Posts Tagged: ‘private student loan debt’

Understanding the Deceptive Practices of Student Loan Companies

June 6, 2018 Posted by kingcade

Over 44 million Americans are finding themselves in over their heads when it comes to student loan debt. It can be hard to see an end in sight when facing six figures of student loan debt following graduation, but for many, student loans are almost considered a “given” if someone wants to pursue a higher education.  Private student loan companies are now trying to make it even more enticing to take out more money to cover these costs.

In the grand scheme of things, government loans still constitute the majority of what is borrowed. Currently, private student loans account for less than 10 percent of all student loan debt, which is a relatively small percentage.

Private lenders have been hoping for this to change and have been actively lobbying for legislation that would lessen the restrictions the government has on student loans, specifically when it comes to graduate students.

This legislation, known as the Prosper Act, was written and proposed by Republican lawmakers last year. It caps the amount of federal student aid graduate students can receive. This cap on federal aid leaves a gap between what the students are able to borrow and how much tuition costs. Concerns have been expressed that students will have no choice but to seek private loan options to pay for the remainder of these costs not covered by government aid.

The next step is for these private loan companies to make their product more appealing to borrowers. What better way to do this than by making friends with the borrowers themselves? Many of these companies, in fact, are now making their product seem more like they are a lifestyle company than a lender.

One such company, Laurel Road, has partnered with MoviePass, a movie theater subscription service. The company has announced that if an individual refinances his or her student loans with Laurel Road, that person will be eligible for one year’s subscription.

Another private lender, Social Finance, Inc. (SoFi) has made small changes to its branding by changing how it refers to its borrowers. Instead of “customers,” these individuals are now referred to as “members.” It may seem like a small change, but this difference in designation also includes invitations to exclusive “member only” events, like cocktail parties and cooking classes. SoFi brands itself as more of a social club than what it actually is– a private financial institution. In 2017, SoFi offered 323 nationwide member events for its over 14,000 “members.” The company also offers an app that allows its members who meet at events to communicate to each other through the app.

The Laurel Road partnership is just one example of private lending companies trying to rebrand student loan debt as something more “fun.” The problem is further compounded when these loan companies do very little to educate their borrowers on the terms of the loans. When borrowers fail to pay back the debt as it becomes due, many of these lenders have been accused of illegally harassing their customers.  Borrowers have become so desperate to pay back their debts, in fact, that some have even resorted to game show antics to find a way out. Recently, a new game show called “Paid Off with Michael Torpey” has offered student borrowers a chance to compete on TV with the prize being having their student debt paid off. The series is premiering on TruTV in July 2018. Many have criticized this new program, saying it trivializes a very serious, growing problem.  However, it does demonstrate what lengths borrowers will go to in order to get some relief from their crippling debt.

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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. 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.

 

 

 

 

Wells Fargo Faces Penalties over Ignoring Student Loan Debt Included in Bankruptcy

December 11, 2017 Posted by kingcade

An important legal victory was recently obtained for a borrower attempting to discharge a student loan debt.  Ryan, the consumer, filed for bankruptcy and following the bankruptcy Wells Fargo Bank sued Ryan and obtained a state court judgment to collect on the debt.

Ryan had attended Capella University, a for-profit school.  In the case, Educational Financial Services, a division of Wells Fargo Bank, made the argument the loan was not actually discharged in the 2007 bankruptcy.  When Wells Fargo sued Ryan in State Court to collect on the student loan debt they made no mention of Ryan’s previous bankruptcy and discharge.

Ryan felt pressured to enter a consent judgment over the debt in 2008 and made monthly payments of $150 on the loan for the next seven years.  Frustrated, he sought legal help to reopen his previous bankruptcy case and his attorney raised the valid point, “that the loans from Wells Fargo were discharged by operation of law on November 29, 2007, because the loans were not a student debt protected by any subsection of Section 523(a)(8).”

The issue at hand was if Ryan’s discharge had been violated because the loans were not student loans under Section 523(a)(8).

“Given Wells Fargo’s actual and constructive knowledge of the timing of the Plaintiff’s loans, the “cost of attendance” at Capella University, and the nature of the Loans it extended to the Plaintiff, Wells Fargo knew or should have known that the Loans were discharged in the Plaintiff’s bankruptcy,” the complaint states.

The Judge ruled that even though Ryan had previously repaid the debt through the State Court judgment he was not prevented from reopening his bankruptcy and filing an adversary proceeding to rule on the discharge of his non-protected private student loan debt.

This is why it is important for anyone who includes student loans in a bankruptcy to pursue an adversary proceeding to get a ruling on the dischargeability of the loans, a key step which is often overlooked.

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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 McMaken, 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 McMaken website at www.miamibankruptcy.com.

U.S. Cracks Down on Collection of Private Student Loan Debt

September 19, 2017 Posted by kingcade

The U.S. consumer financial watchdog has ordered National College Student Loan Trusts and its debt collector, Transworld Systems Inc., to pay at least $21.6 million for attempting to collect on out-of-date loans and possible non-existent loans.

The Consumer Financial Protection Bureau (CFPB) alleges that the companies sued borrowers without being able to prove the debt was even owed or pursued collections where the debt was too old, relying on false and misleading legal documents.  There were at least 486 lawsuits filed where the statute of limitations had expired on the debt.

As a result, consumers made payments of at least $3.5 million on debt they did not owe, according to the CFPB. Transworld agreed to settle by paying a $2.5 million, which is part of the total of amount of at least $21.6 million.

Offered by banks and other companies, private student loans do not provide the same borrower protections and repayment options as federal student loans.

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, 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 McMaken website at www.miamibankruptcy.com.

Why Paying off Your Student Loan Debt Early Could be a Mistake

September 14, 2017 Posted by kingcade

The average college student who graduated in 2016 had approximately $37,172 in student loan debt.  While experts offer differing opinions on exactly which types of debts are considered good and bad, everyone agrees that debt on something that will end up making you money in the long run is essentially “good debt.”

A 2013 study based on Labor Department statistics showed that Americans holding a four-year college degree made 98% more per hour on average than those without a degree. Student loans are typically a low interest debt, as opposed to credit card debt which is typically the most expensive kind of debt.

The interest rate for undergraduate federal student loans disbursed in 2017 was 4.45%; the rate for federal graduate student loans was 6%. Compare that to the average credit card APR of 15.59%.

The Department of Education allows student borrowers to choose from up to eight different repayment plan options, several of which are designed for those with low income levels. If one repayment plan does not work, you can switch to another.

Private student loan debt is different and comes with a higher interest rate.  Private student loan lenders offer what is called “financial hardship forbearance,” which means you can suspend your payments due to financial hardship but the interest continues to accrue and is added to the balance.

Paying your student loan debt consistently overtime can lead to debt forgiveness.  Certain federal student loan repayment plans can result in automatic debt forgiveness. If you choose the Income-Based Repayment Plan, the Income-Contingent Repayment Plan, or either of the Pay As You Earn Repayment Plans, any balance you owe on your federal loans after 25 years will be automatically forgiven.  Student loan debt interest is also tax deductible, something you will see in your refund after filing your personal taxes.

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, 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 McMaken website at www.miamibankruptcy.com.

Thousands of Student Loan Debts Could Be Wiped Out Due to Missing Paperwork

July 25, 2017 Posted by kingcade

Tens of thousands of borrowers will likely see their private student loan debt erased due to a technicality- missing paperwork and incomplete ownership records.  One of the largest owners of private student loans in the U.S., The National Collegiate Student Loan Trusts is at the center of a legal dispute involving at least $5 billion in student loans, the New York Times reports.

Judges have dismissed dozens of lawsuits filed by the lender against student borrowers due to the lack of documentation proving the loans are even owed.  The National Collegiate Student Loan Trusts, which includes 15 trusts that hold 800,000 private student loans, has brought tens of thousands of lawsuits in the past five years against borrowers who have fallen behind on their payments.  The trusts hold loans totaling $12 billion and more than $5 billion of those loans are in default.  The mix up occurred when the loans, which were originally made by banks, were sold to lenders and the ownership records were lost in the process.

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.