*NEW* Update On Court Fights
Last month, judges heard two important cases in the fight for debt relief.
Important: Though these cases are being tried on behalf of individuals or a specified group, the decisions made in these cases will set legal precedents that could help everyone going forward.
Case #1: We lost, but there is still hope.
On April 30, 2018, a Court in California heard arguments from Debt Collective member and former Corinthian student, Sarah Diffenbacher. Unfortunately, the judge sided with Betsy Devos.
While this is disappointing, there is reason to hope that we can still win. The case was decided based on the fact that Sarah originally filed suit because the Department of Education was garnishing her wages. Since the Department had stopped doing that, the judge ruled that the issue was resolved and that if Sarah wanted to sue over the underlying debt itself she would have to start over with a new lawsuit. The judge did not rule that Sarah's loans are valid. The Court did not address the rights of Sarah or any other student scammed by a for-profit college to have their loans cancelled. This ruling does not change the fact that Sarah, and all Corinthian Colleges students, were ripped off by that company.
The Department did not dispute that Sarah was cheated. Instead, it argued that she should have to start over again with a new lawsuit
What’s next in this case? Sarah’s attorneys have filed a “motion for reconsideration,” which means they answered some of the questions the judge had and asked her to take a second look. Their motion will probably be heard June 25 and decided sometime after that. We will post updates here as they come in.
Case #2: We won an injunction in the Calvillo Manriquez case.
Also on April 30, 2018, another California Court heard argument on a Motion for a Preliminary Injunction in a class-action on behalf of certain former Corinthian students. Through this motion, Plaintiffs (former students) sought an order stopping the Department of Education from partially denying former students’ borrower defense applications and an order requiring the Department to grant them a full loan discharge.
Attorneys arguing on behalf of borrowers won an injunction.
What does this victory mean in the immediate future? The Debt Collective is working with attorneys to better understand how this ruling will affect borrowers. Our best reading is that it prohibits all collection stemming from use of average earnings rule, for now. That means that if you received a partial discharge of your federal loans and you attended Corinthian within one of the findings windows listed here, the rest of your loans cannot be collected on until the court gets a chance to hear the full case. If the court decides in the end that partial discharges are invalid, we expect those who have already been given a partial discharge to receive full discharges.
It is also important to note that one reason that partial discharges are invalid is because the Department of Education illegally accessed borrowers’ private information through the Social Security administration. This is a violation of students' legal rights.
We need to stay vigilant and see how the Department responds. If you received partial relief and collectors try to collect from you, please write to thomas [at] debtcollective [dot] org so we can keep track of these violations.