Arizona Bankruptcy Attorney Blog

I'm about to start a Crusade.

I'm sick and tired of seeing kids who have gigantic non-dischargeable student debts, advanced degrees in Fingerpainting as Therapy, who can't get a job to save their lives during a depression where the unemployment rate hovers around 17%; and that's just the official U-6 Unemployment Statistic.

The real numbers are far worse!

So here's what needs to happen.

Student loans are simply debts. There's nothing magical about them.

Under prior law, they were dischargeable.

Under the law today, they should be dischargeable.

So let's change that law, Congress!

Tomorrow would be fine.

I have another bankruptcy blog (actually, I have several. Fickle, I guess).

But I like my Bankruptcy Crossroads blog particularly because I built it myself, with my own little hands. So I have some foolish pride about it.

Now, a bankruptcy blog is just a platform to write articles about bankruptcy and insolvency, so I shouldn't be all that proud. But still.

And here are the top ten most-liked bankruptcy posts from that bankruptcy blog this month.

I hope you like them!

And I can count. Really! I just threw in an extra post, as a bonus!

Did Russell Armstrong of Real Housewives Commit Suicide over Finances?
Statistics: Just How Bad IS the U.S. Economy?
Stern v. Marshall: Everything Old is New Again! Hissyfits About Jurisdiction.
Sugar Babies, Sugar Daddies, and Sex for School Loans; This Lost Generation
31 Million Dollar Nigerian Scam Takes Law Firms to Cleaners
Bankruptcy Does Not Solve All Problems: Danielle Chiesi Would Go to Jail, Anyway.
Big Bad Bank Beats Bend Bulletin Badly; Bend Bulletin Blasts Bank Back!
The Arizona Anti-Deficiency Statute. Repealed? A Full Employment Act for a Phoenix Bankruptcy Attorney?
Student Debt: The Ultimate Solution (and No, It's Not a Bankruptcy!)
It's Better to Be Lucky than Smart Department, Part Whatever, Bankruptcy Division
To Raise Money for States: Online Gambling and Online Heroin Prescriptions! And Online Prostitution!

Let's suppose you're an embezzler.

Well, it stands to reason that you won't be able to scrape off your debts incurred by embezzlement, because consumer bankruptcy under Chapter 7 is designed and intended to provide an honest debtor relief from overwhelming debt.

And so it often goes. As it does in this article about Dawn Solomon, for instance, by Leslie H. Dixon.

Turns out that milking a healthcare system is pretty easy, at least for Dawn; she skedaddled with four million dollars from MaineCare, and was ultimately discovered, and then she was prosecuted, and then she filed bankruptcy.

Her ordinary, garden-variety debts have been discharged; it's a little misleading to suggest that she was "granted" a discharge, because that's a fairly automatic process in the U.S. Bankruptcy System.

And there was unintentional bankruptcy humor in the article, which points out that an Attorney General spokesperson repeatedly declined to answer how the money would be recovered.

Let's think about this for a minute. A currently unemployed health care provider is sitting in a prison cell after filing a bankruptcy. Her real estate holding company is also in Bankruptcy Court.

If you were asked to bid for the restitution judgment against Dawn Soloman, would you pay a lot of dough?

Yeah, me neither.

Unless Dawn Soloman comes out of prison and becomes the world champion Sugar Baby, my guess is that the four million dollars in debt is gone forever.

There are a lot of other debts that will, in most cases, survive the bankruptcy process. They include HOA Fees incurred post-petition, tax debts that aren't quite ripe enough, and student loans unless (in most jurisdictions) you pass the dreaded Brunner Test.

And you really don't want to be so bad off that you pass the Brunner Test.

I like all my Arizona Bankruptcy Blogs, but one that I'm very fond of right now is my Bankruptcy Crossroads blog.

It has more topical discussions about news of the world, and municipal insolvency, and how "Sugar Babies" are finding "Sugar Daddies" to help out with non-dischargeable student loans.

I guess it was inevitable that an economic depression would have bad effects, but I was never creative enough to think that anybody would suggest online gambling to fix governmental insolvency, or that pretty young graduates would list themselves on "Seeking Arrangement" to find rich, old guys.

Between the gambling and drug use and what some would describe as prostitution, it seems to me that things are a little darker than I would have imagined a few years ago.

And I've read that Greece was extremely progressive in the area of online gambling.

But it was also addicted to spending, so that didn't, in the end, help either Greece or its citizens.

What do I hope for the rest of the year?

Well, I hope that news in bankruptcy is that we have many fewer consumer bankruptcy cases in Phoenix, and Scottsdale, and Mesa, and Glendale, and Chandler, and all over Arizona.

But I don't think I'm going to get my wish.

Now, you'd think that I'd be delighted with online gambling, because it will lead addicts directly into bankruptcy, and you'd think that I'd be delighted that Sugar Babies will file bankruptcy to discharge their credit card debts so that more of the Sugar goes to student loans, and you'd think that I'd be happy that governments are borrowing and spending at a rate that the next municipal bankruptcy cases will make Central Falls look like a piker.

Faithful readers know that you'd be wrong.

A College Degree: How Much Is It and Is It Really Necessary?: MyFoxPHOENIX.com

I was interviewed last night on topics relating to the value of a four-year college degree and the dischargeability of student loans.

While it was a little late, given my old-guy early bedtime, I enjoyed it.

Every single person I talked to at local Channel 10 was absolutely wonderful!

To say that they are all nice to their guests is a massive understatement; and calling me a bankruptcy expert may have been a bit of an exaggeration, but it certainly made me feel warm and fuzzy.

I love giving TV interviews on bankruptcy topics. Of course, I always worry that I'm going to forget what I was saying, or focus someplace else than the camera.

Student loans have overtaken credit card debt.

'Atsa one spicy meatball of debt!

And a big one.

The trillion dollar student loan bubble has experienced increasing default rates in the years available to review. If you look at 2005, the default rate on student loans was 4.6; if you look at latest year available for review, 2008, you see a default rate of 7%.

Does anybody want to bet that 2009 and 2010 will show horrifically higher default rates?

The Government has taken steps to limit the profits being made by private schools that have a high default rate; it will be interesting to see if it applies the same standards to public schools, which are working the same side of the street.

Now, I have a theory, and it goes like this: you can fool some of the people all of the time, and all of the people some of the time. But you can't fool all of the people all of the time.

Until recently, it looked like going back to school had little opportunity cost associated with it, because there were no jobs to take in any case.

But now, that proposition doesn't look quite so sweet.

Kids coming out of school are increasingly angry that they were sold a bill of goods, and rightly so; I note that law students are suing law schools for providing them with inaccurate data on hiring statistics and income statistics of graduates.

Once kids have a realistic understanding of the way the story ends (being garnished forever from your minimum wage job, and the standard for discharging student loans in bankruptcy out of reach), they may be less interested in the siren song of the expensive four-year university and the useless degree in Interdisciplinary Studies.

And while some commentators believe that a catastrophic (for universities) fall-off in student applications will happen in thirty years, I think information circulates a lot faster today than it did in the good old days (formerly known as "these trying times").

And I expect that we'll see universities closing right, left and sideways, because this is a depression, and kids aren't stupid.

Visit msnbc.com for breaking news, world news, and news about the economy

I'm unhappy about the state of the student loan industry.

In general, student loans are foisted on trusting students to the tune of an average of about $29,000 a year, and students are encouraged by the "financial aid counselor" to continue borrowing to get a four or six or nine year degree (at higher numbers) when they will never be able to get a job with that degree.

Like, say, French Grammar.

My champion student loan debtors (I'm a bankruptcy attorney) are in the range of $350,000 in debt from student loans, and those are very, very hard to scrape off in a Chapter 7 Bankruptcy in Arizona, in the Ninth Circuit. The judicially-established standard is just too darn high.

But right now a hot topic on the internet and television (must be sweeps week, right?) is the topic of Sugar Daddies, Sugar Babies, and each of them seeking arrangements to provide sex and companionship and money. In no particular order. To each other.

Since long before "Gentlemen Prefer Blondes", the idea of women looking for money in all the usual places has been a part of every culture; but often it carried a wedding ring as part of the package. Girls were, in the old days, told by their mothers not to give it away, because "why buy the cow if the milk is free?"

Apparently, the old days are now gone forever, and it is now easy for both Sugar Daddies and Sugar Babies to find one another, although I'm unsure whether such arrangements will confer lasting happiness on anybody.

There are multiple articles on the internet about the phenomenon of Sugar Babies and sex for tuition, and this much makes sense to me: somebody who has set up the various websites to help old, rich guys find stunning young, poor women is going to make a heck of a lot of money.

Now, the articles I've read about the websites and the phenomenon itself are examples of multiple personality disorders, no matter who's writing them.

On the one hand, the writers don't want to seem judgmental, and on the other hand, the obvious dangers inherent in trading sex for money, no matter what cute phrases are used for the exchange, have caused even the most exploitative articles to agonize about the risks to the young ladies of selling sex, even on a retail basis.

I have not seen any sites agonizing over the obvious risks to the old geezers who are paying to play, but they're old enough to know better, so too bad for them.

Myself, I'd like it better if student loans were dischargeable in Chapter 7 Bankruptcy Cases routinely in Arizona.

Because encouraging young women into prostitution, while it may sound lovely on the surface, seems like a very bad idea to me; no matter whether you call it prostitution, or any other cute phrase whatsoever.

If you take a look at this analysis of the student loan industry, you'll see something very scary.

Everything.

For instance, the increase in prices in tuition far outstripped the housing industry price increases, pre-bubbleburst.

And there are no jobs that don't involve the phrase, "Would you like fries with that, sir?" waiting for graduates.

The combination of huge price increases for a four-year degree, and no jobs for graduates, leads to the following question: can you fool all the people all the time?

Granted, fooling a poor little college student is a little like shooting fish in a barrel.

But that doesn't make it right.

The Main Street Network appears to agree with the above analysis.

From my perspective as a bankruptcy attorney in Arizona, the only analysis that interests me is whether I can help a kid who can't get a job discharge the $350,000 student loan in a Chapter 7 Bankruptcy.

And given the unrealistically high standard of "undue hardship" in the 9th Circuit, that answer is usually "no".

So just which wonderful jobs can the class of 2011 look forward to snagging, so it can pay its student loans?

Yeah.

And that makes me sad. Because, in general, the Bankruptcy Code is not useful as a tool for discharging student loans.

It can be done, and I've done it for a few clients.

But you wouldn't want to be them. They had it rough!

p.s. I didn't add this sentence from the article about the most indebted class ever, and I should have: " The Collegiate Employment Research Institute estimates that the average salary for holders of new bachelor degrees will be $36,866 this year, down from $46,500 in 2009." That average conceals the fact that for many new graduates, there are simply no jobs at all. 

 

While it's possible for a debtor to scrape off student loans in a Chapter 7 Bankruptcy in Arizona (or anyplace else), that doesn't mean that it's easy.

The combination of impossibly high unemployment, and underemployment, AND gigantic student loan amounts paid to institutions with more administrators than professors is having an interesting effect.

And by "interesting", I mean gosh-awful.

See, a University is dependent for its continuing survival on a regular flow of lambs to the educational slaughter.

And kids are catching on that getting a very, very expensive degree purchased with student loans may not be a good economic investment if there are no jobs to be had by new graduates, or anybody else.

Student loan lenders have zero motivation to be economically reasonable; they'll cheerfully garnish for the entire life of the student, and keep running interest rates and default penalties that would make The Godfather blush.

Here's my prediction for the Student Loan Bubble; it will be put off for a little while, as the Government punishes for-profit educational institutions for existing, and puts them out of business, routing the now-reduced flow of students to not-for-profit schools.

But there will be a greatly reduced flow of students as they figure out that they have been chasing a worthless brass ring, and that there's no rainbow at graduation.

And when some bright guy figures out that the future of education is hooking up videos of the very best and finest professors on the internet, and handling the attendance issue the way the Bar Association deals with online attendance, traditional Universities are doomed.

Now, they may not know that today, or they may.

But they'll first ask for bailouts, and when that doesn't keep 'em afloat, they'll tank. Putting it another way, they'll change or die.

And getting an education online will become the norm. Which only makes sense, because the university lecture system came about because of a book shortage; and now we have Kindle!

And I recently ran into a post entitled "100 Awesome Ivy League Video Lectures", at a site called Online Universities.  And you'll see what I mean; if you can learn from the very best at Heidelberg, The Sorbonne, Oxford University, or Trinity College Dublin, the chances that you're going to want to listen to a teaching assistant in a classroom the size of a football field at your local State U. is pretty limited.

Especially if you have to mortgage your future on a high-stakes gamble for economic survival in your effort to attend your local State U. Note that my State U. (ASU) is raising tuition, even though it's making profits, because...uh, why? But I'm sure there's a good reason.

No, actually I'm not. It seems straightforwardly crazy, from a moral or economic perspective.  

So the one good thing that'll come out of this economic depression is this; as competition for students heats up, and students get hip to the higher prices for lower quality teaching assistant scam, some super-duper university will get smart and say, "We are currently a knowledge factory, and we will now become a video factory, with knowledge embedded on each and every video. Because if we can charge a fair price for the very best education...we'll be a filthy rich knowledge factory!"

And the other universities will go out of business until they get with the program.

Which is why I like capitalism.

p.s. there will be an intervening period of time where fear of criticism will keep Universities around the world from playing well on the Internet with classes for fair prices. But the first time a super-duper University wants to get serious about survival in difficult times, that will all change.

p.p.s. Or the second time; no matter.  This one is inevitable.

p.p.p.s. Unless I'm wrong.


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Here's the deal; I get to talk to kids every week who have $130,000 degrees from Prestige University (no, that's not really the name of the school). And $130,000 student loans to go with those lovely degrees.

They have nifty degrees in Woman's Studies, Environmental Finesse, and Pre-Cortez-Invasion Literature; or maybe Philosophy, like me (I got to dig ditches for Pancho Willis when I graduated with a degree in Philosophy, and it taught me a valuable lesson; I don't like to use a pick and shovel in the hot, hot sun).

Now, your kids had a passion for whatever they were studying, and you let them follow their passion!

I can't decide if you did a good thing by letting them feel good about themselves for four or six years or nine years, or whether you goofed up like no generation of parents before you.

Why didn't you tell 'em that they needed a degree with salable skills attached? Why didn't you insist and demand? You're parents, not buddies!

Now, there are some jobs for folks with interesting degrees, and they are usually at the University itself; perhaps as a Professor!

Oh, that's right! There aren't any such jobs anymore! Because kids are smart, and some parents are smart. So fewer kids are going like lambs to the educational slaughter. It's a little too late for the kids with non-dischargeable student loans who are flipping burgers after their bankruptcy cases, and getting their tiny salaries garnished whenever they are found by the lowlives who bought their student loans.

In the same way that the housing industry was distorted by goofy lending, the education industry has gone sideways, and will soon experience a horrific "correction". That means that schools will either close or ask for bailouts.

And the folks with the worst problems? How about kids with huge student loans and no degrees?

p.s. soon I'll post a couple of cases that set out standards to discharge student loans in a bankruptcy case; and it ain't pretty. 

 

Arizona is Number One again!

When I went to Emerson Elementary School on 7th Street and Palm Lane in Phoenix, we were taught that Arizona was tops for copper, cattle, and citrus. And that was good.

As a good friend of mine, Robin Dugas, has pointed out to me, Arizona is now tops in another area.

Arizona is now Number One in student loan defaults.

I'll be writing in the near future about possible changes in the statutes concerning student loans and discharges in bankruptcy, but for right now, the Rule of Two still applies. You count the potential debtor's arms and legs and head, and if the total is two or less, they might be able to get out from under a student loan in Bankruptcy Court.

Now, it's not quite that bad, but it's pretty darn bad; the standard for "hardship" in the caselaw is absurdly high, and that's a bad thing.

The reason it's a bad thing is that a student loan is a double-trouble kind of hit.

On the one hand, if a student just out of school can't get a job (okay, that's far-fetched, but it could happen, right?) and has a hundred grand in student loans, that student may go into default, and get garnished for the rest of eternity through no particular fault of his own.

If the student decides to get a real job; staying an economic pet of parents or a girlfriend or boyfriend is another alternative that crops up from time to time, and that is bad for the economy because the now-degreed student should have an opportunity to become a productive member of society.

Instead, they're cast into the economic outer darkness with a debt they can't dump under almost any circumstances, and that's a bad thing.

Another alternative is that the student-loan debtor gets a job, but at much less salary than expected, and can't make payments on that student loan, and goes into default, and now penalty interest and legal fees and garnishments start, and the student doesn't get a chance to generate a decent credit history, Until the World Shall End.

That's also a bad result.

Congress is looking at changing some of the rules concerning the discharge of private student loans, but for most students, that will provide no relief.

I yearn for the Good Old Days (formerly known as "These Trying Times") when we could discharge student loans in ordinary bankruptcy cases.

But I'll keep you posted.

p.s. in some cases, a bankruptcy is the only way a student loan will ever get paid off; the debtor takes a huge pay cut, and can only pay some of her debts. So who you gonna pay? Well, probably not your credit card debts, if you have student loans.

In those cases, a bankruptcy filed in the District of Arizona may have some benefit for the debtor, because the non-student loan gets scraped off, and that frees up enough dough so that even on a lower salary, the student can stay current on the student loan.

And God help the poor student who goes into default on student loans, because nobody else will.

And that's a very bad thing.

I ran into an casenote about a student who failed to pay some tuition, which was discharged in a bankruptcy.

The school had threatened to withhold a transcript if the student failed to pay the tuition.

And after the discharge the school made good on that threat.

So the student took the school to school in Bankruptcy Court, and said that the school was in contempt of the discharge for refusing to issue the transcript.

Now, the case itself has little importance, because the debt here is only tuition, not a government-insured student loan, so we won't see these facts again anytime soon.

But the case note is still a fun read!

There are a few interesting theories floating around the bankruptcy universe these days.

One is the idea that many people who would benefit from filing a bankruptcy are not doing so. And that's certainly true, because only the folks who want a root canal for fun are enthusiastic about filing a Chapter 7 in Arizona.

But that idea has shown up in scholarly papers, and the idea has also shown up in a long USA Today article.

I recommend the USA Today article, because it's a fast read, and gives non-bankruptcy folks a glimpse into the bankruptcy universe that some of us get to see 24/7/365, because we practice bankruptcy law in Arizona, and spend our lives dispensing bankruptcy information and bankruptcy advice in Arizona.

And that beats the heck out of digging ditches for Pancho Willis in the hot, hot sun!

I want to go on record, however, questioning one paragraph in that USA Today article about bankruptcy; it suggests that in a bankruptcy, you can "save" your summer home and yacht, but you can't save your primary residence.

I'm not sure what state permits the saving of yacht and summer home, but I certainly want our homestead exemption in Arizona to be changed now: I want the summer home included, not just the primary residence with an upper limit of $150k in equity under our Arizona homestead exemption.

And I want our automobile exemption amended so that we, too, can save the family yacht, along with an auto for mom and dad with an equity limit of $5,000 for most folks, and $10,000 for folks who have a handicap that limits their walking ability.

The USA Today article almost seems to call for a change that would make student loans dischargeable in a Chapter 7 case, and I would support that change wholeheartedly.

Mind you, the Law of Unintended Consequences would apply to making student loans dischargeable; we would also see a down-shift as students decided to limit their economic exposure by going to less expensive schools, and we'd see the downsizing or closing of a bundle of very expensive schools.

And we would see new demand for high-quality, inexpensive education online, because there's no need to shop around for it today; a student just gets to talking with a "counselor", who hooks him up with a gigantic student loan, and the student gets to go to a big, shiny, brick-and-mortar school.

And that will all go away immediately after student loans become dischargeable, if they every do.

Instead, middle-class students will watch the same lectures they would have watched online, and take the same exams that they would have taken online, and get to print out a diploma when they're done.

And have a diploma without the gigantic student loan.

And that's such a good idea, you sort of have to wonder why it's not the general rule today.

And the answer is the easy-peezy access to nondischargeable student loans, which are easy to get because they're almost impossible to discharge.

The slice of 11 USC 523 that makes student loans very, very difficult to discharge follows:

(8) unless excepting such debt from discharge under this paragraph would impose an undue hardship on the debtor and the debtor’s dependents, for—
(A)
(i) an educational benefit overpayment or loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or
(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or
(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual;

And since we discussed our homestead exemption in Arizona, here's a look at that statute as well; bear in mind that it's modified by a part of the 2005 Amendments and the Supremacy Clause, so this is only part of the story (and remember, don't try this a home, kids!):

33-1101. Homestead exemptions; persons entitled to hold homesteads

A. Any person the age of eighteen or over, married or single, who resides within the state may hold as a homestead exempt from attachment, execution and forced sale, not exceeding one hundred fifty thousand dollars in value, any one of the following:

1. The person's interest in real property in one compact body upon which exists a dwelling house in which the person resides.

2. The person's interest in one condominium or cooperative in which the person resides.

3. A mobile home in which the person resides.

4. A mobile home in which the person resides plus the land upon which that mobile home is located.

B. Only one homestead exemption may be held by a married couple or a single person under this section. The value as specified in this section refers to the equity of a single person or married couple. If a married couple lived together in a dwelling house, a condominium or cooperative, a mobile home or a mobile home plus land on which the mobile home is located and are then divorced, the total exemption allowed for that residence to either or both persons shall not exceed one hundred fifty thousand dollars in value.

C. The homestead exemption, not exceeding the value provided for in subsection A, automatically attaches to the person's interest in identifiable cash proceeds from the voluntary or involuntary sale of the property. The homestead exemption in identifiable cash proceeds continues for eighteen months after the date of the sale of the property or until the person establishes a new homestead with the proceeds, whichever period is shorter. Only one homestead exemption at a time may be held by a person under this section.

Sometimes you read an article and say, "Yep. That's not complex; that's gonna happen, sure as shootin'".

At least, you say that if you're an old Arizona bankruptcy lawyer.

I just read a nifty article about the one of the next upcoming economic bubbles. I knew it was a funky industry, but I didn't know how bad things were.

The next bubble is American Higher Education.

There will be a few before and a few after, but it's clearly going to happen, and the bursting will be painful.

And here's the fairly obvious reason: what started as a Great Idea has turned into a scam to make obscene profits for investors in the Great Nondischargeable Student Loan Scam and to make brick-and-mortar universities rich, bloated and complacent.

Well, P.T. Barnum suggested that you can't fool all the people all of the time.

And soon enough, somebody is going to figure out that having a two-hundred thousand dollar debt for an undergraduate degree and post-graduate degrees in more elaborate ways to make bayberry candles ain't gonna be a big winner from an economic perspective. BECAUSE THERE ARE NO JOBS OUT THERE RIGHT NOW!!

Then enrollment at fat, happy, complacent and bloated Universities (that is one word, you know) all over the United States will fall to zip.

And when the economic dinosaurs of American Education fall, the tiny, agile mammals will rise...okay, I mean online education at a fair price.

You see, the lecture system of education came about because there were too few books in Italy.

So if you had actually read the book, you could lecture about it, and you became The Professor!

Over years, the system of talking about books continued and became an institution, even though you can only listen at a couple of hundred words a minute, while you can read much, much faster.

And when there were plenty of books, the lecture system continued anyway, because otherwise a lot of professors would have had to get real jobs!

Now we don't need as many professors talking about books to educate folks. For one thing, there's a high-technology thing I like to call a video camera.

Once a lecture series has been delivered, it should be in the can (a phrase from the days when recording was done on film, and the film lived in a can; you had to be there) and a thing of beauty forever.

Most lecture series, even wonderful lecture series, are not recorded, to make repetitive work for professors.

Now, there came a point when we could mass-produce shoes.

So we did.

And a lot of cobblers got new jobs, and that was that.

So when I see that Universities are founded on economic sand, I have one word that describes the easy, simple, guaranteed solution: Amazon. Or competition, same thing.

Think about a system of higher education in which you can buy a book from Amazon. You can then read it, and become a professor yourself!

Oh, that's right. I guess there's something magical about the lecture process itself, which is why nobody ever ducks class and gets straight A's anyway!

If only there were some way that Amazon could, you know, sell lectures from the very best qualified, best reputed, and best credentialed Professors in the world!

Oh, wait. It does!

Now, there's great value to being able to talk to experts in a field, and there's a benefit to brick-and-mortar colleges and Universities.

But there's also a benefit to efficiency, and the mass-producing of education for the masses.

And the first very-high-end University with a super-duper reputation that decides to be a winner is the one that will put its programs online at a reasonable price, and it will smoke the competition by giving degrees to people who pass the same tests online that they would have passed inside the brick and mortar institution.

And that's more or less inevitable, because this is a depression, and the evil practice of making student loans nondischargeable in most bankruptcy situations won't make that a good area of investment if nobody coming out of schools can get jobs.

That will mean that nobody in their right minds will sign up for expensive schools, and the first winners will be the junior colleges, and the BIG winners will be the internationally famous schools that embrace the new business model and become publishers of video lecture series as they cut to a fraction of their previous on-campus populations.

Now, will bankruptcy cases happen as that process begins and continues?

I don't know. How many folks are currently employed at Universities?

And a tip of the hat to Naked Law for its great article on this topic.

P.S. In Las Vegas, to squeeze the extra drop of blood out of suckers, they made it a criminal offense to fail to pay on a gambling marker, arguing that a signature by a half-drunk goofball surrounded by hot babes should be treated the same way as a hot check written by a professional check-kiting expert.

At some point, the nondischargeable characteristic of student loans will be seen the same way; a poor, moronic student with no idea of what he should do is sold a pig in a poke by a "counselor" who also gets him set up for a gigantic student loan.

Nice work, Universities! You are your own worst enemies. And you can't legislate around your upcoming demise, and that's fair; you did bad, and there's a better option to make people smart at a hugely lower price coming. In general, I think competition is a good thing, because it permits people to make the economic choices that will make them happy.

I'm not so wild about command economies; there's a reason that Cubans keep trying to make it to American soil. Communism is a great system, unless you have to survive under it. So far, the most committed Capitalists I have ever met have come from Communists countries that collapsed economically.

p.s. my daddy was a teacher, and his daddy was a teacher. I taught for a while at a private school and then a public school, and when I notices that I was starving, I decided that it wasn't for me. But I like going to school; I just think that education at every level should be available to everybody in the United States, and that competition should be allowed to make it fairly priced.

And inevitably, I'll get my wish on that issue, I think.

p.p.s. do I think student loans should be treated just like credit cards in a Chapter 7 bankruptcy in Arizona? Darn tootin'!

Are they? That's a big "no", my friends.