February 19, 2016 Leave a comment
A man was arrested recently in his Houston home by U.S. Marshalls for failure to completely pay the government for a small amount owed on a student loan. Most student loans are backed by the U.S. government so when you don’t pay them you apparently now get to see the U.S. Marshalls at your door with guns drawn. You don’t need to owe the U.S. government very much. The man in question only owed $1500.
Paul Aker of Houston came outside slowly with his hands up and he was arrested by the marshals who had surrounded his home. He said he did not have any idea why he was being arrested until he was in the car on his way to jail where the marshals revealed that he had an outstanding student loan debt.
Mr. Aker had actually paid off two student loans in the past and he believed he did not owe any more to the government. The arresting agents asked him if he was in the habit of stealing from the U.S. government.
The U.S. Marshalls did release a statement explaining that it is their duty to serve federal process and to make arrests and they had apparently contacted Mr. Akers by phone to get him to appear in court and he refused. It would have been a good idea for him to go to court before this unfortunate incident because he was forced to pay the government back for the cost of his arrest ($1258.60) in addition to the delinquent loan with interest.
They did “allow” him to pay off the debt in $200 monthly installments but I would ask what happens if he stops paying the monthly amount? Do more armed agents show up at his door and arrest him again? Most of my clients can’t afford such monthly installments and therefore they don’t continue to pay them. Indeed in chapter 13 bankruptcies most debtors fall out of their chapter 13 plans for failure to pay.
I have written in the past about people being arrested and sent to debtor’s prison for unpaid debts but that is rare in America and it is not done at all in most states. Debtor’s prisons were supposed to be completely outlawed in the 1800s. The federal government appears to be the worst creditor of all to owe as their full military and police power can be turned against a person for some small student loan as we see here. For many years similar heavy handed tactics have been reported to have been used by the IRS for unpaid back taxes. With a private non-student debt you would not see anything like this.
Unfortunately there is not much bankruptcy can do for people with student loan debts. Currently student loans cannot be discharged in bankruptcy (unless there is “extreme hardship”) though we attorneys are hoping that someday that law will be changed to allow people to escape these debts if they cannot pay them. In America there is something like $1.2 trillion owed in student debts and no politician has yet done anything about it.
In the mean time I think it is a good idea to avoid these student loans wherever possible. They last forever, they cannot be discharged in bankruptcy, and someday a tragedy could occur when an overzealous marshal pulls a trigger and possibly ends a person’s life for a few delinquent student loan dollars.
For those that already have the loans I would suggest you stay in continual contact with some representative of the government to work out whatever deal you can with them just like you would with the IRS. If you do not you might have the misfortune of seeing armed federal agents surrounding your house who will place you under arrest and make you appear before a federal judge. Let’s hope that someday the law will be changed and student loans will become dischargeable in bankruptcy even if the student debt has to be 10 or 20 years old before it is eligible for discharge.
Photo by a.mina from Flickr
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