I am one of the unfortunate students that attended Westwood College. I have $90, 000+ in student loan debt, two of which are from private lenders. Student loans can now be written off under bankruptcy but it is incredibly difficult. Is it possible to use the Westwood lawsuite as the basis for filing my private student loans under my bankruptcy? If yes, what information should I provide my bankruptcy attorney to move forward?
Ask your bankruptcy attorney if you have a chance of hardship discharge. This process will cost you tens of thousands and the chances of winning are very slim. Your bankruptcy attorney will know about the process and the chances in our jurisdiction.
A lawsuit against the school does not change the bankruptcy code. Depending on the chaims that were brought against the school and whether the same facts apply to you, the lawsuit may (or may not) provide you a defense against any lawsuits to collect debts owed to the school itself. The claims may also allow you to seek compensation from the school. However, the lawsuit against the school is unlikely to change the nature of the debts you owe to third party lenders.
It would be necessary to gather the documents from the lawsuit and review them with an attorney to see if that gives you any grounds to defend against collection of the debt. If your loans were taken out from an institution other than the school, it is less likely that the law suit will affect the collectability of the debt.
As you know, a hardship discharge in bankruptcy is extremely difficult and usually requires that you show a permanent inability to work in order to discharge any part of your debt.
If all else fails, you can use a Chapter 13 bankruptcy filng to put the loans on hold for 5 years while paying only what your household budget allows. This prevents the creditor from garnishing wages, seizing bank accounts, or taking any other action during the course of the plan. If the debts are still overwhilming at the end of 5 years, a new plan can be filed for another 5 years.
I assume you are referring to the recent settlement regarding deceptive trade practices. The Colorado Attorney General recently settled its case, but the Illinois Attorney General suit may be ongoing.
The type of claim you are contemplating is very fact specific, but may have merit if the degree, as in the Illinois case, is worthless because the school lacked regional accredidation for the degree it was offering (although Westwood was nationally accredited). The Colorado lawsuit, from what I have found (note, I haven't fished out the complaint) was focused on the schools misrepresentation of the cost and its employment statistics. The insitituion and the degree are valid, but the school failed to properly inform students how much the degree costs and misrepresented the employment placement success.
However, you will still need to file an Adversary Proceeding in bankrutpcy court (basically, you will need to sue Westwood in bankruptcy court). Your first discussion with your bankruptcy attorney will be whether they are even willing to do the case. The adversary proceeding is an entirely separate case from your bankruptcy and costly.
