Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, August 27, 1993 TAG: 9308270287
SECTION: VIRGINIA PAGE: B1 EDITION: METRO
SOURCE: Associated Press
DATELINE: LYNCHBURG LENGTH: Medium
Household Finance Corp. is owed $16 million for defaulted student loans. The Illinois-based consumer credit firm is planning a foreclosure claim after repeated delays in payment from Liberty, the News and Advance of Lynchburg reported.
The school owes about $61.7 million to creditors. As classes began for the year Wednesday, Falwell announced a plan to use the financial resources of his Thomas Road Baptist Church to wipe out a portion of Liberty's debt.
"We still have the gun pointed right at our head, there are still threats," Falwell told students and faculty at a chapel service.
Household provided loans to students who took a home-study Bible course offered through Liberty during the late 1980s. Seventy percent of the students defaulted, leaving Liberty responsible for the debt.
Robert Hartney, a spokesman for Household's parent company, Household International, said he could not comment on whether foreclosure was imminent.
"It's one of several possibilities, but that's always been the case," he said. "The university owes us money and we're trying to get it back."
At the chapel service, Falwell asked students to pray that Household not take any action for the next 90 days, while Liberty and the Thomas Road church work out an arrangement to eliminate $28.7 million of the school's debt.
Falwell said an anonymous donor has offered $7 million on three conditions: that Liberty promise to be debt-free in seven years; that Thomas Road Baptist Church give Liberty $7 million by the end of November; and that a major creditor, Christian Mutual Life Insurance, make certain stipulations, which Falwell did not detail.
The $14 million would be used to pay $28.7 million to creditors, including Household, at a rate of 50 cents on the dollar.
"If I were sitting out there, I'd rather have $1 today than $2 down the line," said Scott Street, a school lawyer involved in the repayment plan. Street said he doubted there would be any foreclosure.
Falwell said the Thomas Road church would raise its share of the money by selling seven-year bonds to its own members. Falwell said he hopes all the branches of his church and university will be debt-free within three to five years.
The remaining $33 million in debt is owed to the school's 2,200 bondholders and Christian Mutual. The bondholders are awaiting the final version of a payout plan for what they are owed. Christian Mutual, which is owed $14 million, has agreed to take a percentage of proceeds from the university's School of LifeLong Learning for the next 10 years.
by CNB