Forward

First, I’m not like most people who file for bankruptcy. I’ve got an Ivy League education, a good job and good credit. I came to Bankruptcy court because of problems associated with student loans. My situation is also unusual in that I chose to file for Bankruptcy without a lawyer; – Pro Se is the legal term; it means ‘for self’.

I believe that acting pro se turned out to be the best decision for me. My story may be instructive to you should you be considering Bankruptcy. Even, if your situation is not so desperate, you will learn something about debt problems and how to take steps to get out of it by reading my story.

In the end, I settled with my creditors after almost 5 years in court and then dismissed the case. Before that, I was in a debtor’s purgatory; - hounded by collection agencies and lawyers, having my wages garnished and my tax returns seized. The situation would have continued for the rest of my life. I had to do something. So, I sued them. You can too. I’ll tell you how.

Outline of my case

I started in Bankruptcy court. I had a trail, and appealed the decision to the district court. I had argued that the loans had been illegally defaulted by my creditors because I was eligible for deferment and loan forgiveness through a Teacher Loan Repayment Program promised by the Federal government at the time that I took out the loans. The Court ruled against me. I also argued for a bankruptcy discharge on the grounds of hardship. The Court ruled that student loans are ‘non-dischargeable’. In other words, I had to repay in full. Nonetheless, filing for bankruptcy benefited me by:

1) properly identifying the creditors who held claims,

2) reducing the amounts claimed by the creditors and eliminating all fees,

3) holding them off until I acquired the funds to repay,

4) creating an incentive for my creditors to settle and,

5) placing control of my financial fate back in my own hands.

Filing for Bankruptcy did succeed in getting the creditors to clarify what was owed and created an incentive for them to settle. Ultimately, it released a stranglehold on me that would have persisted had I not taken this action.

Sue The Bastards –

A Personal Story About Pro Se Bankruptcy

The Creditors Squeeze

I had guaranteed student loans from my attendance at Colleges and Universities. The loans were defaulted. Once a loan is defaulted. It is often sold to guarantee agencies which may in turn sell your loans again. In a short time, you may get demand letters from various lawyers, collection agencies and guarantee agencies that you’ve never heard of. They often rack up the tab with fees and drastically exaggerate your ‘debt’. (In my case, I was threatened with default fees that would have added 18% yearly to the loan balance.)

Communicating with these agencies is next to impossible, as they tend to mask their extra charges; or worse, keep poor records of the debt. If you have certain types of debt - city, state and federal authorities may have the right to directly take your money away. They can do this through wage garnishment and tax refund seizure (as it was in my case) or even go after your bank account. If this happens, you are in a danger zone; since they have no incentive to straighten out any errors in the account. You can waste your time with phone calls and letters requesting that they prove what you truly owe, or you can take action and sue the bastards!

PROOF OF CLAIM –

Get rid of the leeches; narrow down your list of creditors

You can sue creditors in other courts, but if you file for bankruptcy; you have a right to demand a proof of claim. This request insists that creditors prove their claim. If you have a number of leeches on your back with no rightful claim, they will disappear after you file your adversary proceeding (i.e. lawsuit against them). When you fill out the bankruptcy papers, you will list that names addresses and amounts claimed by all parties who are after you. Only the ones with valid claims will return supporting documents to the court. (In my case, I had 9 claimants pursuing me; after the proof of claim demand, only 3 were left.)

After you have narrowed down your list of creditors, you can dispute their proof of claim. Demand that they break down the charges. What was owed? How much did they charge in collection fees, late fees or lawyer fees? Demand the details; they will usually back down if they believe that the figures will be scrutinized by a judge. You can provide your documents –promissory notes and receipts for payments; to back up your claims. (In my case, I challenged all fees charged by guarantee agencies which came into possession of my student loans. With the audience of the Court; they ended up reducing the amounts of their claims considerably. After nearly 5 years of wrangling, I settled with them for the amount of the loans plus interest. All collection costs and lawyer fees were dropped.)

MOTION TO STAY - Hold on to your money until the court decides

Another benefit of filing for bankruptcy is an Order of Stay. You can request this with a Motion of Stay. If granted, and it usually is for a short period of time; they have to stop. - Stop taking money from you, and stop harassing you. {This is especially helpful to people who are about to be evicted from their homes}.

So, you find out how much you owe with a proof of claim, you stop them from taking any more money from you with an order of stay and then you work on settling with them.

If you do this pro se, you have an advantage. You can work for yourself for free while they pay through the nose for lawyers. This in itself may provide an incentive for them to settle with you. There is no guarantee that this will happen though… If you have lawyers on the other side intent on making you bleed; it might still be difficult to settle with them. (In my case, I had a pain in the ass, suck-up lawyer employed by NYSHESC who made it her business to ring-lead the group of my three creditors. NYSHESC’s motto is ‘we help people pay for college’. Actually, they are a massive profit driven enterprise; they own the 12255 zip code and have a team of lawyers at their behest. I got one who had me on the top of her list. I made her travel from Albany to New York City on a number of occasions. I made her prepare for and stand for trail; this is practically unheard of in Bankruptcy court, And, I exposed and contested every inaccuracy in their accounting that I could find. She had it in for me…)

Anyway, I found that doing research yourself is a better way to go because:

1) You will be more convincing in claiming that you can’t afford to pay if you are not shelling out money to lawyers, and

2) If you do get a lawyer; a major incentive will be to extract money out of you. Because lawyers have their own monetary interests in mind, they may not best represent you. They may agree to settle for more than you can afford, or drag the case out so as to earn more in legal fees.

Besides, you know your case better than anyone else. And, you care most about its outcome. If you are articulate, organized and have information resources; you will serve as your own best advocate.

Attached are some documents associated with my case. I hope that these papers will help you with your case.

If you decide to file an adversary proceeding in Bankruptcy Court, it will cost you about two hundred bucks to apply (I paid a $185 filing fee in 2001). You will have to list all of your assets and debts and show up in court about once per month until you work out a settlement. After that, you can either confirm on a repayment plan, or dismiss the case. Going Pro Se is a lot cheaper than hiring a lawyer.

CLOSING REMARKS

Don’t be ashamed. Get your power back!

Don’t pay anyone who is not a listed creditor – Never directly pay collection agencies or lawyers for the other side.

Pay on time. After you propose a repayment plan to the court (In my case, I created a 10 % repayment plan paying out $299 per month for 60 months) be sure to make timely payment to the Bankruptcy trustee. Debtor non-payment is often what causes the court to side with the creditors or to dismiss a case.

Pay by Bank Check, stating your name, purpose of payment and account number. Keep your receipts. Do this whether you settle inside or outside of court.

Document everything. Keep a copy of all correspondences to and from your creditors. Send critical documents by certified mail, return receipt requested.

If you need help, get it.

Have someone proofread your documents for clarity. Get a knowledgeable person to read your settlement agreements. Make sure that you know what you are agreeing to. Don’t sign anything unless you are sure about it. Honor all of your agreements. Seek out a professional for the short term if necessary. (In my case; I paid an accountant to check the figures of the Student Loan agencies claims. I asked lawyers whom I knew for strategic advice and I paid a non-profit credit counseling service to negotiate a settlement with one of my more contentious creditors. Early on in the case; my judge even offered to have the issue arbitrated for free; but the creditors were unwilling.)

Once you settle with one, the rest will follow. The terms of agreement will likely be similar. Once one agrees to drop legal fees or collection costs, for example; you can use this as a bargaining chip in your negotiations with the others. Let the judge be aware of the details of your negotiations; perhaps s/he can encourage the parties to fairly settle.

Feel free to use my documents as a template for documents that you might prepare for your case.

Please keep in mind that, I am not a lawyer (nor do I care to be one).

I have revealed what I have learned as a service to people who are in financial trouble because I hope to help those who are in a similar bind as I was in. One lawyer who helped me told me a story about a guy who was so pressured by student loan debt that he committed suicide. This lawyer told me that he was helping me because he was disturbed by what happened.

I know how emotionally distressing student loan debt problems can be. Compared to suicide, filing for Bankruptcy is a preferable option. If what I have revealed to you makes sense for your situation; I advise that you file for Bankruptcy Pro Se. Take back your life and empower yourself!

Many people have helped me in this struggle. In tribute to them, I chose to ‘pay it forward’. Good Luck!

Sincerely,

Ms. Natalie Williams