Lawyer Called “Don Quixote of Student Debt” Decides to Run for Congress

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Bankruptcy law

Lawyer Called “Don Quixote of Student Debt” Decides to Run for Congress

Austin Smith is seeking to represent part of Long Island, New York, as a Democrat. Photo courtesy of Austin Smith.

A lawyer who called for reparations from student borrowers in bankruptcy court decided to run to Congress in 2022 on a platform that includes reforming the debt cancellation rules.

Austin Smith is seeking to represent part of Long Island, New York, as a Democrat after a legal career in which he won about 75 cases on behalf of borrowers, Business Insider reports.

His victories are limited, however. His cases focus on borrowers who have taken out private school loans for expenses other than educational benefits, such as tuition, books, and room and board.

And it can be costly to litigate cases for student loan borrowers, who are often the least able to afford legal fees. Smith funded his business with loans from a bank, his father, and litigation finance companies, according to Business Insider.

A federal bankruptcy judge described Smith as the “Don Quixote of student debt,” a comparison adopted by Smith. A print of Don Quixote hangs above his desk, the article reports.

Opposing student debt relief is a law that generally prohibits the discharge of student loans in bankruptcy unless the borrower can demonstrate undue hardship. This usually means that a borrower will have to demonstrate that they are unable to maintain a minimum standard of living, that the borrower’s situation is unlikely to change, and that the borrower has made a good faith effort to repay. the loan.

According to Business Insider, there are more exceptions for borrowers who take out private rather than federal student loans. These borrowers cannot cancel “eligible student loans” without undue hardship. But Smith looked into the meaning of qualified student loans and sought to cancel private student loans covering other expenses.

The argument worked in Smith’s 2016 victory on behalf of Pace University law graduate Lesley Campbell who was allowed to write off the unpaid portion of a bar exam study loan from Citibank. The loan paid for rent and groceries while she studied for her bar exam. Despite the victory, Campbell still owed about $ 360,000 in federal student debt, according to Business Insider.

The amount Campbell owes has more than doubled due to “negative amortization” in which interest accumulates faster than payments made, according to Business Insider.

Smith also won a pro bono appeal on behalf of a 2004 graduate of Yeshiva University’s Cardozo Law School, Kevin Jared Rosenberg, who exercised undue hardship in his case.

Campbell’s case is attracting the attention of bankruptcy judges, who have cited it at least 20 times.

Smith failed, however, when he attempted to break into the loan management arm of Navient Corp. to involuntary bankruptcy, according to Business Insider. The case began as a possible class action lawsuit alleging that Navient had wrongly sought to collect a bar exam study loan that had been released in bankruptcy. Smith claimed the company was insolvent. Navient said the petition was frivolous.

Smith did not file a response to Navient’s motion to dismiss and did not appear at a dismissal hearing. Smith was absent as he was being treated for recurrent testicular cancer, the judge informed. A bankruptcy judge dismissed the case and awarded partial legal fees to Navient.

“If we don’t have success in the judiciary,” Smith told Business Insider, “then maybe there is a solution in the legislature.”

See also:

ABAJournal.com: “Some bankruptcy judges are looking for ‘leeway’ in student debt cases; the clerics are instructive ”

ABAJournal.com: “The 1st circuit demands the release of the student debt of $ 246,000 from the former executive”



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