Being Sued out of SOl and after discharge

[tijerin]

What is the name of your state? CA

I am being sued by a collection agency on behalf of the University of California. The alleged debt occured while I was a student. I had been receiving federal student loans. At the time I was married and living on campus. Due to unsatisfactory academic progress, the school took my loan money away and returned it to the lender. They then claimed that I owed the money to THEM. This was in 1999. I filed and had a bankruptcy discharged in February 2001. This debt was listed as a dischargeable debt and was discharged. UCR nor any representative from them came to the meeting of creditors nor did they dispute the dischargeability of the debt. The US Bankruptcy Court has specific procedures for disputing the dischargeability of the debt after the bankruptcy discharges. The collection agency filed the lawsuit in California Superior Court for breach of Contract. I filed a Response with the affirmative defense that the suit is time-barred by California Code of Civil Procedures. I failed to include as ANOTHER affirmative defense that the debt was discharged via the bankruptcy. The plaintiff (collection agency) has always maintained that the debt was non-dischargeable yet have never initiated any action for the trustee or the bankruptcy court to review.

It is my understanding that if I do not raise the affirmative defense of the bankruptcy discharge that I will be unable to utilize it as a defense in the court. How can I either AMEND my answer or SUPPLEMENT it to add another affirmative defense or is it even necessary?

 

[tijerin]

First Amended Answer

OK, through searching the forums, I've found that I can amend my answer once without leave of the court. First question answered. Thanks.

I've added the following as affirmative defenses. Are these over the top? Should I remove any? Any comments?

AFFIRMATIVE DEFENSES
1. These ALLEGED debts, dated 5/4/99 from the plaintiff's complaint, are time-barred under California Code of Civil Procedure 337-340.
2. Laches - Plaintiff waited 5 years to file lawsuit without having a good reason for the delay thus making it harder to defend my case.
3. Discharge by Bankruptcy - United States Bankruptcy Court, Central District of California, Bankruptcy # RS 01-12751-MJ, Discharged June 5, 2001. Collection of Discharged Debts Prohibited.
4. Failure to Exhaust Administrative Remedies - As instructed by the United States Bankruptcy Court, plaintiff failed to request re-opening of the bankruptcy case to determine dischargeability of debt in question. In re Beezley, 994 F. 2d 1433 (9th Cir. 1993)
5. Lack of Privity - There was no contract between defendant and plaintiff (with exception of the Holman Short -Term Loan) and the debt was not properly transferred to plaintiff.
6. Breach by Plaintiff - Plaintiff agreed to facilitate loans to pay tuition. Upon said promise, defendant enrolled. Plaintiff returned money loaned to the lending institution, without consent of defendant, thus in breach of plaintiff's promise to obtain loans for tuition.

 

[tijerin]

Update

California

OK, after more research, I've found the following case laws to support my affirmative defense of discharge. This is under the defense that the tuition was not a loan, or an extension of credit. Here is the alteration of my affirmative defense #2:

2. Discharge by Bankruptcy - United States Bankruptcy Court, Central District of California, Bankruptcy # RS 01-12751-MJ, Discharged June 5, 2001. Collection of Discharged Debts Prohibited. Upon an unofficial withdrawal, the federal loan monies were returned to the lending institution by the University of California and determined to be a financial aid overaward and an outstanding balance on defendant's student account was created. Per the University of California's own financial aid policies, said balance was due and payable "by the payment deadline on your billing statement". Upon failure of defendant to pay said balance, a "past due account" was created which does not constitute a "student loan" as defined by section 523(a)(8) of the United States Bankruptcy Code. There was no extension of credit nor agreement to repay balance at a future date. In re Renshaw, 229 B.R. 552 (BAP 2d Cir 1999) - Boston University v. Mehta 2002 WL 31521461 ( 3rd Cir. N.J.) - In re Chambers, 348 F.3d 650 (7th Cir. 2003)

Please give me some advice as to the feasability of this defense and/or my other affirmative defenses described above.

 

[stevek3]

California

OK, after more research, I've found the following case laws to support my affirmative defense of discharge. This is under the defense that the tuition was not a loan, or an extension of credit. Here is the alteration of my affirmative defense #2:

2. Discharge by Bankruptcy - United States Bankruptcy Court, Central District of California, Bankruptcy # RS 01-12751-MJ, Discharged June 5, 2001. Collection of Discharged Debts Prohibited. Upon an unofficial withdrawal, the federal loan monies were returned to the lending institution by the University of California and determined to be a financial aid overaward and an outstanding balance on defendant's student account was created. Per the University of California's own financial aid policies, said balance was due and payable "by the payment deadline on your billing statement". Upon failure of defendant to pay said balance, a "past due account" was created which does not constitute a "student loan" as defined by section 523(a)(8) of the United States Bankruptcy Code. There was no extension of credit nor agreement to repay balance at a future date. In re Renshaw, 229 B.R. 552 (BAP 2d Cir 1999) - Boston University v. Mehta 2002 WL 31521461 ( 3rd Cir. N.J.) - In re Chambers, 348 F.3d 650 (7th Cir. 2003)

Please give me some advice as to the feasability of this defense and/or my other affirmative defenses described above.

The U.S. Supreme Court already stated that a general discharge does not discharge a student loan. The applicable statute is self-executing. In fact, you would have had to first bring an adversary action against the state to assert that non-dischargeability of the student loan would cause you undue hardship. Instead, you tried to sneak the entire thing under the radar as part and parcel of a general discharge. Sorry, Pee Wee. Unless the plaintiff's lawyer and the judge are complete morons, your defense is a loser.

 

[tijerin]

The U.S. Supreme Court already stated that a general discharge does not discharge a student loan. The applicable statute is self-executing. In fact, you would have had to first bring an adversary action against the state to assert that non-dischargeability of the student loan would cause you undue hardship. Instead, you tried to sneak the entire thing under the radar as part and parcel of a general discharge. Sorry, Pee Wee. Unless the plaintiff's lawyer and the judge are complete morons, your defense is a loser.

Under the Case Law cited in my post, I'm disputing that the existing balance on my student account was a student loan at all. There are many courts (Bankruptcy, US Appeals, etc) that have affirmed the decision and have ruled that the existing student tuition debt to the University IS dischargeable as it does not constitute a "loan" as defined by the appropriate US Bankruptcy law. Look up the case law (which I found easily on the Internet).

 

[stevek3]

Under the Case Law cited in my post, I'm disputing that the existing balance on my student account was a student loan at all. There are many courts (Bankruptcy, US Appeals, etc) that have affirmed the decision and have ruled that the existing student tuition debt to the University IS dischargeable as it does not constitute a "loan" as defined by the appropriate US Bankruptcy law. Look up the case law (which I found easily on the Internet).

I once vehemently argued that my pants were a weapon of mass destruction. My bullsh!t was almost as persuasive as your bullsh!t is now.

 

[tijerin]

I once vehemently argued that my pants were a weapon of mass destruction. My bullsh!t was almost as persuasive as your bullsh!t is now.

Thanks for the pleasant response. I did consult with a bankruptcy/civil attorney today and his opinion was that my case was meritorious and I should have no problem winning. FYI

 

[stevek3]

Thanks for the pleasant response. I did consult with a bankruptcy/civil attorney today and his opinion was that my case was meritorious and I should have no problem winning. FYI

Probably the same guy that opined O.J. Simpson should have no problem playing with knives.

 

[tijerin]

Probably the same guy that opined O.J. Simpson should have no problem playing with knives.

I don't understand why you are so hostile. I even contacted the Bankruptcy court and they agreed that the debt was listed on the schedule F (?) which was non-priority unsecured debts where my "actual" student loans were listed under the appropriate schedule deeming them non-dischargeabe. The University did not attend the 341(a) meeting of creditors, nor did they dispute the dischargeability of the "tuition" owed on my student account.

It's obvious that you tend to agree that any debt owed to any school is non-dischargeable but there are cases (even the Banruptch discharge uses the terms "most student loans" and there are cases which define the meaning of "loan" under 523(a) and if the debt doesnt meet the requirements of "loan" (ie. and extension of credit and/or promise to pay in the future) then it's just a past due account and dischargeable.

You're not offering any replies of substance, so I don't understand why you are so hostile. I'm simply asking questions and seeking advice. You certainly aren't the one losing any money. I respect your opinion that my defense is "bullsh!t" but that's certainly uncalled for, rude, and unnecessary. Why can't you just say you don't agree and move on?

 

[stevek3]

I don't understand why you are so hostile. I even contacted the Bankruptcy court and they agreed that the debt was listed on the schedule F (?) which was non-priority unsecured debts where my "actual" student loans were listed under the appropriate schedule deeming them non-dischargeabe. The University did not attend the 341(a) meeting of creditors, nor did they dispute the dischargeability of the "tuition" owed on my student account.

It's obvious that you tend to agree that any debt owed to any school is non-dischargeable but there are cases (even the Banruptch discharge uses the terms "most student loans" and there are cases which define the meaning of "loan" under 523(a) and if the debt doesnt meet the requirements of "loan" (ie. and extension of credit and/or promise to pay in the future) then it's just a past due account and dischargeable.

You're not offering any replies of substance, so I don't understand why you are so hostile. I'm simply asking questions and seeking advice. You certainly aren't the one losing any money. I respect your opinion that my defense is "bullsh!t" but that's certainly uncalled for, rude, and unnecessary. Why can't you just say you don't agree and move on?

I don't agree and I'm moving on. If your opposition is incompetent, you'll have a shot.

 

[badapple40]

Probably the same guy that opined O.J. Simpson should have no problem playing with knives.

I disagree, and think his discharge was valid to discharge the debt.

First, the debt apparently was already adjudicated to be not a loan by the bankruptcy court, and that finding is res judicata/collateral estoppel as to the collection agency.

Secondly, look at the language used by the bankruptcy court. The money was returned to the lender. The school account was then deemed to be open. It was the school account, not the lender account, that was discharged (the lender account was already paid off).

If I took all my law school loans, paid them off with credit cards, waited three months paying the interest, and filed bankruptcy, as the law stands today, I'd get that discharged. The situation is the same here. 11 USC 523(a)(8) defines a student loan, his debt isn't one.

 

[stevek3]

I disagree, and think his discharge was valid to discharge the debt.

First, the debt apparently was already adjudicated to be not a loan by the bankruptcy court, and that finding is res judicata/collateral estoppel as to the collection agency.

Secondly, look at the language used by the bankruptcy court. The money was returned to the lender. The school account was then deemed to be open. It was the school account, not the lender account, that was discharged (the lender account was already paid off).

If I took all my law school loans, paid them off with credit cards, waited three months paying the interest, and filed bankruptcy, as the law stands today, I'd get that discharged. The situation is the same here. 11 USC 523(a)(8) defines a student loan, his debt isn't one.

I do not agree it would be res judicata. I think it comes down to a definition of what the debt now is.

I can just imagine the amount of time the guy is ultimately going to spend arguing it. If he spent all of his time productively by doing something else, he could probably earn a minimum of 10 times the amount of the debt he's trying to fight.

 

[tijerin]

I do not agree it would be res judicata. I think it comes down to a definition of what the debt now is.

I can just imagine the amount of time the guy is ultimately going to spend arguing it. If he spent all of his time productively by doing something else, he could probably earn a minimum of 10 times the amount of the debt he's trying to fight.

It's not taking me any time at all to fight it. Besides, the way the court system is in California, I probably wouldn't even get a trial for 2+ years. It's not a matter of the amount of money, it's mere principle. I refuse to be intimidated by a collection agency. It's a matter of personal choice.

To the poster above, your post is essentially what the BK/Civil attorney told me.

 

[stevek3]

It's not taking me any time at all to fight it. Besides, the way the court system is in California, I probably wouldn't even get a trial for 2+ years. It's not a matter of the amount of money, it's mere principle. I refuse to be intimidated by a collection agency. It's a matter of personal choice.

To the poster above, your post is essentially what the BK/Civil attorney told me.

If you're in your mid-20s and you have your life to burn away, then I suppose there's not much harm done. However, if you find you're participating in the same "it's the principle" brand of activities 15 years from now, then it's really time to pay some visits to one of those 3 billion California shrinks.

 

[tijerin]

If you're in your mid-20s and you have your life to burn away, then I suppose there's not much harm done. However, if you find you're participating in the same "it's the principle" brand of activities 15 years from now, then it's really time to pay some visits to one of those 3 billion California shrinks.

Actually, I'm in my early 30's and make a six-figure income. I also sill have plenty of time to pursue this. Geez, I'm at home right now about to take a nap. Don't even have a degree and, no, I'm not doing anything illegal to make money.