student loan debt

Debt Relief, student loan debt

Seniors Carrying as Much Student Loan Debt as Borrowers in Their 30s

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The student loan debt crisis is at an all-time high, but it appears that when it comes to the age of the borrower, this type of debt does not discriminate. According to Experian, a review of student loan balances across different age categories showed that borrowers who were in their 30s and borrowers who were in their 60s carried around the same amount of student loan debt.

According to Experian, the average 30-year-old borrower owes $36,406 in student loan debt while the average 60-year-old borrower owes $35,637.

Bankruptcy Law, student loan debt

How to Handle Zombie Student Loan Debt

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Student loan debt has been known to haunt borrowers for years, if not decades, after that first loan is issued. Many borrowers find themselves on payment plans that can least up to 25 years. To them, a student loan is like a mortgage without the benefit of having the house to live in. Once the debt is paid in full, the last thing that person wants to think about again is that loan. However, for many borrowers, that debt never seems to go away and often comes back in the form of zombie debt.

Most forms of debt are limited by a statute of limitations, which governs how long a creditor can sue the borrower for the debt. Federal student loans were once governed by a six-year statute of limitations until 1991 when that statute of limitations was lifted. Now they are technically collectible indefinitely. Private student loans, however, are still limited by statute.

Debt Relief, student loan debt, Student Loans

FTC Takes Legal Action Against Corrupt Student Loan Debt Relief Companies

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The case comes as a warning to student loan borrowers struggling with their debt and company’s looking to profit from it. The Federal Trade Commission is cracking down on two student loan debt relief operations and the financing company that assisted them. The complaint is alleging the companies charged illegal upfront fees, led consumers to believe the fees would go towards reducing their loan balances, and falsely promised to permanently lower and even eliminate their balances.

The FTC has also charged the companies with locking its customers into high-interest loans and paying their fees without making required disclosures. This caused their customers to sink further into debt.

Bankruptcy Law, Credit Card Debt, Debt Relief, student loan debt

Good Debt vs. Bad Debt: Do You Know the Difference?

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When it comes to debt, not all debt is created equal. If the money being borrowed helps increase the borrower’s net worth or income, that debt is considered “good” debt, while bad debt only worsens a person’s financial situation.

Good Debt

Good debt is any obligation that would increase a person’s net worth or income. While it does involve a financial obligation to repay a debt, it can also be something positive or beneficial to the consumer.  Good debt also tends to come with a lower interest rate on the amount owed. Mortgages are one example of good debt because the person who takes out the loan ends up with an asset that will increase his or her net worth. Car loans are also considered good debt since they are attached to an asset, namely a car. Student loans are another type of debt that are considered good debt, especially when it comes to obtaining a desired degree and furthering job prospects and earning power for the borrower. These loans may not be attached directly to an asset, but they tend to have lower interest rates, especially if the loans are federal student loans.

Credit Card Debt, Debt Relief, student loan debt, Timothy Kingcade Posts

The Effects Student Loan Debt and Credit Card Debt have on U.S. Economic Growth

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The fact that many Americans are struggling to pay their student loans and credit card debt is not just effecting the individuals carrying the debt. It is taking a toll on the economy, as well. In fact, these two growing categories of debt are reportedly weighing down U.S. economic growth.

Credit card balances are at an all-time high at $868 billion in the second quarter, which is up from $848 billion reported in the previous three months, according to the Federal Reserve Bank of New York. Consumer debt is also climbing, hitting an all-time high of $13.86 trillion in the second financial quarter. When compared with the previous high of $12.68 trillion just before the 2008 recession, financial experts have expressed concern as to what this could mean for the country’s financial well-being.

Debt Relief, student loan debt, Student Loans, Timothy Kingcade Posts

Student Loan Debt Relief Scams to Watch Out For

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Student loan debt is an issue for many Americans, and for a great number of them, the situation has become a desperate one. This fact could be why so many borrowers are falling prey to student loan debt relief scams.

It is estimated that the national total student loan debt is well over $1.5 trillion. The average student loan borrower in 2018 is carrying just shy of $30,000 in loan debt, according to Student Loan Hero. This figure only represents what the average undergraduate student owes. For a graduate or professional degree, the borrower may end up with student loan debt well into six figures. With this much debt, borrowers can be paying on their loans for decades, which is why many of them jump at the opportunity, when presented, to get some sort of relief on their debt.  The problem is these “relief opportunities” end up being more trouble than they are worth.

Bankruptcy Law, Debt Relief, student loan debt, Student Loans

How to Discharge Student Loan Debt in Bankruptcy

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When it comes to discharging debts in a bankruptcy case, student loan debt has traditionally been one of the most difficult debts to discharge. The fact that this debt can be so difficult to get rid of in a bankruptcy case has kept some consumers from filing for bankruptcy. The problem is it can be very difficult for a person who is in a financially tight situation to keep paying on this debt outside of bankruptcy.  Student loan debt is oftentimes the largest debt a consumer carries, outside of their mortgage.  If someone goes through bankruptcy only to continue being stuck with his or her student loan debt, that person may end up in the same financial situation, again.

Here is how to  discharge student loan debt in bankruptcy.

Undue Hardship

Student loan debt can be discharged if the borrower can demonstrate that he or she would suffer an undue hardship if forced to pay back his or her student loans. However, bankruptcy courts do not have one set standard to guide them in determining what exactly qualifies as an undue hardship. The U.S. Bankruptcy Code does not give a clear definition for what undue hardship is, which could be why so many inconsistencies exist among bankruptcy courts. Some courts will only use the undue hardship test to grant full discharge of the loans while others will allow for partial discharge. Others view the test as an extremely difficult standard to meet while others may be more lenient. At the end of the day, if the borrower has a very low income or took the student loan out to attend a for-profit trade school, he or she may have a better chance to get the obligation discharged, although other factors will be considered, as well.

Debt Relief, student loan debt

Loan Forgiveness Applications Stall at the U.S. Department of Education

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Student Loan Forgiveness

More than 180,000 applications remain pending in the hands of the U.S. Dept of Education, leaving borrowers with little to no answers when it comes to their student loan forgiveness. This lack of progress has many borrowers feel that their chances of receiving any type of relief for their student loan debt is slipping away.

Last year, a federal judge ruled that the Department of Education’s delays in processing student loan forgiveness applications from borrowers who were defrauded through for-profit school lending schemes was illegal and in direct violation of federal law. The ruling supported claims that the Department was purposely ignoring borrowers seeking promised relief from their debt.

Bankruptcy Law, student loan debt, Student Loans

Bankruptcy: Finally An Option for Student Loan Debt?

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Student loan debt is at an all-time high with 44 million Americans carrying outstanding amounts of the debt. It is currently estimated that $1.5 trillion is owed in student loan debt. With that many people graduating with student loans, it should come as no surprise that many of these borrowers eventually default.

Approximately 11 percent of student loan borrowers have defaulted or were delinquent on their loans by the end of 2018. For the most part, consumer debt, including credit card and medical debt, can be discharged in a bankruptcy case. Only a very select list of debt is not allowed to be discharged at the end of a bankruptcy case, including child support, alimony, criminal fines and certain overdue tax debt.

student loan debt, Timothy Kingcade Posts

Teachers Sue U.S. Over Student Loans that Were Not Forgiven

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The American Federation of Teachers has filed a lawsuit against the U.S. Department of Education on behalf of educators who argue that they have been wrongfully denied loan forgiveness under the federal public service loan forgiveness program.

The Public Service Loan Forgiveness program was created more than a decade ago to encourage young graduates to seek employment in a government job or in public service industries. While the pay in these types of jobs tends to be lower, the promise of having their federal student loans forgiven at the end of a ten-year period was created to entice them to apply for these positions.

Under the program, borrowers who work in certain public service professions, including law enforcement, nursing, and teaching, and who make payments consistently for ten years, can have their federal loans forgiven. It is estimated that more than one million borrowers have filed official paperwork to participate in the program. However, many of these borrowers are finding out that they suddenly do not qualify for forgiveness for one reason or another, including not carrying the correct type of loan.