Student Loans Archives - Page 27 of 31

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

New York State Accepting Applications for Student Loan Debt Relief

Posted on January 8, 2016by Admin

In an effort to help ease the burden of student loan debt on its residents, New York has started accepting student loan forgiveness applications from borrowers who attended college in the state this past year.

Governor Andrew Cuomo announced the state’s “Get On Your Feet” loan forgiveness program, which allows for up to 24 months of student loan debt relief to recent college graduates. The Get On Your Feet program supplements the federal Pay As You Earn repayment program, and allows college graduates living in New York to pay nothing on their student loans the first two years out of school. The program even goes a step further by paying its residents’ student loans for a maximum of 24 payments, equal to their monthly student loan payment amount.

“With this program, we are telling recent graduates: if you invest in New York’s future, we will invest in yours,” Cuomo stated. Helping students pay for college is critical to ensuring their future success. Students struggling with student loan debt are less likely to start a small business or buy a home, and the consequences of defaulting on these loans can be devastating.

To qualify, applicants must have earned their degree from a college or university in New York no earlier than December 2014, have an adjusted gross income of less than $50,000 a year, and be enrolled in the Federal Income Based Repayment plan, Pay As You Earn.

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

Bankruptcy Court Determines “Income Based Repayment” Unrealistic

Posted on January 4, 2016by Admin

Another borrower has triumphed over his student loan debt, after he filed his own adversary proceeding with the U.S. Bankruptcy Court of the Western District of Missouri. The judge in this case decided the borrower’s federal student loans should be discharged tax free in bankruptcy, allowing him to save for the future and have a better life.

In his decision, the judge looked at the “totality of the circumstances” the debtor was facing and criticized the income based repayment programs offered by the Department of Education.

The struggling borrower in this case was a truck driver who had maximized his earning potential. The public records summarized his situation by saying, “The Debtor (who represented himself) is forty years old and is unmarried. He is currently employed as a delivery driver, but at times in the past, he has worked as an over-the-road truck driver. He currently earns gross regular income of $2,420 per month, plus overtime in the approximate amount of $643 per month, for a total gross monthly income of approximately $3,063 per month. After payroll deductions for taxes, a modest retirement contribution, insurance, and child support, his net take-home pay is approximately $1,183. The Debtor testified that, due to Department of Transportation limitations on hours of service, he is unable to earn any more than what he is currently earning with the overtime, even if he took a second driving job. He also testified without contradiction that he has no job skills other than as a driver.”

Chief Bankruptcy Judge Arthur Federman noted in his opinion that Income Based Repayment Programs (IBRP) are “not the magic answer to federal student loan debt.” He further went on to say, a court, “must be mindful of both the likelihood of a debtor making significant payments under the IBRP, and also of the additional hardships which may be imposed by these programs. As stated, interest and other charges would continue to accrue while the Debtor participated in IBRP, meaning that the total debt would be increasing. The overhang of such debt could well impact not only the Debtor’s access to credit over the 25-year IBRP period, but could also affect future employment opportunities and access to housing.”

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

Student Loan Debt Discharge- Another WIN for Consumers in Bankruptcy Court

Posted on December 30, 2015by Admin

Another consumer has successfully had their federal student loans discharged in bankruptcy court. The topic of student loans and bankruptcy is gaining more attention and although not every court district offers the same considerations as this one- it should not be assumed that discharging your student loan debt in bankruptcy is impossible.

Bankruptcy can help mitigate your student loans in a variety of ways, including a full discharge of the debt owed. There are even private student loans that can be easily discharged in bankruptcy; for example, loans for schools or education that was obtained at an “ineligible education institution.”

In this specific case, the debtor was an unmarried woman in her mid-thirties with no dependents. She had suffered a variety of mental issues since her mid-teens, including eating disorders, anxiety, depression and self-harm (i.e. – cutting), which had adversely affected both her academic endeavors and her ability to maintain employment. She obtained educational loans totaling approximately $204,525.00, which included $57,489.11 owed to the U.S. Dept. of Education, $47,900.00 owed to Educational Credit Management Corporation, and $99,136.00 owed to Iowa Student Loan.

She filed for Chapter 7 bankruptcy on April 15, 2010. On July 23, 2010, she filed a complaint to determine whether her student loans could be discharged. The matter was tried, and on December 1, 2010, the bankruptcy court entered a memorandum decision in which it concluded, “excepting the educational loan debts Debtor owed to the United States Department of Education, Iowa Student Loan, and Educational Credit Management Corporation from discharge would impose an undue hardship on Debtor and a judgment determining those debts were discharged.”

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

The Jury is still out on the New Student Loan Repayment Solution REPAYE

Posted on December 28, 2015by Admin

The new federal student loan pay-off solution known as REPAYE (Revised Pay As You Earn) is supposed to fix the shortcomings its predecessor, PAYE (Pay As You Earn) failed to do. The new program allows borrowers to cap their monthly payments at 10% their discretionary income regardless of when they borrowed or how much they owe. Another benefit is that after making 20 years of payment- 25 years for graduate students- any outstanding loan balance will be forgiven under the program.

The goal is to ease financial stress and subsequent loan default. The effect of defaulting on student loans can last long after graduation. It can impact a borrower’s credit history; make qualifying for any new loan (for example, a mortgage or car loan) more expensive or flat out impossible.

But like all new plans, just because it’s new does not mean it’s a perfect fit for all borrowers. The downside to this repayment option is that for some borrowers, the monthly payment may not cover both interest and principal payments, which mean the loan balance, could keep growing. That makes it harder to obtain other personal credit (i.e. – credit cards, mortgages, etc.) because the borrower’s credit capacity is exhausted.

Another risk is that the lower monthly payments will lead the borrower to pay substantially more over the life of the loan when compared to a standard repayment plan. Borrowers must also be aware of the consequences of REPAYE if their salary eventually increases. With REPAYE, payment will always be 10% of your monthly discretionary income, even if it amounts to more than the original payment under the ten-year plan as income rises.

There are now a total of eight income driven repayment plans to choose from. The key is to select the one that’s best for your situation and know the pros and cons of each.

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Bankruptcy Law, Debt Relief, Student Loans

Three Questions to Ask about the New Student Loan Repayment Program

Posted on December 24, 2015by Admin

Some financial counselors are advising caution when it comes to the federal government’s new income-based student loan repayment program. If you do not plan ahead, the lower monthly payments under this option could have long-term financial consequences.

The REPAYE program (Revised Pay As You Earn), which launched December 16, gives those Americans with Federal student loans the option of capping monthly payments at 10% of disposable income. For example, someone earning $30,000 a year would see payment capped at around $103 a month. It also includes a forgiveness feature- Any loan balance remaining after 20 years of payments will be wiped away for undergraduate loans. If you have loans from graduate school, the forgiveness comes after 25 years.

To make sure you weigh all the costs and benefits of the new plan, here are three questions to ask before you sign up for REPAYE:

Will your monthly payment reduce your balance? Check to see whether your monthly payment will cover both the principal and interest due on the loan. If it does not, your balance will keep growing, which can mean financial trouble in the long run.

How much more in interest will you pay? By stretching out your loan, you inevitably pay more in interest, which is money that could have been saved for your financial goals. This can also hurt your credit score if the loan balance keeps growing.

Will you be able to handle a large tax bill? Under current law the loan amount that is wiped out will be treated as taxable income. If the forgiven debt is a large amount, wiping it out may push you into a higher tax bracket, so you could end up paying the tax at an increased rate.

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Bankruptcy Law, Debt Relief, Student Loans

Student Loan Debt: The Next Crisis Facing Elderly Americans

Posted on December 23, 2015by Admin

The number of student loan borrowers age 60 and up has increased to 2.2 million, from 700,000 in 2005, according to the Federal Reserve Bank of New York. Twenty-seven percent of education loans held by people age 65-74 were in default in 2013, which means they have not made a payment in 270 days or more. In fact, more than half of education loans held by people 75 and older were in default.

The government has the ability to garnish wages for non-payment of student loans- even take your tax refund, but with seniors they have added leverage- their social security. In 2013, 155,000 seniors lost part of their retirement benefit to repay education debt, up from 31,000 in 2002, according to the GAO.

This has left many seniors helpless, as most forms of consumer debt can be discharged in bankruptcy- student loan debt cannot. Congress said in the 1970s that such debt can go away only if a debtor can prove repaying it would impose an “undue hardship.”

However, Congress never defined undue hardship, so it has been left to the courts discretion to determine just how desperate someone needs to be to qualify for relief. Bankruptcy judges have said that to get education loans discharged, borrowers must show their entire lives would otherwise be characterized by a “certainty of hopelessness” or that repaying the debt “strips [the debtor] of all that makes life worth living.”

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

Make Managing Your Student Loan Debt an Objective this New Year

Posted on December 17, 2015by Admin

It’s almost the New Year and if managing your student loan debt is one of your resolutions in 2016- this post is for you. Student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008. Balances of student loans have surpassed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages, according to the Federal Reserve Bank of NY.

Below are some actionable items that can help you start off on the right foot when it comes to managing your student loan debt in 2016.

Take Inventory of your Debt. Create a detailed list of all of your liabilities starting with the highest cost debt, first. Private loans are often more costly than federal loans, due to their higher interest rates and less flexible repayment terms. Begin to pay down the highest cost obligations more aggressively.

Alert your Lender and Prepay your Loans. Even if it is a small amount each month, a prepayment will reduce the amount of interest you pay and the length of time you have the loans outstanding. You may need to let your lender know that you want to pre-pay your loan with the extra payments.

Check and See if your Loans are Tax Deductible. In certain cases, student loan debt is tax deductible. Your deduction can reduce the amount of your income subject to tax by up to $2,500 subject to income limitations. Remember, the student loan interest deduction is claimed as an adjustment to income.

Consider Consolidation. If your goal is to purchase a home this year, you may want to lower your monthly student loan payment to qualify for better mortgage terms. Consolidating your loans and lengthening your repayment schedule can help improve your mortgage approval prospects.

Live Below your Means. A sound financial plan begins with spending less than you make. This can be difficult to do- but once you are free of debt imagine the possibilities of what you can do with the extra cash- savings, vacations, etc.

Consider Borrowing against Home Equity while Creating a Repayment Plan. If you own your home, you should consider a “cash out refinance” to benefit from potentially lower cost debt that may be tax deductible. You should also consider a home equity line of credit as you may qualify for a lower interest rate and tax deduction.

Whatever you decide, make sure the approach you take is a methodical one. Write down a list of your financial obligations and think measurable objectives. You have options and help is here.

Bankruptcy Law, Student Loans, Timothy Kingcade Posts

More Student Loan Debt Forgiven for Corinthian College Students

Posted on December 7, 2015by Admin

The government is erasing student loan debt for more than 7,000 former students of the now-defunct Corinthian Colleges- totaling over $100 million. According to a recent report, the Education Department has approved a second wave of loan forgiveness for students who attended this college and took out loans. This one is for students who filed “borrower’s defense” claims with the government, alleging they were lied to or mislead. At one time, Corinthian was one of the largest chains of for-profit colleges, but filed for bankruptcy protection in May 2015 after allegations of fraud surfaced.

The department’s undersecretary, Ted Mitchell said, “We will continue to provide forgiveness to every student who has been similarly mistreated.”

In a progress report released by the department, Joseph Smith, who is overseeing the debt relief, said his team has approved relief for 1,300 former Heald College students, totaling nearly $28 million in loans that now will not have to be repaid to the government.

Heald, which had campuses in California, Hawaii and Oregon, was one of three schools under the Corinthian umbrella. The other two were Everest (with 10 Florida campuses) and WyoTech.

Another 5,800 former students from Heald, Everest and WyoTech who filed “closed-school” claims with the government will see their debt discharged, totaling $75 million. It is expected that tens of millions of dollars of additional relief will be granted in the coming months under the closed-school claims.

Education officials have predicted that if all Corinthian students who borrowed government money (dating back to 2010) would seek relief, the total cost would be $3.2 billion in student loan debt relief.

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Bankruptcy Law, Credit, Student Loans, Timothy Kingcade Posts

Student Debt in America: Extend with a Smile, Collect with a Fist

Posted on December 4, 2015by Admin

The student loan debt crisis is nothing new, but the interest accruing on these loans represents a new threat. Of the 43.3 million borrowers with outstanding federal student loans, 1.8 percent, or 779,000 people, owes $150,000 or more. And 346,000 owe more than $200,000. A Missouri high school teacher and mother of four owes the federal government a staggering $410,000! She took out loans for her undergraduate education, but also for law school, which she was unable to complete after becoming ill with a life-threatening autoimmune disease that required a lengthy hospitalization. Today, the interest has accumulated to twice the original principal. The monthly loan payments of $2,750 will stretch for 30 years.

With her forbearance options exhausted, the loan servicer has threatened to “come after her,” garnishing her wages and eventually her social security. This woman’s story reveals the deep contradictions in the federal government’s approach to student loans. People have always struggled with debt and access to capital is what fuels the modern economy. Borrowing for college is often seen as a good idea because it represents an investment in a person’s future potential. However, borrowing is risky and people often do a poor job- particularly young people- of properly weighing the interests of their present and future selves.

The private enterprise system is built to limit over-borrowing by sharing risk between lenders and borrowers. Lenders examine credit and income histories and ask for collateral that can be repossessed in case of default. Because most loans can be discharged in bankruptcy, lenders share on the cost of default. But federal student loans do not work that way. “No Cash? No Credit? No Problem!” is essentially the Department of Education’s policy on student loans.

The number of active borrowers enrolled in college has declined roughly nine million today from about 12 million in 2010, according to the Federal Reserve Bank of New York. But the total amount of outstanding student loan debt continues to increase, because many borrowers are struggling to pay back their older loans.

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

Student Loan Debt- Not just a burden to the student

Posted on December 3, 2015by Admin

Ninety-four percent of parents of college students are increasingly feeling the burden of student loan debt, according to a 2014 survey by Citizens Financial Group. More than half of those parents are worried that the cost of college will impact their ability to retire. Parents who cosign on their child’s student loan debt assume equal responsibility for repaying the loan. That means any late payments not only hurt the child’s credit, but the parents as well.

The problem is wide-reaching, but the middle class seems to have been hit the hardest. In many instances, the debt is held by private lenders because federal loans have been maxed out. Those taking out the loans oftentimes do not qualify for need-based aid since their parents make “too much” money.

Parents who are shouldering the burden of student loan debt are encouraged to look for ways to improve their cash flow by reducing monthly expenses like cable bills, refinancing mortgages to lower interest rates and shopping around for the best insurance coverage.

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