what is gonna happenbefore any of this process gets squared away atthe department of education. and they come up with a smoothway to handle these things is,

it feels like it's onlyminutes away that our dear debt relief scammerbrethren are gonna jump on this. and they're gonna start sellingprograms to people where, we can have all of your federalstudent loans forgiven for 599 or something. and essentially, all they're gonna do is fill outthat crap online questionnaire. they're not gonnaresearch these things. i think that the claims for

having all of your federalstudent loans forgiven that have the most chance of successare those that actually have some legal basis underyour individual state law. for why it is deceptive andunfair. and you have to givethe department of education an opportunity to say this isa good and valid claim, and we will accept it. because as you notedin the beginning, they have accepted theseclaims in the past.

>> well yeah,just a couple of them, right, until we sawthis last year. but over a thousand ofthese have now been, smith's team has submitted themto the department you know with their recommendation forapproval of complete and total loan discharge which bythe way they've got an irs, administrative letter that thesearen't going to be taxable, you know that forgiven debt,which is awesome. >> buthere's the backside of this.

and this is why this is goingto be an ongoing fight. because under this borrowerdefense claim while the student has their loans forgiven,if it's approved, the department of educationis going to go back and claw back the moneyfrom the school. >> if they're open. yeah, [crosstalk] those schoolsare gonna fight like crazy. and this is gonna be a mess forawhile, so right now we're at just the very tip of peoplebeing aware of this.

people are gonna do stupiduninformed things jumping into the program. >> or that's sold to them. >> yeah, or sold to them, right. and i would expect this isgonna be a big mess for awhile. but it will eventually have someclarity, will have some rules, will have some understanding,and exactly who's appropriate, and moving forward,it would be a good program. >> yeah, and it could be.

right now, based on this lastreport that i've been referring to today right now there'sanother report due out any minute, but smith had fourattorneys working with him for all of those submissions. now, you and i weretalking the other day, and you talked about that app andthere being a couple hundred thousandsubmissions through that app. >> there's a,what i like to call, a shitload. >> [laugh] thatseems to be theme. shit.

[laugh] that's what they're sayingwith florida attorneys. they're gonna need resources, they're gonna need a moremethodical plan to go about it. i want people to be moremethodical when they go about it, and i can't help but make this correlation ofthe debt relief industry, and their willingness to try andprofit off of whatever they can. >> yeah.>> this is important stuff.

>> butlet's be clear about this for a second, that this isa fine point that i fail to get people to understand is,we talk about debt relief scammers when we talk aboutpeople paying for service. the fine point here is thatif you don't have the skills to do this, and you havefound somebody who does have the skills to do it, and you'rewilling to pay an expert to do it for you, that's certainly avalid and logical consideration. it's like some of the advice iseverybody needs to run off and

do this themselves andnot pay anybody for help. but that's so much likeputting in your own filling. [laugh] i'm not a dentist,i'm not going to be out there drilling my tooth in the garagetrying to do my own filling. i'm going to rely on an expert. so, find an expertbecause the consequences of not doing this correctlycould cost you lots of money. >> well, and then the motivationof the person sometimes. >> but here's a good one.

lots of law schools inthe united states had fudge their employment figuresfor a long period of time. the have said that, you knowgraduates are graduates are 80% employed and come to find outthat, yes, they were employed temporarily while theywere doing the survey. they might have actually beenemployed by the school for a week or two while theywere doing the survey. and those things are nowsubject to court actions. there's one in californiathat's still ongoing.

so, it is not unheard of, of schools promoting falseinformation to encourage students to enroll, even ifthey are mainstream schools. >> so steve, we can't help because of howmuch you cover student loans and have been for years,especially this next aspect. i can't let you get away withnot talking about the fact that a lot of folks think that,even in the legal field, that student loans justcategorically are near

impossible to get dischargedin a chapter 7 bankruptcy. but you've beenout there proving people wrong->> yeah. >> for a couple of years now. tell me.this is going to be for viewers what are some of thethings that you're seeing people succeed with in getting theirstudent loans discharged in bankruptcy. >> well thereare a couple things.

this is an evolving topic, butcertainly one of the easiest things is people withprivate student loans. so, big organizations like sallymae originated private student loans, but come to find out thatthey originated these loans for lots of schools that were nottitle 4 accredited or meeting the accreditation standards ofthe department of education and the bankruptcy code doesnot protect those loans. so if you went to a tradeschool, a flight school, any sort of thing likethat i would direct you

to a bankruptcy attorneyto talk about it. but, most bankruptcy attorneysdon't understand this topic. those loans are notprotected in bankruptcy, they would be instantlydischargeable and those put forward those caseshad those loans discharged. the tough part is finding anattorney who understands this. the other thing is you candischarge federal student loans. now, historically, this has been that you hadto prove an undue hardship.

and basically, the unduehardship was you had one leg, a dollar in your pocket,and two breaths left. but these days,it's not like that. >> no.>> and there are different tests and courts around the country areapplying different tests, and this is an evolving topic, butmore and more federal student loans are being dischargedthrough bankruptcy. case in point is one gentlemanwho contacted me recently.

use information from an articleof mine was talking about how the department of educationhas said that they will pursue less of these cases. and he filed an adversaryproceeding and bankruptcy. he did it himself. and he was able to discharge$130,000 in federal student loans without a trial orany additional discovery by using this department ofeducation guidance, so it's becoming more frequent.

right now, while the departmentof education has said we're going to stop fighting thesedischarges in most cases. the process that deals withthese is like a huge ship and it just take a while to turnthe whole damn thing around. and so in the meantime,you've got the department of education saying we'renot gonna fight it and then you got theirlawyers fighting it. so, we will see moretimes when the tests will become much more logicalto have these loans discharged.

right now, as it is, you cantake somebody who's unemployed, disabled, and the lawyer for the student loan,the department of education, or whoever is holding that loan,will argue, your honor, they always have an opportunity toget a better job in the future. which, i mean,that's just not common sense. >> no, not today. >> yeah, i mean,that's the brunner test that people might hear about.

but the one that's moreimportant is this thing called the totality of circumstances,that is a common sense test, and it will get weeded out,and more people need to file. and if you go to your attorney,you go to your bankruptcy attorney,and they say just flat out, there's no chance ofeliminating your student loans, you should probably go geta second or third opinion. because while your particularstudent loans may not be dischargable becauseyou're in good health and

your circumstancesare fairly good and stuff. they need to be aware of allthe things that allow loans to be discharged. >> yeah.and you know what? on that note, any viewers, ifyou have student loan questions post them in the comments below. we correspond on our youtubevideos every day, so you can get somededicated feedback, and some suggestions about how tolook at either bankruptcy,

or borrower defense,which is the main topic of this. steve, you have, and i'llhave a link up to your site, you have tons of resources,i mean, the most resources of anywhereabout this issue, especially student loans and bankruptcy orjust student loans in general. so, what would you suggest that,based on the coverage that you've had so far, andthis new app that's submitting things in bulk,what are your top three ideas? or top threesuggestions to people,

to viewers,dealing with student loan debts? that they think might applythe borrower defense. what would you suggest they do? >> well i would suggest thatthey number one take a deep breath and understand that thesethings are a good opportunity but they're not as simpleas they appear to be. so don't rush into somethingthat can cost you more in the long run if youmake a mistake. it's the same advicethat i give people who

are considering filingbankruptcy themselves. if you don't want to takethe time to research it and figure out all the ins and outs,you should not do it yourself. the next thing is that youneed to do a lot of research. you need to find out whichof your state laws apply and build a case. this is not an opportunity foryou to send a letter to the department of education andbitch at them. this is an opportunity foryou to tell them exactly how you

were deceived and why andwhat state law applies and why it is obvious that yourloan should be forgiven. so, deep breath, research,and put together a professional presentationwould be my three days. >> okay cool. i really, if i can get you back,i think i'm gonna feel out this, cuz you and i have donegoogle hangouts before. we've not done themin bulk with filling up the whole screenwith attendees.

>> it's good.>> yeah, but if i can get you back->> yeah. >> and we can start talkingabout this some more and like i said put a finerpoint to state issues. and maybe we can tacklea state at a time and bring on an attorneyfrom each state. you and i know many thatare part of collection defense and all that stuff. they care about these issues.

all right, so thanks fortuning into debtbytes. subscribe to our youtube channelright here and get more updates on student loan issues and someof the other things that you might be interested in whenit comes to debt and credit? >> well i urge everyone who iswatching this to subscribe to debtbytes, and to subscribe tomichael's information, and to subscribe to the youtube channelbecause he is a brilliant guy. >> wow, thank you for that sir. i'll see you on the next video.

>> bye.