Debt Relief, student loan debt, Student Loans

Changes Coming in 2020 for Student Loan Borrowers

Student loan debt has reached an all-time high in this country with an estimated $1.6 trillion owed nationwide. Student loan debt is a major issue being discussed in the 2020 presidential race, and it is also an issue being addressed in the current legislative session. The U.S. Department of Education is also considering changes for student lending. No matter how you look at it, major changes are coming in 2020 for student loan borrowers.

These changes come at the height of the student loan debt crisis. According to a recent study from Politico/Morning Consult, more than half of American consumers consider student loan debt to be a major problem facing the country. In fact, student loan debt has now surpassed both credit card and auto debt. With the average college graduate walking away with $30,000 in student loans, which is up from $10,000 in the 1990s.

Bankruptcy Law, Student Loans, Timothy Kingcade Posts

New Bankruptcy Rules Proposed for Student Loan Debtors

According to a recent report from the Consumer Financial Protection Bureau, it is estimated that there are around 44 million individuals with student loan debt. The report showed that around $1.4 trillion is owed by total student loan borrowers. Of this amount, around 11 percent of that debt is past 90 days overdue. These figures show one common theme: student loan debt affects many Americans and not in the good way.

Student loan debt becomes an even bigger problem for those borrowers who are not able to keep up on their payments. It has traditionally been impossible for a borrower to have his or her student loans discharged in bankruptcy, which meant that these individuals were continued to be burdened by immense debt even after bankruptcy was over. It seems counter-intuitive since the purpose of bankruptcy is to get a financial fresh start, which has led to recent proposals to change the way student loans are handled in bankruptcy.

A recent bill, the HIGHER ED Act, H.R. 5549, introduced in April 2018 by Oregon Democratic Congressman Peter DeFazio has proposed significant changes to how student loans are handled in bankruptcy. The legislation would broaden the legal definition of “undue hardship,” which is the standard used by bankruptcy courts to determine if a borrower is eligible for discharge of his or her student loan debt.

The “undue hardship” determination has never been truly defined, and bankruptcy courts have had to decide on what it means on a case-by-case basis, and this inconsistent application has led to inconsistent rulings across the board. Earlier in 2018, the U.S. Department of Education had issued a statement requesting public comments on whether the undue hardship definition needed to be modified. The Department had previously expressed concerns that the undue hardship test has kept borrowers from trying to see relief from their debts through bankruptcy.

In a recent study written by Jason Juliano at the University of Pennsylvania Law School, it was found that around 40 percent of borrowers who included their student loan debts in their initial bankruptcy filings ended up with some or all of their debt obligation discharged. That number does not seem too bad until it is compared with the 0.1 percent of filers who actually attempted to discharge their student loan debts. This number shows that people simply do not even feel it is worth trying to discharge their student loan debts.

When it comes to bankruptcy and student loan debt, there are some common misconceptions. One being, that student loans are never dischargeable in bankruptcy. In fact, there are ways to file for bankruptcy with student loan debt.

All of the federal courts of appeals, with the exception of the Boston 1st U.S. Circuit Court of Appeals and St. Louis 8th U.S. Circuit Court of Appeals have adopted what is commonly referred to as the Brunner test in defining undue hardship. The test goes through three factors when making this determination:

  1. If the borrower had to continue to pay back the loan, would he or she be able to maintain a minimal standard of living?
  2. Are the borrower’s financial difficulties expected to continue for the next several years, or are they temporary?
  3. Has the borrower made efforts to keep up with student loan payments before deciding to file for bankruptcy?

Under the Brunner Test, the borrower must be able to show that the debt has made it impossible for him or her to support themselves and their families and that the financial situation is not expected to change without the debt being discharged or lifted.

The Department of Education is taking the comments and data received this year and hopes to re-evaluate this criterion. The Department also hopes to change the weights given to each of the three factors and make the discharges more accessible to student loan borrowers who desperately need relief.

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. There are ways to file for bankruptcy with student loan 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 McMaken 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 McMaken website at www.miamibankruptcy.com.

 

 

 

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Class Action Lawsuit Brings Hope to Student Loan Borrowers in Bankruptcy

A Texas bankruptcy judge has denied a request by student loan giant, Navient, to dismiss a class-action lawsuit accusing the firm of illegally collecting on loans that were discharged in bankruptcy. The decision means the case can move forward and allow the opportunity for an appellate court to consider whether loans historically viewed as exempt from bankruptcy can be discharged.

The ruling is an important one, as the Department of Education is currently reviewing the high standard student loan borrowers must meet to have their student loan debt discharged in bankruptcy.  The case in question focuses on a specific type of private loan debt (i.e. – money loaned to borrowers to pay for unaccredited programs, such as bar exam study courses and K-12 educational expenses).  However, if the appellate court rules in favor of the plaintiffs, it could mean that borrowers with similar student loans from other companies could qualify for the same relief.

Before this ruling, bankruptcy courts have determined that the types of loans in question in this case cannot be discharged because they were received as an “educational benefit.”  Recently however, lawyers and judges have started to challenge whether loans to help borrowers study for the bar exam and other similar debts truly fit into the category.

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 McMaken 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 McMaken website at www.miamibankruptcy.com.

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Trump Administration Delays Student Loan Forgiveness Program

The federal student loan forgiveness program established to refund borrowers who were defrauded by their schools has been put on hold until further notice, according to the Department of Education.  This applies to Corinthian College students who were defrauded by the school’s deceptive advertising and false job placement rates.  Approximately 15,000 student loan forgiveness claims from Corinthian students had been approved as of October 2016.

Here are the requirements for qualifying for a borrower defense federal loan discharge:

  • If your school misled you in any way about your loans or education program;
  • If your school violated certain state laws, such as consumer protection statutes or laws related to your loan or educational services.

Secretary of Education Betsy DeVos said on June 14 that last year’s expansion of the forgiveness rules “missed an opportunity to get it right.” Several Democratic senators are demanding answers and asking the Dept. of Education to provide detailed information regarding loan forgiveness applications and approvals for past students of Corinthian Colleges, along with two other failed for-profit college chains: ITT Technical Institute and American Career Institute.

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.

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

Student Loan Debt Forgiveness Signed into Law in New Jersey

Governor Chris Christie signed a bill into law this week that will eliminate student loan debt in the event of death and total disability, and allow for deferment of payments and interest accumulation for those who are temporarily disabled.

The change comes after an investigation into the case of a mother who was forced to continue paying her son’s student loans after his senseless murder.  It brought to light New Jersey’s punitive lending practices.  The bill’s sponsors in the lower house called its success a victory for students and parental co-signers who could have been left with insurmountable debt after a tragedy.

The primary sponsor of the bill, State Assemblyman Vince Mazzeo, made the following statement:

“Imagine you’re a family who always pays their bills, has good credit and then you lose a child and in the midst of your grief, you’re saddled with tens, if not hundreds, of thousands of dollars in their remaining student loan debt,” Mazzeo wrote.  “That’s just something we can’t allow to happen on our watch.”

Fellow sponsor Andrew Zwicker also praised the change.

“To expect a student’s family or other survivors to pay their college loan debt in the event of their death is cruel and unacceptable.  We can do better than that,” Zwicker wrote.

New Jersey’s Higher Education Student Assistance Authority (HESAA) will now be obligated to forgive those debts.  In cases of permanent or temporary disability, borrowers will have to provide a written statement from their physician attesting to their condition.

Unlike other states, New Jersey does not allow for payments to be adjusted by income and charges higher interest rates than similar federal programs. The state can also garnish a borrower’s wages for non-payment and revoke professional licenses without court approval.

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.

Debt Relief, Student Loans

Four Ways President Trump Could Affect Your Student Loans

President-elect Donald Trump has plans to address student debt and college affordability, but many of the details remain unclear.  Trump and the Republican Party did not emphasize higher education in their campaign platforms and any changes to the current federal student loan system would require congressional backing.

Here’s what we may be able to expect:

  1. Income-driven repayment changes are likely. According to Trump’s proposed student loan program, he would cap repayment at 12.5% of a borrower’s income. He did not indicate whether this repayment cap would apply to all federal loan borrowers or only for those who apply for income-driven repayment, as is the current standard.
  2. Private Banks may begin issuing federal student loans. Trump wants to restore a system where private banks issue federal student loans as opposed to the government.  This was a process that occurred up until 2010, when the federal government revamped the program and began originating all federal student loans through its Direct Loan program.  The Obama administration cited billions of dollars in cost savings as a result of the switch, and used the savings to offer more Pell Grants for low-income students.
  3. Students’ prospective earnings could dictate their ‘loan worthiness.’ Trump wants to let colleges have a say in lending decisions and make them share the risk of student borrowing with lenders.  It would be up to colleges and banks to decide together which students could take out student loans.
  4. College costs could be reduced by limiting the ‘administrative bloat.’ Trump said in an October speech that he would take steps to cut tuition costs.  In that same speech he said he planned to reduce the tremendous ‘bloat’ in college administration.  By reducing the unnecessary costs of compliance with federal regulations, colleges would be able to pass the savings along to their students.

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.

Related Resources:

http://www.latimes.com/business/la-fi-trump-student-loans-20161111-story.html

 

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

More than half of all student loan borrowers have seen scams

Approximately 60% of more than 6,300 student loan borrowers surveyed said they have seen scams for advertisements promising relief from their student loan payments. Nearly 45% of the respondents said at least one of these companies reached out to them directly, according to the survey conducted by the personal finance site NerdWallet, and student loan advocacy group, Student Debt Crisis.

These predatory companies offer to help borrowers with their student loan payments for a fee, but typically provide services borrowers can access from the government for free- or sometimes they provide nothing at all.   The more than 40 million student loan borrowers with $1.3 trillion in student loan debt has become a vulnerable part of the population.

In response to borrowers’ struggles, the Obama administration has gone to great lengths to expand the assistance programs borrowers can use to manage their debt.  But scammers have used these programs as an opportunity to lure borrowers, advertising their services with government logos and phrases like “Obama student loan help.”

About 9% of the survey respondents said they paid for student debt relief services, spending an average of $613. The Consumer Financial Protection Bureau has taken legal action, accusing various student loan debt relief companies of deceiving borrowers into paying for services they can get for free from the government and keeping borrowers on the hook for a repeating charge illegally.

Consumer advocates say the prevalence of these student loan debt relief scams is reminiscent of the mortgage crisis, where servicers failed to provide homeowners with necessary information and scammers targeted a vulnerable portion of the population.

The Department of Education is taking action and working on revamping the student loan servicing system, giving servicers more of an incentive to work with borrowers, and repay their loans through one government-branded portal.  By fixing the current system, borrowers will not be as tempted to turn to these predatory companies.

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.

Related Resources: http://www.bbb.org/wisconsin/news-events/bbb-scam-alerts/2015/04/bbb-alert-con-artists-are-targeting-student-loan-holders

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

New Jersey Student Loan Agency Instructs Staff Not to Tell Borrowers About Help Unless They Ask

New Jersey has the largest state-based student loan program in the country. However, the terms of the loans offered through the program are particularly harsh and can lead to financial hardship.

Recently, internal emails from the staff at Higher Education Student Assistance Authority were released where employees were instructed not to tell families that they may qualify for loan forgiveness unless they ask.

The email sent to staff members in May 2016 from a supervisor said, “Families of deceased borrowers (or surviving cosigners) must inquire if HESAA has a policy on loan forgiveness. We should not be volunteering this information.”

The agency’s chief of staff, Marcia Karrow, released a statement that said the emails “do not accurately reflect the Authority’s policy or practice on loan forgiveness.” However, Karrow did not provide any proof that management had corrected the instructions that were sent out by email.

According to HESAA, they have helped 35 out of 50 cosigners or co-borrowers who have requested assistance after a borrower died or became disabled over the past four years.

The same company released a statement directly following Superstorm Sandy in 2012 stating that borrowers’ credit ratings would not be affected if they made a late payment. Instead, the agency only erased late payment reports if a borrower requested it.

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.

Bankruptcy Law, Debt Relief, Student Loans

Obama Administration Unveils NEW Student Loan Forgiveness Program

This week, the Obama administration announced new guidelines for the forgiveness of certain student loans.  The program would forgive student loan debt for those borrowers who were the victims of scams perpetrated by for-profit colleges that used fraudulent or illegal practices to convince students to enroll.  While there are already federal laws in place for this, these new guidelines would make it easier to apply for this type of forgiveness.

If finalized, the new program would go into effect in July 2017. Under the new plan, borrowers would be able to ask for debt forgiveness if they can prove one of the following:

  • The school had a court judgement against it;
  • The school breached their contract with the student;
  • The school made a “substantial misrepresentation” about their offerings, graduate job prospects or the debt the student would accrue.

Under the new proposal, students would be able to request debt forgiveness up to six years following their discovery of the school’s wrongdoing, an increase from the current two-year limit.

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.

Bankruptcy Law, Credit, Debt Relief, Student Loans

Local Doral Company Sued for Running a Massive Student Loan Debt Scam

The Federal Trade Commission (FTC) and Florida Attorney General Pam Bondi are suing the Doral-based, Student Aid Center, for illegal business practices in the hopes of recouping some of consumers’ lost money.

The Student Aid Center, which claimed to help graduates relieve themselves of student loan debt, is now facing serious legal trouble of its own. The two owners filed for bankruptcy in February, stating the company had liabilities between $1 million and $10 million.

In addition to the FTC and the State of Florida complaint, Minnesota and the District of Columbia have filed lawsuits accusing Student Aid Center of “deceptive practices.” The Minnesota lawsuit alleges one of the owner’s Instagram account frequently referenced Jordan Belfort, the money-grubbing stockbroker depicted in the Leonardo DiCaprio film The Wolf of Wall Street.) The account has since been taken down.

The owners were savvy marketers, running advertisements on social media, radio spots, Google ads promoting the tagline, “Obama Loan Forgiveness,” and even in one case, an aerial banner flying over South Beach.

The complaint brought by the FTC and the State of Florida says Student Aid Center “preyed on consumers’ anxiety about student loan debt” by falsely promising to reduce or even eliminate it.

The company demanded upfront fees in five monthly installments of $199 or more, according to the complaint- even though graduates can apply for government loan forgiveness programs free of charge. Student Aid Center went as far to tell its customers to stop paying their lenders and instead pay the company directly, the lawsuit alleges.

But although the company lured in customers by promising a 100 percent money-back guarantee, Student Aid Center later deflected those who demanded refunds by either not returning the money or returning an amount much less than what had been paid, according to the FTC.

Click here 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.

Related Resources:
http://www.miaminewtimes.com/news/doral-company-ran-massive-student-loan-debt-scam-feds-say-8491808