According to a recent report, the federal government has spent $1 billion a year to pay debt collectors to help struggling borrowers make regular monthly payments on their student loan debt. But based on the data, their efforts have been a waste of money.
Nearly half of the student loan borrowers who had defaulted on their student loan payments and worked with the debt collectors defaulted again in three years, according to a report in Bloomberg News.
The data came from the Consumer Financial Protection Bureau (CFPB), which also found that debt collectors get up to $1,710 in payments from the Department of Education in the U.S. each time a borrower makes good on a debt after working with a debt collector through a process known as “rehabilitation.” The debt collector keeps the money, even if the borrower defaults again.
The CFPB told Bloomberg that the government should reexamine whether the program and the contractors awarded to private debt collection are working to truly help the millions of Americans suffering with crippling student loan debt that now stands at $1.4 trillion.
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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.