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Corinthian Colleges Bankrupt, Liable for $531 in Student Loans

Posted on in Bankruptcy

Corinthian Colleges Bankrupt, Liable for $531 in Student Loans

Corinthian Colleges, Inc., the parent company behind various for-profit colleges including Everest University, Rochester Business Institute, National Institute of Technology, and various other colleges and programs, filed for Chapter 11 bankruptcy in 2015. This bankruptcy came after years of investigations into unlawful conduct by the company, with multiple former students and student groups alleging that the company used exaggerated claims and other predatory marketing tactics to lure students into its programs, promising them career success while dispersing private student loans with interest rates as high as 15%.

Corinthian College's campuses in the United States and Canada closed in 2015. Now the company finds itself navigating bankruptcy court and liable for $531 in student loans. Bankruptcy can be a way to eliminate some debts, but it comes with the loss of financial autonomy and a lowered credit score. If you are a business owner considering filing for Chapter 11 bankruptcy, talk about your plan with an experienced bankruptcy attorney before making any drastic moves.

Who is Responsible for the Student Debt?

Private loans comprised a significant portion of Corinthian College's business. Currently, 115,111 former students still have balances on these private loans. These students have the option to file complaints about Corinthian College's predatory lending practices with the Consumer Financial Protection Bureau (CFPB). Following the bankruptcy, students with loans from Corinthian College received a 40% reduction in their loan amounts through an agreement between the federal government and the company that purchased some of the company's campuses.

The issue of student debt is the main issue in this bankruptcy case. When the company filed for bankruptcy, more than 72,000 students were enrolled in its programs. It agreed to sell its campuses to other companies so these students' educations are not interrupted. However, 16,000 students did have their educations disrupted by the sudden closure. These students can have their debts forgiven in full.

This case brings the issue of transparency among lenders and higher education providers to light. Student debt is a serious issue facing millions of Americans, many of whom took out student loans with high interest rates without a full understanding of the loan process.

Restructuring Through Chapter 11 Bankruptcy

When a company files for Chapter 11 bankruptcy, it is tasked with repaying its debts while restructuring its business to become profitable. Corinthian College has closed and is now in the process of having its campuses purchased by other companies. During its bankruptcy hearing, the company listed that its total assets are worth $19.2 million and its debts total $143 million.

Illinois Bankruptcy Attorneys

Chapter 11 changes everything about how a company operates, whether it is a large corporation like Corinthian College or a small mom-and-pop business. For sound advice tailored to your specific business needs when you are considering filing for bankruptcy, contact our team of experienced Illinois bankruptcy attorneys at the Law Offices of Newland & Newland, LLP. We understand the challenges you are facing with your debt and will work with you and the court to reach a solution that allows you to successfully repay your debt and restructure your business into a profitable company.

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