Private lenders are revising student loan contracts to ensure borrowers are not placed in default when the co-signer of their loan dies or declares bankruptcy. In a letter obtained by The Washington Post, Consumer Bankers Association President Richard Hunt informed Consumer Financial Protection Bureau (CFPB) director Richard Cordray that the 10 member banks who offer student loans, including Wells Fargo, PNC Bank, Discover and Sallie Mae, have changed their policy on these type auto defaults.
The banks will no longer trigger a default when a co-signer dies, while most will do the same in the event of a bankruptcy. The same policy will apply with existing loans.
Earlier this year, the CFPB warned bankers that they were at risk of breaking the law by automatically placing people who were current on their loans in default. The practice occurs in the private student loan market, where banks and other financial firms provide education financing with loan contracts that give them the right to trigger a default, even if the loan is being paid on time. Auto defaults leave borrowers with no choice but to repay the entire balance of the loan or ruin their credit, making it difficult to purchase a home or car.
Click here to read more on this story.
For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.