New York Times columnist Ron Lieber writes about student loans and bankruptcy in his Your Money column this week. Ron spotted this post from A Clean Slate about how student loans are like a tattoo and called me to chat about it. Ron happens to know me from years ago so this was a good opportunity to catch up on things.
I don’t get too involved in the legislative battles over changes to the bankruptcy laws. Ever since the banking industry used its muscle to get Congress to pass the the disastrous and ill-conceived 2005 amendments to the Bankruptcy Code, I have had little faith in the legislative process when it comes to the bankruptcy laws. So I won’t be holding my breath whether Congress manages to overturn one of the many foolish provisions contained in the 2005 revisions.
Our conversation was much more involved than Ron could reflect in his column. Such is the nature of the media process, of course, where a sound bite or two ends up making the cut and much of what is discussed gets turned into background learning for the reporter. But I was pretty pleased with how the column came out.
Here is one point that Ron and I discussed that did not get as much attention in his column as I would have liked: Anyone who tactically chooses to incur dischargeable debt with the intention of discharging it in a bankruptcy case runs the risk of having such debt declared non-dischargeable. And any person in a bankruptcy case who turns down available government student loans to incur private student loan debt is providing the private student loan lender with a good circumstantial case to render such debt non-dischargeable anyway. So the argument that students might incur dischargeable debt with the intention of filing a bankruptcy case is probably a red herring.
Another point that Ron addressed tangentially is that the vast majority of my potential consumer clients are not the kind of people who would ever think about running up large amounts of dischargeable debt and filing a bankruptcy case. The very small percentage that I have seen who seemed to have taken such a tactical approach I simply decline to represent. As all of my consumer clients know, the first little speech I give every one of them before we ever enter into an attorney-client relationship is the need for candor. If I thought there were any chance that my client had incurred debt with the intent to discharge it, I would have a very serious talk with the client and possibly decline the representation. Just about every other bankruptcy lawyer I know would do the same.
But in any event it was a lot of fun to chat with Ron about this stuff. As I told him, I love what I do and very much enjoy talking about these kinds of things. So it was nice to have a small part in educating people in the broad scale that the New York Times can provide.