Student Loan Collection Agencies Have Failed To Collect Millions Of Dollars in Student Loan Repayments Awarded to them in Bankruptcy Cases
Thousands of student debtors who have been forced into bankruptcy are not getting credit for millions of dollars they have paid on their student loans in their bankruptcy cases. Those millions of dollars remain on the debtors’ records as unpaid debt even though those payments have actually been paid by the debtors to bankruptcy trustees for the benefit of the lenders. The failure of the lenders to collect that money may result in it being forfeited to the United States treasury and lost to student debtors and their lenders forever.
Some of the biggest players in the student loan debt crisis, including the U.S. Department of Education, have failed to collect many payments approved and authorized by bankruptcy trustees to repay student debt. It would appear the agencies have been neglectful in following up on bankruptcy claims they file against student borrowers. In many of those cases around the country, payments have been authorized, checks drawn and sent to the collectors, but not deposited by those collection agencies. These unclaimed bankruptcy payments aggregate millions of dollars in student debt that has actually been repaid by debtors but not credited to their loan accounts.
These unclaimed funds are being held by bankruptcy courts for the lenders who are entitled to the money. According to the Office of the United States Bankruptcy Trustee, “Most unclaimed funds arise in bankruptcy cases when the checks mailed by the trustee to the creditors are not cashed. Under the Bankruptcy Code, the trustee must stop payment on any check that remains unpaid 90 days after final distribution in the case. The unclaimed funds are turned over to the court to hold for the benefit of the creditors.”
Creditors with an asset recovery program in place will eventually collect those unclaimed funds. However, most creditors lose track of the payments, and they are never collected and eventually deposited in the federal treasury and, since student loans are not dischargeable in bankruptcy, the student debtors will not have their outstanding debt properly reduced by the amount paid in their bankruptcy cases.
Poulson Law Offices has decades of experience in recovering unclaimed bankruptcy dividends for its corporate clients. It has recovered many millions of dollars for those clients. Some of these unclaimed amounts are neglected because they are too small to warrant a recovery effort. However, Poulson Law Offices has recovered several individual unclaimed items worth over $1 million each.
Student loan providers and their collection agencies should take note. There is a lot of money out there that has already been paid by student debtors waiting to be collected by the lenders or their collection agencies. Poulson Law offices provide asset recovery and collection services to some of the largest corporations in the world. We perform these services on a contingent fee basis, so lenders really have nothing to lose and millions to gain.
Contact Robert J. Poulson at (607) 547-1195 or rjp@poulsonlaw.com to find out if your company has money to be collected from old bankruptcy cases.
