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Bankruptcy Law/SALLIE MAE STUDENT LOAN

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Expert: - 7/2/2009


Question
AFTER WE FILED FOR BANKRUPTCY, SALLIE MAE DECIDED WE COULD NO LONGER MAKE PAYMENTS ONLINE OR CHECK THE STATUS OF OUR LOAN, WHICH BY THE WAY WE STILL PAY. NO STATEMENTS ARE SENT. WE HAVE NO PROOF THEY ARE APPLYING THE MONEY TO THE LOAN AND THEY REFUSE TO SPEAK WITH US.
THEY SAID BECAUSE WE ARE IN BANKRUPTCY THEY CANNOT SPEAK OR COMMUNICATE WITH US.
PLEASE ADVISE.

Answer

Leon Bayer
Sallie Mae is at least partially right, but they could do a far better job at providing an explanation. I went to the Sallie Mae web site looking for information I could point you to on their bankruptcy collection practices, and while I found a page discussing bankruptcy in general terms, (it took a long time to find even that), it said absolutely nothing about Sallie Mae's procedures for dealing with an account during the duration of a bankruptcy case.

You are absolutely right to be frustrated with them.

The filing of a bankruptcy case automatically creates an immediate restraining order against all creditors, prohibiting debt collection, (even billing and normal payment collection procedures), EVEN on debts that are non dischargeable, like student loans.

If Sallie Mae sent you statements during the bankruptcy, they will leave themselves open to a charge that they are in violation of the court Order, called the Automatic Stay.

After a person gets a bankruptcy discharge, normal procedures can resume with Sallie Mae. A letter from your attorney to Sallie Mae authorizing them to communicate with you in a normal manner not withstanding the bankruptcy should do the trick.

In many cases, student loan lenders will put an account on a temporary payment deferment during a bankruptcy. If you canget them to speak to you, ask if they have done that.

If you want to do some further general reading on the subject of what happens during a bankruptcy, see my Bankruptcy Guide at http://www.debt-relief-bankruptcy.com/guide-new.asp  

Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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