Jun 10 2008
Educational Credit Management Corporation – Making New Law
Educational Credit Management Corporation, a nonprofit organization that provides student loan services, has been involved in several lawsuits that establish new principles in lending law.
Who Is Educational Credit Management Corporation?
Educational Credit Management Corporation (ECMC) is a nonprofit corporation that provides services to students and lenders who participate in the Federal Family Educational Loan Program. ECMC guarantees student loans for private parties and is the designated guarantor of Stafford, PLUS, and Consolidation loans for the Commonwealth of Virginia and the State of Oregon.
ECMC also guarantees loans for many other agencies. When borrowers whose loans are guaranteed from 23 different guarantee agencies declare bankruptcy, these agencies transfer the bankrupt borrower’s loan to ECMC for servicing. Due to Educational Credit Management Corporation’s involvement in so much bankruptcy litigation, it has found itself as plaintiff or defendant in a number of lawsuits that have helped to form the legal landscape in the field of lending law.
Polland V. Educational Credit Management Corporation
In this Tenth Circuit case out of Kansas, the plaintiff, Ms. Polland, had entered a bankruptcy plan that disputed the amount and terms of her student loan. Her bankruptcy plan provided that, unless the student loan lender filed proof of the student loan with the bankruptcy court, the amount of the student loan would be included in the bankruptcy debts to be discharged, and Ms. Polland would no longer have to pay the student loans.
The lender – one of those 23 guarantee agencies, no doubt – failed to file a proof of claim as required by Ms. Polland’s bankruptcy plan. The debt was later transferred to Educational Credit Management Corporation, and ECMC tried to collect the debt. Ms. Polland filed a legal action to declare that the debt had been discharged in her bankruptcy proceeding.
The Tenth Circuit Decision
The Tenth Circuit ruled that Ms. Polland had to pay the debt owed to Educational Credit Management Corporation for her student loans. The opinion stated that bankruptcy law allows student loans to be discharged under certain circumstances, including a showing by the debtor that paying the loan will be an “undue hardship.”
The judge held that, even though Ms. Polland’s bankruptcy plan had provided that the debt must be discharged unless a proof of claim was filed, she had not shown undue hardship in her bankruptcy documents. Without undue hardship, the law does not allow the debt to be discharged. Educational Credit Management Corporation won its lawsuit and appeal against Ms. Polland.
Related posts:
- A Peek inside the Amazing History of Franklin Credit Management Corporation
- Bankruptcy And Student Loans Do Not Always Go Together
- The Student Loan Corporation Of Your Choice Can Help You Pay For School
- The Relationship Between Student Loan and Bankruptcy
- Going To Bankruptcy Court
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I took out a student loan for $5117.00 back in 1992. I had endured a major financial hardship due to a divorce and being a single mother I had to drop out of school 3 weeks before graduating to go back to work. Because of the hardship the loan led to a default.
A few years later I had my first income tax refund garnished for about $1004.00 dollars and then decided to accept the rehabilitation process offered to my by Sallie Mae. I paid a lump sum of $700.00 and then made monthly payments of $99.00 for a little over a year. And again had another financial hardship which threw me back into default. I then had 3 more tax returns garnished all over $1000.00 and am now being garnished 15% of every pay check, after taxes. I am in retail and make commissions, they too are garnished. After it is all said and done and once I have paid in full I will have paid over $13031.00 to ECMC. Or should I say Educational Credit Management Loan Sharking Corporation.
So in essence I will have paid $7914.00 over what I borrowed.
Why can NO ONE bring these sharks to justice?
Kelly J. Scott