Friday, November 04, 2011

No Money Down Chapter 13

Today I decided to become the first and only certified specialist bankruptcy lawyer in Los Angeles County to offer a no money down Chapter 13 plan for qualified wage earners. Up until today, I typically charged my Chapter 13 clients $2,000.00 down. Now, with my new no money down plan, any regular wage earner in need can afford to hire us to save his or her home, stop a wage garnishment, stop an eviction before trial, or stop a repossession. Our Clients still need to pay the Bankruptcy Court Chapter 13 filing fee of $281.00.

I typically charge $4,000.00 for a Chapter 13 bankruptcy case for debtors who work for a company, and $4,500.00 for debtors who are self-employed, though complicated cases may involve additional fees. These fees will now all be paid through the Chapter 13 plan of reorganization at the expense of my clients' creditors.

My firm and I have an extraordinarily high success rate confirming Chapter 13 plans. This and my concern for the average person who is faced with losing his or home and simply does not have thousands of dollars to pay to his or her lawyer up front are the reasons that I have decided to start this new program. To my knowledge, I am the only attorney in Los Angeles County, Orange County, Riverside County, San Bernardino County, Ventura County and Santa Barbara County to offer this no money down Chapter 13 plan. To schedule a free consultation, call me or Sofya Davtyan at 310 271-6223. Sofya is the head of my Chapter 13 department. My 11 lawyer 7 paralegal firm now has 3 offices and is ready to serve you. For more information about me and my firm, see my website

Wednesday, August 24, 2011

SSH Student Update

Students with loans with Student Loan Express

I have been receiving many phones calls, emails and letters inquiring about the letters that former SSH students that have Student Loan Xpress loans been receiving from AES regarding final settlement. These letters are confusing because they contradict prior letters from AES. The operative letter is the letter that references the “Holman Settlement” dated August 11, 2011. This letter is the correct letter that has each individual student’s settlement. The amount that each individual student must pay was based on the number of certificates received while attending SSH. The payment amount is made up of the following: 1. Loan amount, 2. Interest from the date the loan was funded through February 4, 2008 and 3. loan origination fee. For example, if your loan was $69,900.00 and you received zero certificates, 75 percent was deducted from the total of your loan amount plus interest through February 4, 2008 and the loan origination fee. If you are my client and you have any question regarding the settlement of your Student Loan Xpress loan, please e-mail my Senior Associate Attorney Georgeann Nicol. Her e-mail is Georgeann is also the attorney handling the settlement of SLX loans for former students that are not part of the class action case.

Students with loans with KeyBank

KeyBank is still insisting on a settlement scheme based solely on flight hours. This scheme is far less favorable to the majority of our clients than the class action settlement approved in the Holman case for former SSH students with Student Loan Xpress loans. 4 of our former SSH students with low flight hours and with loans from KeyBank have settled their loans using KeyBank's formula. The rest of our KeyBank clients are at a standoff with KeyBank, waiting for a better settlement offer or a favorable court ruling to come along. We are still waiting for an Appellate Court ruling on the dismissal of the Pinnacle Law Group's proposed California class action case . We do not know when the Court will rule on the Appeal, but as soon as we know the results on the ruling, we will post it on the blog.

Wednesday, April 20, 2011

What Is New for Former Students of Silver State Helicopters?

Our office received numerous phone calls and e-mails regarding an "Order Scheduling Settlement Conference" for May 10, 2011 in the Silver State Helicopters, LLC bankruptcy case that was mailed out by the Court to creditors. This Order does not apply to former SSH students and it does not affect them. It relates to a dispute between the SSH and its major secured creditor Orix.

We are waiting for Student Loan Xpress ("SLX") to send new bills to former SSH students who were covered by the class action settlement agreement with SLX. These bills will reflect the reduced principal and interest amounts set forth in the class action settlement agreement approved by the Judge Merryday. The attorneys for SLX continue to tell me that they do not know when the new bills will be mailed out.

Senior Associate Attorney Georgeann Nicol and I have begun settlement discussions with counsel for SLX regarding clients of ours who were former SSH students who obtained loans from SLX to attend SSH but were not members of the class action. This includes former SSH students who were not enrolled at the time of the filing of the SSH Bankruptcy. At the request of counsel for SLX, these discussions were postponed until after the class action settlement was approved by the Court.

KeyBank continues to be the most difficult bank for us to deal with in connection with the loans that it made to former SSH students.
KeyBank's offer to our clients was based on the number of flight hours that the student had at SSH, not on the flight certifications obtained. This is generally less favorable to our clients than the number of flight certifications standard that was agreed to by SLX in the class action. To date, only four of our clients with KeyBank loans accepted KeyBank’s settlement offer.

The remainder of our former SSH students with KeyBank loans are still waiting for a better offer and / or a favorable ruling from the Ninth Circuit Court of Appeal with regards to the District Court's dismissal of the proposed California class action suit against KeyBank brought by Andrew August and his firm Pinnacle Law Group, LLP.

Monday, January 31, 2011

Comments on the Dischargeability of Student Loans in Bankruptcy

1. Overview
The Bankruptcy Code provides that student loans are not discharged in any bankruptcy proceeding unless “excepting such debt from discharge would impose an undue hardship on the debtor.” Section 523(a)(8).
The test – undue hardship – is very difficult to meet. It is the debtor’s burden to prove the undue hardship at trial. Undue hardship means an inability to maintain a “minimal standard of living,” essentially forever.
2. The Procedure
To obtain a discharge of student loans, a person must:
a. File a bankruptcy proceeding, chapter 7, 11 or 13, and,
b. During the pending bankruptcy proceeding, file a Complaint against the student loan lender (or lenders) asking the court to “declare” that repayment of the student loan will be an undue hardship on the debtor.
Filing the Complaint begins an adversary proceeding. This is the same thing as litigation outside of bankruptcy. The lender is the “defendant” in the proceeding. The lender will file an “Answer” or other response to the Complaint. The Court will set a status conference and eventually set a trial date. During the interim between the filing of the Complaint and trial will be a “discovery period.” The lender defendant will take the deposition of the debtor and possibly the debtor’s other witnesses. The lender will request documents from the debtor including income and expense records and employment records. The lender may file various motions such as Motion for Summary Judgment.
The time between the filing of the Complaint and trial varies but can be generally estimated to be six months to a year. Trial generally will take a few days. After hearing the debtor’s witnesses and other evidence and the lender’s response and its evidence, the Bankruptcy Court will rule and “declare” whether any or all of the student loans represent an undue hardship to the debtor.
3. Determining Whether There is Undue Hardship
The Bankruptcy Courts use a three prong test called the Brunner Test to determine whether or not there is undue hardship. The Brunner Test (831 F.2d at 396) requires that the debtor prove all of the following:
a. that the debtor cannot maintain, based on current income and expenses, a minimal standard of living for herself and her dependents if forced to repay the loans;
b. that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
c. that the debtor has made good faith efforts to repay the loans.
3.1 The First Brunner Prong – Inability to Pay Now
The first prong is the easiest to meet. The debtor must offer evidence at trial that repayment of the loan is not possible “based on current income and expenses.” This is established usually by the debtor’s own testimony and personal records. The debtor’s testimony is that he has a job (or does not), makes x amount of money, and that amount is not enough to allow him to maintain a minimal standard of living.
The lender will often argue that the debtor can get a better job, or work more hours, or cut back on expenses, get a less expensive place to live, and thereby pay some of the loans and still maintain a minimal standard of living. A minimal standard of living does not include private schools for children, putting money away for retirement, or supporting other family members or unrelated persons.
3.2 The Second Brunner Prong – Inability to Pay in the Future
To meet the second prong, the debtor must prove at trial that “this state of affairs,” i.e., his current financial condition, will continue forever essentially. The debtor will need evidence at trial that he will not make significantly more in the future than he is making now. The debtor can certainly get on the stand and say that his position is as high as he will ever get however that will generally carry little weight with the judge. This usually requires an expert in the particular industry. This prong obviously involves a lot of speculation but the burden belongs to the debtor. He must prove to the Bankruptcy Court with evidence at trial that things are never going to improve.
The lender will certainly retain an expert who will likely testify that in this particular industry the debtor can be expected to make considerably more in the future.
3.3 The Third Brunner Prong – Good Faith Efforts to Repay the Loan
The debtor must establish at trial that he has made a good faith attempt to repay the loans. The most basic part of this requirement is that the debtor show the court that he has attempted to reach some sort of arrangement with the lender which will permit reduced payments or a period of no payments.
The United States Department of Education, William D. Ford Federal Direct Loan Program offers various repayment options for student loan debtors. One of these is the Income Contingent Repayment Plan.
Systems of bankruptcy are designed to relieve the honest debtor from the weight of indebtedness which has become oppressive, and to permit him to have a fresh start in business or commercial life, freed from the obligation and responsibilities which may have resulted from business misfortunes. Essentially, once a student loan debtor is on an ICR plan, monthly payments are calculated on the basis of adjusted gross income, family size, and total amount of Direct Loan debt. This can give student loan debtors the flexibility and breathing room they need during difficult times. Direct Loan provides a handy calculator for approximating ICR plan payments. The calculator is located at The maximum repayment period under an ICR plan is twenty-five years. If a debtor makes payments under an ICR plan for twenty-five years, and there are still amounts left owing, those unpaid amounts are forgiven. More information on ICR plans and other Direct Loan repayment options can be found at or by calling 1-800-848-0979.
It is pretty clear that failure to use the Ford Program Options will, by itself, prevent any portion of the student loan from being discharged.
The Ford Program does not apply to many loans. The debtor must attempt to settle or otherwise resolve the issue with the other lenders before seeking a discharge. The debtor will need evidence of these efforts at trial. A statement by the debtor on the witness stand that “I tried” will be given little weight. The debtor needs names and dates and rejection letters are even better.
Some courts have ruled that failure to make payments before filing the bankruptcy case is a factor against the debtor.
4. The “Partial Discharge”
A relatively new development in the discharge of student loans is the “partial discharge.” The Bankruptcy Court is permitted to determine that some portion of the total student loan debt is discharged. This occurs usually when the amount owed is huge, for example a few hundred thousand dollars or more. Applying interest to that amount means that the payments will be several thousand dollars per months for many years. The Bankruptcy Court may decide that x amount of the total is to be repaid and the rest discharged. Remember that the burden is on the debtor to show the court at trial what portion cannot be repaid.

This article was prepared by By: M. Jonathan Hayes and is
Reprinted from the CDCBAA February, 2010 Newsletter

Wednesday, January 12, 2011

Kilgore v. KeyBank Appeal Briefing Complete

All of the briefing is complete in the 9th Circuit Court of Appeals in the California proposed class action case on behalf of California residents who attended Silver State Helicopters, obtained student loans from KeyBank to do so, and were still enrolled at SSH at the time that it filed bankruptcy. KeyBank has cited the dismissal of this case in the District Court when threatening its borrowers with collection action. A hearing date is anticipated in March. The ruling in this case, while only binding on California residents, is expected to have influence on KeyBank with respect to its dealings with all of its former SSH student borrowers. For now, KeyBank continues to place collection calls and write collection letters to former SSH students, without suing or seeking arbitration against any of them. If you are my client and you receive a collection call or letter from KeyBank, respond by telling the collector that I represent you and ask the collector to call me at my office: 310 271-6223.

Student Loan Xpress Proposed Class Action Settlement Approved

Judge Merryday has issued his order granting final approval of the proposed class action settlement agreement for students that attended Silver State Helicopters School ("SSH") and obtained student loans from Student Loan Xpress ("SLX") and were still enrolled at SSH at the time that SSH filed bankruptcy. Judge Merryday has not yet entered a final judgment on that order. Class counsel has filed a joint motion with SLX to have Judge Merryday enter judgment ASAP. Class members can expect to receive updated loan information from SLX, including the new reduced amount of their loan balance and their loan payments, in the next 30-60 days. Any questions about this should be addressed to Andrew August: