Caution ahead, higher education in America can be hazardous!

By: R.A. Monaco
May 21, 2011

Amazingly, these days seeking an advanced degree in America routinely puts students in far worse financial troubles than if they hadn’t attempted to further their education at all. In fact, student loan debt can be likened to getting a tattoo when you’re young - it’s easy to get and awfully hard to get rid of.

The front page of the New York Times on Thursday reported, “Many With New College Degree Find the Job Market Humbling.” In fact, the median starting salary for students graduating in 2009-2010 was $27,000, down from $30,000 for those who entered the work force in 2006 to 2008. But those figures are for the lucky ones who found a job. Increasingly, new college graduates are forced to settle for jobs that don’t require a college degree. So it’s not surprising that they are earning far less than their peers as a result.

Meanwhile, college graduates are having trouble paying off student loan debt, which is at a median of $20,000 for graduates of classes 2006 to 2010. Arguably, if these students had a nickel for every time they’ve heard a politician in Washington or elsewhere say that education is the key to solving all of our underlying societal problems, their problems too would likely be solved. Unfortunately, this is where the student debtor’s problems just begin.

Credit card borrowers, unlike federal student loan borrowers, enjoy the fundamental consumer protections afforded all other borrowers with all other types of debt. The fact is that federal student loan borrowers enjoy almost none of those protections- not bankruptcy protections, not statutes of limitations, not state usury laws, not even truth in lending laws. The federal student loan lending system enjoys unparalleled collection powers where student debtor’s wages, income tax returns, even Social Security and disability income are routinely garnished without court order and with no appeals process.

In 2005 Congress changed the bankruptcy rules so that it is nearly impossible to get rid of debt obtained for education even from a private loan from a for-profit lender like Citibank who, by the way, was bailed out twice in this most recent mortgage crisis. The 2005 changes which included private for profit loans into the bankruptcy code has had a disastrous affect creating an inherently predatory lending system that has grown our national student loan indebtedness to a point in which it now exceeds credit card debt.

Fortunately, last April 15, 2010 a few courageous senators like Dick Durbin (D-IL), Sheldon Whitehouse (D-RI) and Al Franken (D-MN)have attempted to find a balance with the problem and introduced the Fairness For Struggling Student Act (§3219) in the U.S. Senate. They’ve proposed that private student loan debt be allowed discharge under a modification of the U.S. Bankruptcy Code. However, their being heard over Tea Party rants and seriously considered at a time when voters are furious about the mortgage crisis and bank bailouts now seems like a steep mountain for climbing.

While these loans are non-dischargeable in bankruptcy except in extreme circumstances, for financially distressed student borrowers it may be worth seeking a confidential consultation from a qualified attorney to help determine whether there is an “undue hardship” sufficient to challenge the adversarial standard under the current provisions of the law.

Deep-Dish Pizza, Deep in Debt

By: R. A. Monaco
May 20, 2011

With fewer customers dining out, this has been a tough year in the pizza business and Round Table Pizza Inc. hasn't been the only casualty of the economic downturn. Earlier this year, Chicago's Deep‐Dish pizza chain, Giordano's also made its way into bankruptcy court within weeks of West Coast‐based Round Table Pizza.

Giordano's Enterprises Inc., where every pizza "is a slice of heaven," has six company‐owned stores in the Chicago area and more than 55 locations in Illinois and Florida.

Since Giordano's bankruptcy filing in February, President John Apostolou and company officials haven't revealed much about how the bankruptcy process can help salvage the chain he and his wife Eva purchased in 1988 or the economic hardship that's led the self proclaimed world's "most famous stuffed pizza" chain into Chapter 11. However, that is all about to change now that Judge John H. Squires has ordered the Apostolou family to get out permanently.

Initially, Giordano's company was given approval to use a portion of a $36 million bankruptcy loan to pay employees, vendors and keep its doors open despite owing more than $45 million to Fifth Third Bank.

The court‐ordered takeover at the company's downtown headquarters Thursday was not without a few tense moments with John Apostolou and family members refusing to leave. However, it didn't take long for court appointed trustee Phillip Martino to enlisted the further intervention of Judge Squires, which eventually resulted in the cooperation of John Apostolou and family.

Apparently, Giordano's Enterprises Inc. came up on the radar of the federal bankruptcy monitors after firing their lawyers, failing to meet key deadlines and timely pay court fees. It is believed that Giordano's owners triggered a change in management through breach of a financing agreement.

Now that John Apostolou and family are out, it may take a little more time before Chicago's loyal deepdish pizza lovers find out just how deep Giordano's pizza problems were.

Ok, this isn't my problem anymore

By: R.A. Monaco
May18, 2011


Not more than two months ago a Wall Street Journal/NBC News poll found Donald Trump leading among potential contenders for the Republican nomination for President of the United States. In fact, a Newsweek poll conducted in February 2011 showed The Donald within a few points of Obama with many voters undecided about the November 2012 general election for President of the United States against Barack Obama.

Certainly, The Donald isn't shy about public opinion as each week during primetime television he tells someone, "You're fired!" Earlier this spring, after Time.com had headlined, "Donald Trump Begins Not Running For President," he made it official on May 16, 2011 that he would not run for president.

Last Friday, while being interviewed by George Stephanopoulus, Trump gave Americans some insight on his personal perspectives about bankruptcy when he said, "I've used the laws of this country to pare debt...[Y]ou know, it's like on The Apprentice: It's not personal. It's just business."

Having sought bankruptcy four times along the way, The Donald is an old hand at the leveraged use of bankruptcy and knows that, "Banks will take considerable haircuts." Rather than suffer miserably for years after, as many fear, for him bankruptcy is just a platform to his next financial scheme. In his words, "Ok, this isn't my problem anymore."

Surprisingly, Americans understand the "It's not personal. It's just business" mind set. What's puzzling, and more difficult to understand, is why so many Americans hold themselves to a different standard? In real life and on reality television you can get a fresh start and run for president too. "It's not personal It's just business."

Your Last Dime The Credit Industry “Perception of Others" Campaign

By: R.A. Monaco
May 18, 2011

When it comes to the subject of bankruptcy, perceptions matter to troubled debtors far more than reflected in public debate. A common argument heard by credit industry lobbyists centers on dogmatic concerns of moral slackness that causes people, who they claim can repay their debts, to seek the supposed, “too-easy” protection of bankruptcy.

Credit industry public relations campaigns over the past decade have aimed at driving home a self serving moral message that is exploitive and completely unsympathetic to families with dying children, years of underemployment and joblessness. By making credit available to those in terrible financial distresses their message is clear, no need to face the horrors of bankruptcy, just refinance your way back to economic security. The rise in debt management plans and other borrow-to-repay schemes is solid evidence that the industry continues to exploit those already in financial trouble.

According to the Stanford University Law Review, when it comes to bankruptcy, it is unlikely that Americans feel less shame today than in the past. Perhaps modern Americans have read about public figures like Kim Basinger, the rock group TLC, former Texas Governor John Connally and most recently, Ruben Hinojosa, a Texas congressman that serves on the House Financial Services Committee who last week filed for bankruptcy. Apparently however, dozens of celebrity examples have not changed the perceived shame factor enough to help many who are most in need.

Too many financially troubled debtors unnecessarily decide not to seek the relief they are entitled to under the bankruptcy code. Many suffer depression and unwarranted distresses from the financial pressure that results. Far more often than realized, troubled debtor's reasons for not seeking bankruptcy protection are concealed and rarely articulated.

A recent assessment according, to Gallup, shows that Americans current attitudes are more downbeat overall than in February 2008. Moreover, that one in four that are unemployed are in financial distress. The stigma, embarrassment and concerns about the likelihood that a bankruptcy filing would become known to at least some family members, co-workers, friends and neighbors is affecting the health of many. Data from a recent university study shows that bankrupt debtors and their families are in more financial trouble than their counterparts of ten or twenty years ago. Worse, the data suggests that families may be more reluctant to consider bankruptcy than ever before.

The alternative is to learn what your real options are through a discrete legal evaluation. A decision that can empower your choice, clarify options, and reduce the stresses that are far too often unnecessary and undeserved.

Reframing Our Debates and Stop the Snarl

By Randell A. Monaco

February 3, 2011

The “snarl” is not really an argument as Joan Williams points out in her article, Stop Socializing the Downside and Privatizing the Upside. Having government undertake a given task is not always the wrong choice or socialism, especially since America does not actually have a free market economy in the first place. In fact, a summary review of Corporatism and Socialism in America would reveal that in more recent years, corporate interests have often cheered on big government programs.

Profoundly, she points us in a direction of productivity; a place to begin our approach to the issue of what to do about solving the challenges of striking a balance between competing ideologies. She suggests that what we need “is a way of reframing our debates that begins to reverse the discrediting of government.”

As an example, a new health care proposal would preserve for private industry the right to insure relatively healthy people off whom insurers can make a profit. Predictably, a plan that privatizes the upside letting industry keep profits while socializing the downside leads to inevitable criticism when the government needs to levy taxes to cover the costs of shouldering the unshared risks.

Socialism or state capitalism - take your pick? America does not have a free market economy. The real issue is that if universal health care ever comes to America, corporations are likely to stay intact but will no longer have to satisfy customers, only the politicians.

On the one hand are those who have become disenchanted with the current system and on the other are those who've misattributed the problems to the free market. Expansion of government interests needs to balance and defend the legitimate systems of profit and private property. But Americans also need to understand how it is that the recent expansion of Medicare has been both the greatest augmentation of the American welfare state and a giveaway to large pharmaceutical corporations.

Socializing the risks has become an over-utilized tool that requires analysis of baseline assumptions. Partisan politics does nothing to help our nation understand the inherent trade-offs. The dumbing down of the debate is insulting, dishonest and clearly not understood. Most likely the later as evidenced by uneducated claims and statements from the politico likes of Sarah Palin, Michele Bachmann and other's regurgitating self promotional nonsense.

You Walk Away ~ Strategic Default ~ CBS Evening News Luxuray Home Foreclosures

Mr. Elected Representative, where were you?

By Randell A. Monaco
January 28, 2011


The influences that brought federal regulators to ignore clear warning signs that were obvious even to the inexperienced observer was easily recognized as unsustainable but what was the marketplace itself to do as they are rapidly seeing themselves priced out of the market?

When Wall Street is taking the complained of excessive risks, don’t we the public have the right to rely upon our elected representatives to protect that reliance in the integrity of the marketplace? I don’t accept that this finger pointing ends with regulators, absence of regulation or Wall Street bosses who need to be brought to justice and held accountable.

The entire elected government is charged with that responsibility, in real time, and I cannot accept that politicians now are going to use this as an issue to campaign upon and self promote after they played to the favors of Wall Street and Corporation including GE who invested in their re-elections.

Mr. President, do you hear me? If you continue to put your arms around the players who’ve participated and benefited, then reluctantly we must part ways. I personally will feel compelled to begin to do what is possible personally to educate those who have a right to expect and trust in you!
This is not a threat, it is a responsibility.