student loan debt, Student Loans

Former ITT Tech Students Receive Debt Relief from Biden Administration

The U.S. Department of Education announced Wednesday that 18,000 former ITT Technical Institute students who were found to be defrauded by the shuttered for-profit university will have their federal student loans cancelled in full. This move is a step in the right direction. The for-profit school closed permanently in 2016, leaving tens of thousands of students with massive student loan debt, and no degree.  

More than 30,000 former students petitioned the Department of Education to cancel their debt under the “borrower defense to repayment law.” However, even after being defrauded by ITT Tech, their claims were denied by officials under the Trump administration.  

Borrowers who are eligible to receive loan forgiveness will be notified over the next few weeks. The total amount to be forgiven comes to over $500 million in debt relief, covering two separate claims submitted by former ITT Tech students, including their ability to transfer credits to a new institution and their ability to obtain employment. 

Officials in the Consumer Financial Protection Bureau (CFPB) and Iowa Attorney General’s Office found that between January 2007 and October 2014, ITT Tech repeatedly misled students about their ability to successfully transfer credits to other colleges. Additionally, they found that ITT Tech also lied to students about employment and earning potential following graduation between 2005 and 2016. 

Of the groups of students particularly misled were military veterans. According to the Veterans Education Success organization, many veteran borrowers came to them, claiming the school lied to them. Their statements were included as evidence in the official claim made to the Department of Education.   

For-profit colleges have been on the radar when it comes to student loan reform by the Executive Branch. In fact, the Obama administration had crafted a plan to grant ITT Tech students in California relief based specifically on the school’s violation of California law. This plan was detailed in a memorandum left for the next administration. However, the Trump administration, led by former education secretary, Betsy DeVos, refused to rule on applications for debt relief.  This refusal only led to claims piling up before DeVos decided to grant only partial debt relief. This decision was then cancelled by the Biden Administration in March 2021, as they wished to move forward more with the Obama-era policy granting full debt relief to defrauded borrowers.  

For now, the Biden administration is dealing with a large number of backlogged applications for debt relief. They are looking for ways to expedite the process, including potentially expanding the period of eligibility offered for former ITT Tech students to have their debts canceled.   

Please click here to read more. 

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. 

Credit Card Debt

Negotiating a Lower Interest Rate on Credit Cards

Paying down a credit card balance can be difficult, especially if the card carries a high interest rate. According to CreditCards.com, the average credit card interest rate in the U.S. is 16.15 percent (16.15%), and for many consumers, their interest rate is significantly higher, which can make paying off large balances very difficult. The good news is credit card interest rates can be negotiated, so long as the consumer knows how to do it.   

It helps to do some preparation before contacting the credit card company. The consumer should first be aware of what his or her credit score is before making contact. The credit card company will closely examine the consumer’s credit score, as well as his or her payment history. Every consumer is entitled to a free annual credit report, which should be closely reviewed before calling the credit card company. Be aware of all missed payments or late payments in case these are brought up in conversation.  

It also helps to research what other rates competing credit card companies are offering. If the consumer has already received preapproval emails or postcards, have these available to use as leverage. Having competitor offers often will help give the consumer a stronger position for negotiating a lower rate.  

When contacting the credit card company, the consumer should be sure to explain why he or she is requesting an interest rate reduction. He or she should bring up positive history with the company, as well as mention his or her credit score and on-time payment history, if possible. If the consumer has received any offers for lower credit card rates, mention these during this portion of the conversation, too.   

Be prepared for the card company to not initially want to offer a lower rate, but do not take no for an answer. The consumer is entitled to an explanation of the decision, and if the first call does not go well, it does not hurt to try again later with a different representative. It also does not hurt to ask to speak to the representative’s manager to see if that will help plead the case.  

Credit card companies do not want to lose a customer, so ask what other offers they would be willing to accept in the event the lower interest rate is not a possibility. Additionally, if they are not willing to offer a permanent lower interest rate, ask for a temporary rate reduction. If the temporary period goes well, they may change their mind about making the offer permanent if they see the cardholder is able to pay off the card during that time.  

If the original credit card company is not willing to offer a lower interest rate, it may be advisable to apply for a balance transfer credit card. These types of cards tend to offer zero or low introductory APRs for a set period. After that time, the rate will go up, but the introductory period gives the consumer a chance to pay down as much as possible while the interest rate is either at zero or a lower number than normal.  

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of 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

Understanding the Difference Between Exempt and Non-Exempt Property in Chapter 7 Bankruptcy

Before filing for bankruptcy, many people fear losing their property during the process. Federal bankruptcy laws, as well as Florida bankruptcy laws, allow for certain property to be protected under what are known as bankruptcy exemptions. However, not all property is protected, and it is important for filers to be aware of the difference between exempt and non-exempt property in a bankruptcy case.  

When filing for Chapter 7 bankruptcy, the filer should expect for a significant portion of his or her property to be turned over to the court as part of the “bankruptcy estate.” The bankruptcy trustee will sell this non-exempt property to pay off the debtor’s creditors before a bankruptcy discharge is granted. 

Property that is protected from this liquidation process in a Chapter 7 bankruptcy case is known as exempt property, which means it is “exempt” from being part of the bankruptcy estate. This property, for the most part, covers the filer’s necessities of life, such as the person’s home, car, and other essentials that are needed for living and working. Since the point of bankruptcy is to allow the individual to get back on his or her feet, it would be counterintuitive to take away the items or property that are needed to allow him or her to work and earn an income. Non-exempt property usually covers items that are not considered daily living necessities.  

For example, items that are considered non-exempt include a second car or truck, a second home or vacation property, family heirlooms, and expensive items of personal property. Alternatively, exempt property includes several items, such as motor vehicles up to a specific value, the filer’s residence, pensions, clothing, reasonable household goods and furnishings, jewelry up to a certain amount, tools of the filer’s trade or profession, public benefits or public assistance, and damages awarded for personal injury.  

Florida offers some of the most generous bankruptcy exemptions in the country, including an unlimited amount of equity in the filer’s residence. To be able to use Florida’s exemptions, the filer must have resided in Florida for at least 730 days prior to filing the petition. To be able to claim the unlimited homestead exemption, the person must have owned the residence for at least 1,215 days before filing the petition.   

Florida’s bankruptcy exemptions include the following:  

Personal Property Exemptions: 

  • Personal property up to $1,000. Personal property can include such items as furniture, art, and electronics. (Art. 10 Sec. 4, Fl. Constitution) 
  • Education savings, health savings, and hurricane savings. (Fla. Stat. Ann. § 222.22) 
  • Prescribed health aids. (Fla. Stat. Ann. § 222.25) 
  • Prepaid medical savings account and health savings account deposits (Fla. Stat. Ann. § 222.22(2)) 
  • Tax credits and refunds (Fla. Stat. Ann. § 222.25(3)) 
  • Funeral costs per Florida’s Preneed Funeral Contract Consumer Protection Trust Fund (Fla. Stat. Ann. § 497.456) 
  • Particular partnership property (Fla. Stat. Ann. §§ 620.153, 620.8307) 

Florida Motor Vehicle Exemption: 

  • Bankruptcy filers can exempt up to $1,000 in motor vehicle equity, more if you are married and filing jointly. 

Exemptions for Wages in Florida: 

  • Wages of a head of the family are entirely exempt up to $750 per week, or the greater of 75% or 30 times the federal minimum wage. 

Pensions and retirement funds are exempt in Florida: 

  • ERISA qualified retirement plans and pensions (including 401(k)’s, 403(b)’s, profit sharing and money purchase plans, SEP and SIMPLE IRA’s, and other defined benefit plans) are fully exempt. (11 U.S.C. Section 522; Fla. Stat. Ann. § 222.21.) 
  • IRA’s and Roth IRA’s are exempt up to $1,171,650. (11 U.S.C. Section 522(b)(3)(C)(n).) 
  • Public employee retirement benefits. (Fla. Stat. Ann. §§ 121.131, 121.055(6)(e).) 
  • State and County officers and employees retirement system benefits. (Fla. Stat. Ann. § 122.15.) 
  • Firefighter pensions. (Fla. Stat. Ann. § 175.241.) 
  • Municipal police pensions. (Fla. Stat. Ann. § 185.25.) 
  • Teachers’ retirement benefits. (Fla. Stat. Ann. § 238.15.) 

Alimony and Child Support Exemptions: 

  • Alimony and child support, to the extent reasonably necessary for the support of the debtor (the bankruptcy filer) and any dependent of the Debtor, are exempt. (Fla. Stat. Ann. § 222.201.) 

Exemptions for Insurance Policies and Annuities: 

  • The proceeds of a life insurance policy payable to a specific beneficiary are fully exempt. (Fla. Stat. Ann. § 222.13.) 
  • The cash surrender value of a life insurance policy and the proceeds of an annuity contract are fully exempt. However, annuity proceeds resulting from lottery winnings are not exempt. (Fla. Stat. Ann. § 222.14.) 
  • Disability income benefits are exempt. (Fla. Stat. Ann. § 222.18.) 
  • Fraternal benefit society benefits are exempt. (Fla. Stat. Ann. § 632.619.) 

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of 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.   

COVID-19, Foreclosure Defense, Foreclosures

Bank of America, Chase and Wells Fargo Announce Plans Following Expiration of Mortgage Foreclosure Moratoriums

As the stimulus programs put into place come to an end this year, many homeowners worry about what their futures will hold. Approximately 2.1 million homeowners are still utilizing these mortgage forbearance plans offered following the start of the pandemic, according to figures from the Mortgage Bankers Association, which means that many people are still set to be adversely affected once the moratoriums are lifted. 

Even more concerning, nearly 1.8 million families are not in forbearance on their mortgages but are at least 90 days delinquent on their mortgage accounts as of April 2021, according to data from Black Knight.   

President Biden has issued an extension of the federal foreclosure moratorium, but those protections are expected to end on June 30, 2021, unless they are extended again. Other foreclosure forbearance programs are set to expire in the fall of 2021. 

In a recent Senate hearing, the CEOs of major banks, including Bank of America, Chase, and Wells Fargo, were asked what they intended to do once these mortgage forbearance programs expired, especially considering how many people are still relying on these programs for survival.  

Wells Fargo intends to extend the foreclosure protection programs after the current federal ones lapse this summer. Their CEO Charles Scharf reported that Wells Fargo has extended the moratoriums for both foreclosures and evictions until the end of 2021. Wells Fargo also supports the Consumer Financial Protection Bureau’s (CFPB) proposed rule that would prevent lenders from initiating foreclosure proceedings until at least 2022.    

The CEO for Bank of America, Brian Moynihan, stated in the hearing that his bank would suspend all foreclosure proceedings through the end of this quarter, which ends when the current federal foreclosure moratorium expires on June 30, 2021. After that date, they will resume foreclosure proceedings. However, Bank of America reported that the number of their customers who are still in forbearance and at risk of delinquency is down 90 percent (90%). 

JPMorgan Chase reported similar figures, saying that 90 percent (90%) of their customers had exited the forbearance program, which is why Chase intends to resume foreclosures and evictions at the end of this quarter.  

While Wells Fargo was willing to make a statement regarding the recent CFPB proposed rule banning foreclosure proceedings until 2022, both Chase and Bank of America failed to comment on the rule.    

Please click here to read more.  

Choosing the right attorney can make the difference between keeping your home or losing it in foreclosure. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure, please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Credit Card Debt

Credit Card Debt Drops a Staggering $56.5 Billion in First Quarter of 2021

Credit card balances saw a record reduction during the first quarter of 2021, after a previous record-setting reduction year was seen in 2020.  According to a study published by the personal-finance website WalletHub, American consumers paid off $56.5 billion in credit card debt during the first quarter of 2021. 

WalletHub reported that American consumers paid off $82.1 billion in credit card debt in 2020, which is a significant accomplishment considering the challenges many people faced last year. However, this decrease in credit card balances does not necessarily mean that the credit card debt crisis has been solved. There is still a collectively $900 billion in outstanding credit card debt. The average household carries a balance of $7,519, and these figures are expected to rise. In fact, WalletHub is projecting consumers will add $60 billion to the nation’s total credit card balances.  

The quarter one decrease in credit card debt was 51 percent larger than the average credit balance paydown since the Great Recession.   

Certain U.S. cities did better than others in paying down credit card balances. Pembroke Pines, Florida, ranked number five on WalletHub’s list with an average household credit card debt of $16,549 and a total credit card debt of $948,650,144. Pembroke Pines citizens paid a total of $64,124,649 of this credit card debt with an average household balance paydown of $1,119.  

Fort Lauderdale came in 24th on the list of cities that did well in paying down their credit card balances. The average Fort Lauderdale household carried $14,400 in credit card debt with a total debt in the amount of $1,073,761,245. Of this amount, Fort Lauderdale residents paid down $72,581,618.  

Financial analysts believe that this data shows that U.S. consumers are in good financial shape in 2021. However, they do anticipate a $60 billion national increase by the end of the fourth quarter of 2021, considering the fact that COVID stimulus packages and additional unemployment benefits will phase out this year.  

As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges.  It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt.

Filing for bankruptcy is a viable option for those struggling with insurmountable credit card debt. Chapter 7 is the fastest form of consumer bankruptcy and forgives most unsecured debts like credit card debt, medical bills and personal loans.  There are certain qualifications a consumer must meet in regards to income, assets and expenses to file for Chapter 7 bankruptcy, which is determined by the bankruptcy means test.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of 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.   

 

Credit Card Debt

Which Debts Should You Pay First After Paying Off Your Credit Cards?

Credit card debt is not the only type of consumer debt people struggle with. Once this debt is paid off in full, it helps to have a plan on which debts to tackle next.

According to data from the Federal Reserve and TransUnion, American consumers paid off a total of $82.9 billion in credit card debt in 2020. Credit card balances continued to drop by $49 billion in the first quarter of 2021, which is the second-largest quarterly balance decline seen since 1999. Despite this fact, more than 20 million American consumers have their student loan debts in forbearance.  

For the most part, financial advisors recommend that consumers pay down any debts they have that carry the highest interest rates, which is why credit cards are usually the first focus. With stimulus programs still in place, providing extra income to consumers temporarily, many financial advisors argue a different theory should be followed. 

Instead of focusing on the debt with the highest interest rate, consumers should look at all their debts and consider other options, such as refinancing other debt sources to lower their interest rates or modify payments. Refinancing could be a possibility for unsecured personal loans, as well as for mortgage debt.  With lower interest rates, consumers are encouraged to take advantage of this opportunity to save money and lower monthly payments, making it easier to pay off debts in full. 

Once credit card debt is paid off, many financial advisors recommend that consumers focus next on paying off their car loans. A car loses its value significantly as soon as it is driven, which is why so many consumers find themselves owing more on the car loan than the vehicle is worth. The interest rates of car loans tend to be moderate to high, although not always as high as credit card debt, depending on the consumer. Many times, it is advisable to either sell the car and use the proceeds to pay off what is owed on the loan or to refinance the loan.   

Once personal loans, credit card debt, and car loans are paid off by the consumer, it may then be advisable to pay off outstanding federal student loans. Since payments and interest is paused on federal student loans until September 30, 2021. During this time, any payment will go towards principal and not interest rate. Paying down this debt will only help improve the consumer’s credit score. 

Please click here to read more.  

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of 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.   

Medical Debt

COVID-19 Pandemic Leads to Medical Debt Crisis

Medical debt is a financial stressor for many Americans, even before the COVID-19 pandemic. Now with the pandemic well into its second year, countless Americans are becoming overwhelmed with medical bills with no end in sight. 

Scientists are studying the long-term effects of COVID-19 on those who contract the virus. Many of them have suffered through several hospital stays, multiple treatments, and several referrals to various specialists. Each of these events, of course, comes with its own set of medical bills. 

According to Credit Karma, medical debt spiked 6.5 percent since the pandemic first hit at the start of 2020, increasing by approximately $2.8 billion. The number of individuals with past due medical debt increased by nine percent during this time, jumping from 19.6 million to 21.4 million.   

Another medical debt survey conducted by Lending Tree found that 60 percent of Americans polled carried some level of medical debt. Fifty-three percent (53%) of them saying that this debt was more than $5,000. Of those surveyed, 72 percent surveyed said that their medical debt has kept them from purchasing a home or having a child in the near future.    

Many consumers have felt forced to rely on credit to pay off their outstanding medical debts caused by a COVID diagnosis. However, paying these debts via credit card only delays payment of what is owed.  

The COVID-19 pandemic has hit consumers and businesses hard. According to a study conducted by the Commonwealth Fund, the Employee Benefit Research Institute, and the W.E. Upton Institute, 7.7 million American workers lost their employee-sponsored health insurance benefits by June 2020, affecting not just the 7.7 million workers but also their 6.9 million dependents. Due to the loss of this insurance coverage, overall cost of medical care has skyrocketed. On top of losing that health insurance coverage, many Americans also lost their job and thus their income source, making paying these high costs nearly impossible.  

Congress passed the $1.9 trillion American Rescue Plan to offset these high medical costs. The bill’s protections provide a short-term solution for those struggling with medical debt. Democratic lawmakers are pushing heavily towards expanding health care and addressing the costs of medical treatment. Some of these efforts have been to reduce the negative effects medical debt has on a person’s credit score. 

Click here to read more on this story.

Those who have experienced illness or injury and found themselves overwhelmed with medical debt should contact an experienced Miami bankruptcy attorney. In bankruptcy, medical bills are considered general unsecured debts just like credit cards. This means that medical bills do not receive priority treatment and can easily be discharged in bankruptcy. Bankruptcy laws were created to help people resolve overwhelming debt and gain a fresh financial start. Bankruptcy attorney 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, P.A. website at www.miamibankruptcy.com.

student loan debt, Student Loans

Do Student Loans Have a Statute of Limitations?

When it comes to most debts, any time the individual who owes the debt stops making payments, the debt will then go into collections. At that point, the original creditor can make the decision to sue the person owing the debt for the remaining balance. However, the creditor only has so long to file that lawsuit. Like any other cause of action, a statute of limitations places restrictions on how long the creditor has to pursue collection of what is owed.  

Each state has its own statutes of limitations, but when it comes to federal student loan debt, federal law governs how this debt is collected. Federal student loans are not governed by the same rules as most consumer debts. In fact, federal student loans do not have a statute of limitations at all, no matter how old they may be.  

Consumer Bankruptcy, Debt Relief

Defaulting on Debt v. Filing Bankruptcy

It can be tempting to want to walk away from debt in lieu of filing for bankruptcy. But doing so will not provide the consumer with the clean slate that a bankruptcy discharge offers. It is often better to face these debts in a Chapter 7 or Chapter 13 bankruptcy case instead of choosing to default on them.

Whenever a consumer fails to make payments on a loan or financial obligation, this failure to pay is otherwise known as a default. Lenders all have their own requirements on what exactly qualifies as a “default,” including how many payments have been missed before the account is officially considered in default.

Debt Relief, Tax Debt

Three Cost-Effective Ways to Pay Off Tax Debt

With tax season coming to an end, many consumers are wondering how they are going to pay their outstanding tax bill. When it comes to tax debt, it is best to pay it off as quickly as possible and in one lump sum payment. However, payment in full is not always possible. Fortunately, there are options available for those struggling with tax debt. 

The official tax filing deadline was May 17, and all outstanding 2020 tax bills were technically due at that time. If a taxpayer was not able to pay the bill by this date, interest and penalties will begin accruing on the outstanding amount owed.   The penalty for not paying tax bills in full is 0.5 percent of the unpaid amount monthly until the full amount is paid. On top of interest, penalties will add up to 25 percent of the total amount owed. Because of these penalties, the quicker the tax bill can be paid, the better.