Student Loans Archives - Page 24 of 31

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

More Attorneys Push for Bankruptcy to Cover Student Loan Debt

Posted on June 20, 2016by Admin

St. Cloud lawyer, Wesley Scott is outraged about the mounting debts student loan borrowers are facing. The bankruptcy attorney has written at least four times to U.S. senators from Minnesota about the issue. Specifically, he wants Senators Amy Klobuchar and Al Franken to help change Chapter 13 bankruptcy rules to make student loan debt dischargeable, as with other debts in bankruptcy.

Graduates of four-year post secondary programs in Minnesota faced an average debt load of $32,000 in 2014. That number was $21,000 in 2005, according to The Institute for College Access & Success.

The bankruptcy code used to be more lenient, allowing people to discharge their student loan debt. It still does, but the deck is stacked against borrowers and it’s something that rarely happens. Debtors must show an undue hardship in court.

Bankruptcy lawyer Scott is proposing one other change to the law, an “at least” option, which would allow debtors going through Chapter 13 proceedings to make payments on their student loans designating them as a priority debt.

Under the current Chapter 13 provisions, people in bankruptcy need to first eliminate debts such as unpaid child support, taxes and mortgages. Debts from student loans, medical bills and credit cards are paid at the end.

In an emailed statement, Franken said student loan debt should be eligible for discharge in bankruptcy, but, “it’s clear we need to address this problem on several fronts.” The senator said he has introduced a bill that would allow people to discharge private student loan debt, one to address tuition costs and another allowing students to refinance their debt.

Also in an emailed statement, Klobuchar said she is supporting a bill that would allow refinancing and one that would strengthen the federal Pell Grant program, which provides payments- not loans, to students.

The total value of outstanding federal student loans was about $1.2 trillion in the first quarter of 2016, up more than 130 percent from $516 billion in 2007. From July 2006 to June 2015, interest rates for federal loans ranged from 3.4 to 8.5 percent. They now fall between 4.3 and 6.8 percent.

Those figures are affecting about 42 million Americans with federal loans, not including private student loans. With no relief in bankruptcy, some people are turning to other options.

A woman with approximately $70,000 in student loan debt went to visit a St. Cloud bankruptcy attorney with her husband. But after leaving the attorney’s office, the couple went upstairs to a divorce lawyer. It was not because they didn’t love each other anymore, the woman had to be single to qualify for an income-based repayment plan. That’s the only way they could survive.

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.

Bankruptcy Law, Debt Relief, Student Loans

Obama Administration Unveils NEW Student Loan Forgiveness Program

Posted on June 17, 2016by Admin

This week, the Obama administration announced new guidelines for the forgiveness of certain student loans. The program would forgive student loan debt for those borrowers who were the victims of scams perpetrated by for-profit colleges that used fraudulent or illegal practices to convince students to enroll. While there are already federal laws in place for this, these new guidelines would make it easier to apply for this type of forgiveness.

If finalized, the new program would go into effect in July 2017. Under the new plan, borrowers would be able to ask for debt forgiveness if they can prove one of the following:

The school had a court judgement against it;
The school breached their contract with the student;
The school made a “substantial misrepresentation” about their offerings, graduate job prospects or the debt the student would accrue.

Under the new proposal, students would be able to request debt forgiveness up to six years following their discovery of the school’s wrongdoing, an increase from the current two-year limit.

Click here to read more on this story.

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Survey Reveals Student Loan Debt Hurting the Housing Market

Posted on June 15, 2016by Admin

Approximately three-quarters of people who have student loan debt say it is hindering them from purchasing a home, according to a recent survey. Although a college degree increases a person’s chances of obtaining a good job and a secure future, the survey found that many would-be homeowners are increasingly burdened by student loan debt.

Seventy-one percent of those surveyed said their student loan debt is delaying them from buying a home. More than half said they expect that delay to last longer than five years.

With 43 million Americans carrying nearly $1.3 trillion in student debt, the burden is affecting all parts of the economy. The home ownership rate among those 35-and-younger has declined from 44 percent at the height of the housing boom to 34 percent today.

Forty-three percent of those surveyed carried between $10,001 and $40,000 in student loan debt, while 38 percent owed $50,000 or more. The most common debt range was between $20,000 and $30,000.

As a result of their student loan debt, 69 percent of borrowers said they did not feel financially secure enough to buy a home, while 80 percent said they cannot save up enough for a down payment. This is not only affecting first-time home buyers, but also “move-up” buyers. A third of those surveyed who are current homeowners said they cannot afford to sell their home and purchase another because of their student loan debt.

Among the reasons cited were the expense of moving and upgrading to a new home, credit problems caused by student loan debt and owing more than their home is worth because student loan debt has limited their ability to pay more than the minimum on their mortgage payment.

The 33-question survey was sent to 75,000 student borrowers, of which 3,230 responded. Among the respondents, 67 percent attended a four-year college and 27 percent attended a graduate/post-graduate school. Two-thirds went to a public institution. Seventy-one percent are employed full time while 14 percent are part-time but seeking full-time employment, according to the National Association of Realtors and American Student Assistance, who conducted the survey.

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Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

Top 5 Bankruptcy Myths Debunked

Posted on June 13, 2016by Admin

Filing for bankruptcy is not an easy decision and many people fear a social stigma after they file. The truth is the stigma against debtors and those who file for bankruptcy has greatly decreased over the last 20 years, and there is no indication that debtors will be treated less favorably after filing for bankruptcy. In fact, it is oftentimes easier to reestablish your credit after filing for bankruptcy, because you are essentially given a “clean slate.”

To make the bankruptcy process a little easier to understand, we have dispelled the top five bankruptcy myths.

Myth 1: You will lose everything. You may think that filing for bankruptcy means you have to give up your home, your car, your flat screen TV, and all of your assets. This is simply not true. The vast majority of Chapter 7 cases are no-asset cases, meaning the debtor gives up no possessions. This happens for two reasons. First, you can allot for basic assets, called exemptions that are necessary for day-to-day living. What you can exempt varies from state to state, so be sure to discuss exemptions with an experienced bankruptcy attorney. For possessions that are not part of the exemption, creditors likely don’t want them. Under Chapter 13, you keep all of your assets, but the value of them figures into your repayment plan.

Myth 2: You will be relieved of all your debts. Both Chapter 7 and Chapter 13 bankruptcy will provide you relief from most of your debts. However, there are some exemptions. These include: recent taxes, child or spousal support, student loan debt, and debts that are the result of fraud you have committed.

Myth 3: Paying off your debt is a better option. Filing for bankruptcy is the biggest financial decision you will ever make, but it doesn’t mean it is a bad idea. If your debts are more than 50% of your annual income and you cannot pay them off in five years, bankruptcy is likely your best option.

Myth 4: Filing for bankruptcy means I have failed. Given that the number one reason for filing for bankruptcy is due to medical debt, this could not be less true. No surprise, the cost of medical deductibles has grown seven times faster than wages have risen. Many bankruptcies are likely the result of stagnant wages, not poor financial mismanagement. Whatever your reason is for filing, think of bankruptcy as a tool that can help you get a fresh start and take control of your finances.

Myth 5: Bankruptcy will ruin my financial future. A report from the Federal Reserve Bank of Philadelphia showed that those who filed for Chapter 7 bankruptcy in 2010 had an average credit score of 538.2 on Equifax’s scale of 280 to 850. But the average score jumped to 620 by the time those bankruptcies were finalized, approximately six to eight months later. There are many ways to rebuild your credit after filing for bankruptcy. There are certain limitations you will face after filing, but taking advantage of the right financial tools can go a long way in helping you get back on the right path for your financial future.

If you are in financial crisis and considering filing for bankruptcy, 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.

Related Resources:

http://www.csmonitor.com/Business/Saving-Money/2016/0613/Five-bankruptcy-myths-dispelled

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

The Battle for Student Loan Debt Discharge

Posted on June 8, 2016by Admin

Section 523(a)(8) of the Bankruptcy Code outlines a debtor’s ability to discharge student loan obligations. Under this section, student loans are presumably nondischargeable. However, there is a narrow exception if a debtor is able to show that repayment of their student loans will cause an “undue hardship.”

Two courts recently entered decisions on this issue within the same week, using the same standard for “undue hardship.” The District Court for the Middle District of Alabama and the Bankruptcy Court for the District of Idaho issued largely opposite decisions based on similar facts.

In ECMC v. Alexandra Elizabeth Acosta-Coniff, the bankruptcy court initially held that the debtor was able to meet the undue hardship threshold and discharge her $112,000 of student loans. However, on appeal, the district court reversed the decision.

The case involved a 44-year-old single mother of two who took out more than $100,000 in student loans pursuing four degrees, including two master’s degrees and a PhD in special education. As a full-time public school teacher, the debtor argued that the student loans were an undue hardship, as she was underpaid with no prospects to increase her earnings in the near future.

The court used the test for undue hardship, where the debtor must establish:

(1) That he or she cannot maintain, based on current income and expenses, a “minimal standard of living for herself and her dependents if forced to repay the loans;

(2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and

(3) that the debtor has made good faith efforts to repay the loans.”

The district court denied the debtor’s discharge of the loans based on the second factor, holding that the debtor did not satisfy the burden to show that there are additional circumstances preventing her from fulfilling her payment obligations. The court reasoned that the debtor chose to earn four degrees with a general understanding of the cost versus benefit analysis and her multiple degrees enabled her to seek employment on a larger pay scale.

It reasoned that the debtor’s future ability to earn extra income was a realistic possibility, negating the need to discharge her student loans.

In Elizabeth M. McDowell v. Education Credit Management Corporation, and U.S. Department of Education, the court reached the opposite decision under the Brunner analysis.

There are essentially three criteria a debtor must meet under the Brunner analysis.

Continuing to pay the loan must cause the borrower to be unable to sustain a minimum standard of living;
The borrower’s financial situation must be unlikely to change in the future;
The borrower must have made a good-faith effort to pay his or her loans.

The debtor, a 43-year-old single mother of two, owed $93,000 in student loan debt for both her undergraduate and graduate degrees. The debtor was steadily employed as a social worker, but had recently taken a $6,000 trip to South America to attend training for a career switch to photography. The debtor also financed the purchase of a motorcycle for her ex-husband.

At trial on the issue of undue hardship, her doctor testified that her health was deteriorating, and it was likely that she would be unable to work in the near future. Due to this fact, the court found her health condition to be an additional circumstance that would persist, or worsen, in the near future, satisfying the second requirement of the Brunner test.

The court recognized that the debtor made certain financial errors in the past, such as her trip to South America and the purchase of a motorcycle. However, the court held that she otherwise lived modestly while working full time. Ultimately, the court held that the debtor could discharge most of her loans, except for $10,000 which the court determined to be frivolous spending.

Click here to read more on this story.

Related Resources:

http://www.lexology.com/library/detail.aspx?g=8b4f44fe-0baa-4e50-b4f8-d77adda86096

http://www.usnews.com/education/blogs/student-loan-ranger/2014/08/13/debunking-the-student-loan-bankruptcy-myth

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

This Bill would make Certain Forgiven Student Loan Debt Tax-Free

Posted on June 7, 2016by Admin

Owing on a debt you cannot repay is bad enough, but owing federal taxes on that debt after you no longer have to repay it is even worse. Federal tax law requires that in most cases when a loan is forgiven, the amount that is written off by the lender is taxable income to the previous debtor.

Sen. Debbie Stabenow, D-Michigan, thinks that it is unfair when the debt was incurred under fraudulent circumstances, specifically to pay for college. She has introduced a bill that would protect defrauded borrowers from being taxed on their forgiven student loan debt, called the Student Tax Relief Act.

Her bill, S. 3008, was drafted in the wake of the Corinthian Colleges, Inc. downfall and the federal investigation that followed. The Department of Education discovered that the now-defunct for-profit chain defrauded students at more than 100 schools in more than 20 states across the country.

Following the fraud finding, the Education Department told students who borrowed money to attend Corinthian classes that they would not have to repay those loans. Affected students can apply for loan forgiveness through the department’s Federal Student Aid division.

As of March 1, nearly 9,000 claims have been processed from former Corinthian students nationwide, totaling more than $132 million, according to The Education Department. The Corinthian students were also provided special tax relief on the amounts written off by the Department of Education.

Stabenow’s bill, which has 7 Democratic co-sponsors in the Senate, would give the same tax relief to students in similar educational fraud cases.

“When students take out loans to attend college, they should get a fair deal and a fair shot,” said Stabenow in announcing the introduction of the Student Tax Relief Act. “No student should be the victim of false advertising from a college that promises skills or job placement. And the last thing they deserve is to be hit with an enormous tax burden on their forgiven loans.”

Click here to read more on this story.

Bankruptcy Law, Credit, Debt Relief, Student Loans

Local Doral Company Sued for Running a Massive Student Loan Debt Scam

Posted on June 2, 2016by Admin

The Federal Trade Commission (FTC) and Florida Attorney General Pam Bondi are suing the Doral-based, Student Aid Center, for illegal business practices in the hopes of recouping some of consumers’ lost money.

The Student Aid Center, which claimed to help graduates relieve themselves of student loan debt, is now facing serious legal trouble of its own. The two owners filed for bankruptcy in February, stating the company had liabilities between $1 million and $10 million.

In addition to the FTC and the State of Florida complaint, Minnesota and the District of Columbia have filed lawsuits accusing Student Aid Center of “deceptive practices.” The Minnesota lawsuit alleges one of the owner’s Instagram account frequently referenced Jordan Belfort, the money-grubbing stockbroker depicted in the Leonardo DiCaprio film The Wolf of Wall Street.) The account has since been taken down.

The owners were savvy marketers, running advertisements on social media, radio spots, Google ads promoting the tagline, “Obama Loan Forgiveness,” and even in one case, an aerial banner flying over South Beach.

The complaint brought by the FTC and the State of Florida says Student Aid Center “preyed on consumers’ anxiety about student loan debt” by falsely promising to reduce or even eliminate it.

The company demanded upfront fees in five monthly installments of $199 or more, according to the complaint- even though graduates can apply for government loan forgiveness programs free of charge. Student Aid Center went as far to tell its customers to stop paying their lenders and instead pay the company directly, the lawsuit alleges.

But although the company lured in customers by promising a 100 percent money-back guarantee, Student Aid Center later deflected those who demanded refunds by either not returning the money or returning an amount much less than what had been paid, according to the FTC.

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Bankruptcy Law, Credit, Debt Relief, Student Loans

Student Debt Relief Scams Targeting Borrowers

Posted on May 31, 2016by Admin

If you are struggling with student loan debt, you’re not alone. The FTC and the State of Florida announced lawsuits against two “alleged” student loan debt relief agencies. Consumer Assistance Project and Student Aid Center promised to get borrowers’ loans forgiven or significantly reduced, according to the FTC.

Consumer Assistance targeted borrowers online and over the phone, claiming they would get relief through government or by disputing loans. Student Aid Center used radio ads, text messages, and featured ads in search results, promoting “Obama Loan Forgiveness.”

But borrowers who paid the companies did not get their loans forgiven or even reduced. At most, the companies got borrowers’ loans put into deferment or forbearance, where loan payments are postponed, but interest still accrues.

Student Aid Center made certain situations worse by telling people to stop contacting their lenders and pay them, instead. Borrowers ended up paying thousands, but did not get the promised relief.

Student loan forgiveness programs are available in very limited circumstances. The FTC has the following new materials to help borrowers:

Student Loan Debt Relief explains how to spot a debt relief scheme, and what people struggling with student loans can do to help themselves.
Maria and Rafael Learn the Signs of a Debt Relief Scam tells the story of a couple trying to repay debt they accumulated for their daughter’s college education. It is the latest in a series of graphic novels to raise awareness about scams targeting Latin communities.
This list shows every company and individual ever banned from providing debt relief and mortgage assistance relief services by an FTC order.

Click here to read more on this story.

Bankruptcy Law, Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

Surge in Student Loan Debt Cancellation Requests

Posted on May 26, 2016by Admin

The Obama administration has received nearly 20,000 applications from Americans seeking to have their student loan debt cancelled on the grounds they were deceived by the universities they attended. The increase has led to the government forgiving tens of millions of dollars for borrowers.

Under a decade-old law, known as the “borrower defense,” borrowers are entitled to have their loans forgiven if they can prove their school used deceptive advertising and recruiting practices. This law had sat dormant for years. However, last year the Education Department, at the urging of student activists, started using the law to cancel loans taken out by former students of Corinthian Colleges. The for-profit chain was liquidated in bankruptcy last year after federal regulators accused it of running advertisements that cited false statistics on the employment status and earnings of graduates.

As of January, the agency had received about 7,500 applications for forgiveness from borrowers owing a combined $164 million. The agency continues to review applications on a case-by-case basis. It has agreed to cancel more than $27 million in debt for 3,421 borrowers, many of them former Corinthian students.

Click here to read more on this story.

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Court Revives Lawsuit over Fraudulent Student Loans

Posted on May 19, 2016by Admin

A federal appeals court has determined that former beauty school students can pursue claims that the U.S. Department of Education violated federal law by collecting student loans it knew may have been fraudulently obtained.

The U.S. Court of Appeals for the Second Circuit brought back the lawsuit by former students of Wilfred Academy over the Department of Education’s alleged failure to abide by two federal laws requiring student loan holders to be told that their loans could be discharged if issued under fraudulent premises.

Plaintiffs in Salazar v. King, 15-832-cv, claimed the agency had knowledge, as evidenced by its conclusion in 1996 that misconduct at Wilfred Academy was widespread and that students enrolled improperly. As early as 1988, the U.S. Justice Department brought charges against Wilfred employees for misuse of federal funds and falsifying loan applications.

The plaintiffs argue that to this day they are burdened with loans from education and job training that did not prepare them for a profession.

Judge Gerard Lynch, writing for the panel, found that the Department of Education did not provide notice about the possibility of discharge that is required by the Federal Family Education Loans and Direct Loans statutes.

“Plaintiffs plausibly argue that the fact that the DOE has already determined that any Wilfred borrower who presents a facially valid application alleging false certification will automatically receive a discharge is powerful evidence that the DOE has in its possession reliable information all such Wilfred borrowers ‘may’ be eligible for discharge,” Lynch wrote.

Plaintiffs are also asking the court to compel the department to do something that is not a discretionary function of the agency: comply with the two loan laws and stop collecting loans from the students.

“The presumption in favor of judicial review applies to this case, because plaintiffs challenge what they contend are unlawful actions that the agency has taken, and continues to take, against the plaintiffs themselves,” Lynch wrote. “Such challenges are at the core of the judicial review function.”

According to the Department of Education’s investigation of Wilfred Academy in the 1990s and to the circuit’s ruling, the question of fraud surrounding the student loans focused on whether the school ever certified that students who did not graduate high school had an “ability to benefit” from its program. The plaintiffs allege that they were never asked if they had a high school diploma or given any test to determine if they had an “ability to benefit.”

It is unclear how many former Wilfred students would be involved in the putative class, or how many are still paying loans arranged through Wilfred that could be discharged. More than 61,000 Federal Family Education Loan program loans were issued to Wilfred students between 1986 and 1994. When the action before the Second Circuit was filed in 2014, lawyers for the plaintiffs estimated that there were 40,000 or more students who took out federally guaranteed loans to attend Wilfred campuses.

At its height in the late 1980s, Wilfred operated 58 schools and had an annual enrollment of 11,000 students. Its advertisements featured an eager young student promoting the tagline, “That Wilfred winner—she knows where she’s going.” The Wilfred American Educational Corporation filed for Chapter 11 bankruptcy in May 1990 and the last Wilfred school shut down in 1994.

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