Bankruptcy

For-profit colleges are accused of deceiving students across the nation and leaving them with a legacy of student debt. Predatory schools allegedly targeted veterans for their GI benefits and also set their sights on lower-income communities and communities of color.

Over a million borrowers defaulted on student loans last year. Many of those carrying this debt file for bankruptcy. In fact, an estimated one-third of bankruptcies involve student loans. But what many people might not know is that in bankruptcy, student loan debt is rarely forgiven. One researcher found that of over 230,000 student-loan borrowers who filed bankruptcy in 2007, under 450 — less than 0.2 percent — even tried to discharge their education loans. 

Professor Emeritus Jack Ayer has long been recognized for his national leadership in bankruptcy law.  The John D. Ayer Bankruptcy Chair honors Professor Ayer for the lasting legacy he leaves in this area.  I was delighted to join other faculty in San Francisco yesterday evening to launch this chair.  Thanks to our hosts, the McNutt Law Group, who have spectacular offices overlooking the Bay and Yerba Buena Island.

Folks in the commentariat seems to believe the planets are in alignment as they read (or hear about) new-Justice Elena Kagan's first Supreme Court opinion. The topic is "bankruptcy," and the general sentiment seems to be that it is only fitting for the newbie to be handed an assignment so "unimportant."

I won't for a moment pretend to have read everything written on the topic but here are a couple of thoughts on mortgage meltdown that i haven't seen elsewhere.

One: the banks are going ballistic hanging tough over the question whether they should rewrite some of these deals so that buyers can stay in their homes. They've pretty well sandbagged HAMP and they talk about a possible Chapter 13 writedown amendment as if it were the End of Western Civilization as we Know it.

Kudos to Katy Porter for dropping a dime on the Justice Department for its indefensible decision to chime in on the side of the creditors before the Supreme Court in the MBNA case. Katy's post offers a crisp summary of the issue—it's a dispute over a fine point of interpretation in a bankruptcy statute.