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About Regan Shinski
Expertise
I can answer questions on collections, repossessions, bankruptcy, credit repair, credit counseling, FICO scores, credit planning, and the cause and effect of credit related decisions. I can also answer questions on collection settlements and preparing to sue your creditors for false debts and credit credit reporting.

Experience
Fifteen years ago I was financially devasted due to severe health issues. I filed bankruptcy, had a foreclosure, car repossession, tax lien, and ruined credit. I immersed myself in credit law. I settled dozens of accounts and had them removed to improve my credit. I personally sued four creditors and collection agencies and won cash settlements for their false reporting on my credit reports. Since then, I have completely recovered and have nearly $100,000 in revolving credit lines and perfect credit. I have owned a credit repair company for the past five years and have an additional three years of specific work in the collections and debt management industry. I am fully versed in the Fair Debt Collection Practices Acts (FDCPA), Fair Credit Reporting Act (FCRA), and have used them successfully in collection settlements and lawsuits for myself and others. I am also familiar with and abide by the Credit Repair Organizations Act (CROA). I have deleted or helped delete literally hundreds and hundreds of derogatory items from consumers' credit reports and helped negotiate many settlements with collection agencies and creditors. I have also advised people on bankruptcy at any stage. In the current credit market, I have successfully advised numerous people on how to obtain credit and how to negotiate for better terms.

Education/Credentials
BA University of Minnesota

You are here: Experts > Business > Corporate Law > Collections Law > Response to a Motion for Dismissal Without Prejudice

Collections Law - Response to a Motion for Dismissal Without Prejudice

Expert: Regan Shinski - 11/5/2009

Question
Back in May of this year I was summoned to court by a company who was suing myself and grandmother for a old student loan debt. The student loan was not a federal loan, but a loan through a non-for profit company. The loan was taken out by grandparents to help me with school expenses and throughout college I made the payments. Over the course of the loan it was sold to Wells Fargo and in June 2001 my grandparents filed bankruptcy. May 2001 is the last bill that was sent from Wells Fargo regarding this account.

May 2009 me and my grandmother received a court summons indicating that we were being sued by a company named Casa Investments that apparently bought this debt from Wells Fargo. I went to court and supplied proof of my grandparents bankruptcy papers, copies of billing statements that show that the last bill sent was from May 2001 (right before my grandparents filed bankruptcy in June 2001), a copy of my credit report that indicates that the account was closed due to bankruptcy, and a copy of the original approval letter from the lender that indicated the original amount of the loan. The original amount of the debt was about $3500 however the plaintiff stated the debit was $54,000.

After the first court date the plaintiff entered a motion in June 2009 to dismiss the case with prejudice. I have now received a copy of a new motion requesting that the "dismissal with prejudice" be changed to "dismissal without prejudice." They now claim that the student loan debt was not charged off in my grandmother's bankruptcy. They have stated that bankruptcy laws require an adversary proceeding and determination of undue hardship upon the party filing bankruptcy and a specific finding by the bankruptcy court judge that the student loan is discharged.

How do I respond to this new motion? I know that if they are granted this motion it leaves the door open for them to try and sue me and my grandmother again. Wells Fargo closed this account after my grandparents bankruptcy hearing whether it was supposed to be closed or not. I have already shown how i made payments on this account until the bills stopped as well as a copy of my credit report showing that that the account was closed. Also I have another student loan account identical to the one that I am being sued over(that Wells Fargo also purchased from the same lender that my grandparents took out the loan with)that I currently pay. The only difference with this loan is that it is in my name and the other one was in my grandparent's name. The loans were taken out within a year of each other. How do I go about providing a sound argument in court to deny this new motion?

I greatly appreciate your assistance

Answer
Hello:

I want to say up front that this specific issue of student loans and bankruptcy is not my primary area of expertise. However, I know exactly what the issue is and why they are pursuing this.

The bankruptcy law was amended in 2005. Previously, only government backed or non-profit run student loans were not dischargeable. For bankruptcies after October 17, 2005 ALL student loans - private, government, non-profit, and for-profit - are not dischargeable. The exception in all cases, regardless of dates or entity, is if the petitioner can invoke the hardship clause. They are also correct that the 4th circuit court of appeals has ruled that it requires an adversary proceeding of undue hardship and the judge must rule accordingly.

So... it looks like your loans were discharged improperly if they received non-profit funding. If it was NOT a non-profit you would have a solid defense.

However, I have not been able to find anything about how the courts interpreted loans that have ALREADY been discharged (improperly) like yours. The only thing I can think of - and I don't think it's all that solid - is a statute of limitations defense.

The other option is invoking the undue hardship clause. This is traditionally so hard to attain that I hesitated even mentioning it. It's typically for people that are disabled and will not be able to work the rest of their life. Since you mentioned the loans and bankruptcy are in your grandparents name, I assume they are a little older. Are they working? Ill? That combined with the eight-year gap may qualify them for the undue hardship clause.

I also think you should seek an attorney because your situation is so unique, there may be a defense I am not aware of or that I am misinterpreting. I am pretty confident about how the law is written as described above.

Good luck. Please let me know how it turns out in case someone else asks me down the road.

Regan
mbscompany@aim.com

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