Month: April 2019

Bankruptcy Law, Student Loans, Timothy Kingcade Posts

How the Student Loan Debt Crisis Got So Bad

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Student loan debt is a problem that plagues over 40 million Americans. It is currently estimated that more than $1.5 trillion is owed in student loan debt nationwide. With an outstanding balance this large, many are asking: how did this problem get so out of hand?

Former Consumer Financial Protection Bureau (CFPB) Ombudsman and the current Executive Director of the Student Borrower Protection Center, Seth Frotman, recently gave an interview to Yahoo Finance where he provided his input on the situation. Since he was on the front lines when it came to government protection of student borrowers, Frotman believes that loan balances have gotten out of hand as a result of decades of predatory lending and weak government regulation over the student loan sector.

Frotman resigned from the CFPB in August 2018 in a letter where he accused the current administration of not protecting student borrowers from predatory lending and other similar practices. In his letter, Frotman accused the administration of not enforcing lending violations and protecting bad lenders in the process.

In the interview, Frotman gave some background as to how student loans have been handled in past decades. For the most part, student loans are issued by banks or federally-backed private lenders. Given the fact that someone asking for a student loan normally does not have an extensive credit history, it is important that these borrowers are protected when taking out money to attend college.

However, over time, the cost of going to college began to skyrocket. It is estimated that the average cost of tuition for a private non-profit four-year university is $35,830, which is twice what a college student would have paid two decades ago. As tuition costs went up, the loans students had to take on to pay for going to college also went up. The result of this increase attracted other less-than-reputable lenders who saw a huge money-making opportunity.

In Frotman’s words “no one was minding the store” when it came to student lending, as more and more companies joined the student lending game. Unfortunately, the 2008 recession caused even more problems. Congress ended up bailing out the banks’ student loan arms hundreds of billion dollars to ensure that students still had access to loans to attend college.

As a result, however, the government ended up owning a great deal of student loan debt. The government ended up entering contracts with banks and loan providers that serviced student loans, including Navient, Nelnet, Great Lakes and FedLoan. These contracts are expected to expire this summer, leaving many, including Frotman, to worry about what will happen next. The current Education Secretary, Betsy DeVos, has mentioned that she would consider an exclusive contract to just one company to service billions of dollars of existing student loans, which has raised a lot of opposition. However, until a decision is made, it is expected that the existing contracts will be extended.

Lenders are required to follow a series of rules and regulations when it comes to providing student loans, but it was discovered recently by a government watchdog that the Department of Education was not holding loan providers accountable under these regulations. Some of these violations included misleading borrowers into putting their loans in forbearance, putting delinquent accounts into forbearance without borrower approval, and generally not holding servicers accountable.

The situation is expected to get even worse. It is estimated, as of February 2019, that 11.5 percent of student loans are at least 90 days delinquent or are in default. It is possible this number underestimates just how many borrowers are behind on their payments, including those in forbearance or loans that are deferred, which means the number of loans that are past-due could be even higher.

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.

 

Foreclosures, Timothy Kingcade Posts

‘Hardest Hit’ Federal Funding Money Spent on Luxury Hotel Stays by Florida Officials

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Florida officials have come under fire after it was discovered that they were using money from a federal fund meant to help homeowners struggling with finances and facing foreclosure to pay for vacations and luxury hotel stays.

This information was discovered by the Special Inspector General for the Troubled Asset Relief Program. The alleged misuse of funds took place between 2011 and 2016. Officials from the Florida Housing Finance Corp. used money from the Hardest Hit Fund to pay for all costs to attend conferences in Orlando, Miami, Boston, Nashville, and San Diego. While this part may seem appropriate, it was later discovered that only two hours of the total four days charged were related to the Hardest Hit mortgage relief program. The remainder of the time was spent for relaxation and enjoyment.

The expenses totaled $40,000 for what they claimed were “routine meetings” in some of the finest hotels and luxury resorts in Florida, including stays at the Vinoy Renaissance St. Petersburg & Golf Club and the Hyatt Regency in Orlando. The expenses are considered a direct violation of federal regulations in how the relief funds should have been used.

Florida currently has one of the highest rates of foreclosures, as well as highest rates of denying funding from the Hardest Hit Fund to struggling homeowners who need it the most. “Florida has the lowest homeowner admission rate for relief funds offered by the organization, one of the highest withdrawn application rates and has consistently denied homeowners at higher rates than the national average,” according to the Troubled Asset Relief Program (TARP).

Unfortunately, this is the not the first time a misuse of funds has occurred when it comes to The Hardest Hit Fund.  Back in 2017, it was reported that millions of dollars in foreclosure assistance was squandered by government agencies.

The Hardest Hit Fund was created in 2010 by the U.S. Treasury Department. The fund carried $9.6 billion at the time of its creation to help 18 states specifically, including Florida, who were hit hardest by foreclosures during the end of the recession. In Florida, the money is disbursed by the Florida Housing Finance Committee. However, since its creation, Florida has come under scrutiny for how slowly the agency disburses money to homeowners in need. Back in 2015, it was reported that only 20 percent of the applicants who requested relief in Florida were accepted. The national average acceptance rate is about 48 percent. At the same time, money is being used by federal employees for bonuses and vacations.

Stephen Auger, executive director for Florida Housing, was forced to resign in 2016 after an audit showed he allowed the agency to pay for a $52,000 lobster and filet mignon dinner to honor the lenders who worked directly with lower-income borrowers.

All this information was disclosed in an 85-page report from the federal special inspector general. Florida was one of the states that had a “culture of inappropriate spending” of the Hardest Hit funding. Florida Housing charged the fund approximately $18,000, which was the most of any state, just to send their employees to national housing conference that had nothing to do with the fund at all.

Click here to read more on this story.

Choosing the right attorney can make the difference between whether or not you can keep your home. 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.

Bankruptcy Law, Credit Card Debt, Debt Relief

Americans Will End Up Paying $122 Billion in Credit Card Interest in 2019

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It is a staggering headline, but just last year Americans paid banks $113 billion in credit card interest, according to a recent study from MagnifyMoney. That is up 12% from interest paid in 2017, and up 50% from 5 years ago. And the amount of interest is only set to increase in 2019.  Credit card debt plagues consumers from all walks of life. The larger the debt, the more likely that cardholder is accruing interest.

What is causing this increase in interest? Financial analysts believe that now since a decade has passed since the big financial crisis in 2008, consumers are feeling more confident in their abilities to borrow more. As a result, the total amount of credit card debt has reached a record high, since before the recession. However, borrowers are also paying more when it comes to interest on the amounts they borrow, as banks have passed recent Federal Reserve rate hikes onto their customers.

The average APR on credit cards has gone up approximately four percentage points over the past five years. The average APR on a credit card is 16.86 percent, according to the Federal Reserve.

The problem with credit card interest is it can make paying down your debt very difficult. In fact, according to the Federal Reserve’s Survey of Consumer Finances, 40 percent of all active credit card users carry a balance from month to month on their cards.

While credit card interest can make paying down the overall balance very difficult, certain methods can help in conquering your debt.  If a consumer is struggling to pay multiple credit cards, the snowball method can help in paying one card down at a time. Using this method, the consumer tackles the card with highest balance or highest interest rate. The consumer continues to pay the minimum amount owed every month on the other cards while putting all other money on the first card. Once that first card is paid in full, the consumer then takes the second card with the second highest rate or second highest balance. This process continues until all cards are paid off in full. While this method can take some discipline, it is a method with proven success.

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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.

 

Student Loans, Timothy Kingcade Posts

Student Loan Debt and College Costs Set to Increase with Trump’s New Budget Proposal

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President Trump’s proposed budget could have some serious consequences for individuals carrying student loan debt. In fact, student loan debt seems to be a major part of the President’s proposed fiscal year 2020 federal budget, which was sent to Congress on Monday.

The proposed fiscal year 2020 budget includes various cuts and changes to federal student loan programs. In addition, the budget includes a 10 percent total decrease in Department of Education Funding. The total cuts end up being $62 billion, which is $7.1 billion less than what the DOE had allotted in funds for the 2019 fiscal year.

Many financial experts worry what these changes could mean for student loan costs, as well as college expenses. Not only would the budget proposal raise costs for attending college, it could also result in a significant increase when it comes to student loan debt.

An estimated $1.5 trillion in student loan debt is owed nationwide. However, it is estimated that this new budget could force borrowers to pay an additional $207 billion more on their student loan debt on top of this already astronomical amount.

One part of the proposed budget eliminates the subsidized student loan program. Students who are enrolled in school could discover that they are accruing interest on their loans even though they are still enrolled in school. Currently, if a student is enrolled in school, they do not accrue interest on their loans, which means these students could be in for a rude awakening if the proposals go through. Adding interest while students are attending college could increase the cost of attending college or even graduate school for these students.

President Trump’s budget proposal also eliminates the public service loan forgiveness program, which has been law since the President George W. Bush era. Many graduates utilize this program as a means of eliminating their student loan debt by entering the public sector and taking jobs as prosecutors, public defenders, legal aid attorneys, police officers, firefighters and civil servants. Taking a lower paying job with the end goal of eliminating tens of thousands in student loan debt pales in comparison to the alternative of being stuck with student loan debt for decades. However, this option may no longer be available for these borrowers if the budget is approved.

The proposed budget does call for quicker loan forgiveness with respect to undergraduate student loans. The budget proposal includes the possibility of student loan debt being forgiven after 15 years instead of the current 20-year term.

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.

 

 

Bankruptcy Law, Debt Relief

BEWARE: The Dangers of “Do It Yourself” Bankruptcy Kits

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If someone is considering filing for bankruptcy, odds are he or she is already in a tough financial situation. The thought of hiring an attorney to file their case can seem out of reach. It is for this reason many consumers turn to the Internet for alternative solutions. Oftentimes, these come in the form of debt consolidation, credit repair and credit consolidation.  All come with their own set of inherent risks and are oftentimes a temporary band-aid to a bigger problem.

“Do It Yourself” Bankruptcy kits are also flooding the Internet and promote a cheap alternative to eliminate your debt. One such software program, Upsolve, created by two Harvard graduates, promotes itself as a non-profit organization committed to helping low-income Americans get a fresh financial start through Chapter 7 bankruptcy.

Sounds great, right?  Well it is obvious the creators of the software (and others like it) overlooked one very important detail.  The importance of the bankruptcy Means Test. To qualify for Chapter 7 bankruptcy, a filer must first pass the bankruptcy means test. This test is basically a formula that takes into account various factors, such as income, living expenses and family size, to determine if the filer can afford to repay his or her debts through a Chapter 13 reorganization bankruptcy in lieu of Chapter 7 bankruptcy. It is not a one size fits all type of test and can be very subjective, depending on the filer’s life circumstances.

It is important that people are aware of the risks of using this type of “do it yourself” bankruptcy software and filing Bankruptcy Pro Se. Changes to bankruptcy law enacted in 2005 added some complicated requirements to the field of bankruptcy.  While most bankruptcy documents are form-based, this does not mean that they are easy to fill out.

When filing for bankruptcy, you will have to fill out much more than a standard bankruptcy petition.  You will be expected to submit dozens of supporting documentation, listing every single debt, all of your creditors and all of your assets.  If you make a mistake or miss something, costly delays can result.  Not to mention, you run the risk of losing valuable property and possessions and your case being completely thrown out altogether.

An experienced bankruptcy attorney can also discuss the pros and cons of proceeding with a Chapter 7 or Chapter 13 bankruptcy. The best piece of advice for these types of situations is “if it seems too good to be true, it likely is.”

While “do it yourself” projects may be a good idea around the house, let a professional handle your bankruptcy filing. Most bankruptcy attorneys offer free initial consultations to assess your financial situation to determine if bankruptcy is right for you. In addition, our firm offers affordable payment plans and Saturday appointments.

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, Debt Relief, Timothy Kingcade Posts

Bankruptcy Checklist: What to Bring to Your First Meeting with Your Attorney

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Deciding to file for bankruptcy is never an easy decision, but those who emerge from it are often thankful for a fresh financial start and the opportunity to rebuild their finances.

Before you sit down with an experienced Miami bankruptcy attorney, there are several important documents you need to bring with you.

  • Outstanding Debts and a List of Assets. The most important documents to bring to your initial bankruptcy consultation are a list of your outstanding debts and a list of your assets (i.e. – major assets, such as homes, cars, boats, trailers, time shares, etc.)
  • Financial Documentation. Wage statements, a recent pay stub, tax returns, bank account statements and any large purchase receipts.
  • Budget. A rough budget of your household’s income and expenses.
  • Creditor Information. A list of credit accounts, account numbers, the amounts you owe and their contact information.
  • Loan documentation. Any mortgages and outstanding loans you may have, such as: car loans, personal loans, etc.
  • Real Estate documentation. Forms and information pertaining to any property you may own or rent.
  • Personal Property Documentation. Any major personal property items like vehicles, boats, valuable jewelry, electronic items, appliances or other items that could be repossessed.
  • Questions. A list of any personal questions you may have for your attorney.

While it is best to be as prepared as possible, if you are unable to obtain all of these documents, do not worry. You will be provided with adequate time to contact your banks, lenders and creditors to obtain the necessary documentation for your bankruptcy proceeding.  It is important to be open and honest with your bankruptcy attorney to prevent possible bankruptcy fraud or being accused of “hiding” assets.  By providing all necessary documentation and working closely with your attorney, you will help ensure the bankruptcy process runs smoothly.

If you are in a financial crisis and are considering filing 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, 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.