Credit, Foreclosures, Timothy Kingcade Posts

Surviving Spouses Receive Assistance on Reverse Mortgages

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Reverse mortgage loans handled by the Department of Housing and Urban Development (HUD) are the most common type available, representing more than 90% of reverse mortgage loans in the United States. However, HUD’s rules and regulations regarding these loans have sparked much criticism and even lawsuits. The issue concerns spouses whose names are not included on reverse mortgage documents.

A reverse mortgage allows those who are 62 and older to withdraw funds against their home’s equity. The debt is not paid back until the borrower dies, moves, or sells the property. Many senior citizens have obtained a reverse mortgage only to discover that they could possibly lose their home upon the passing of their spouse.

This is exactly what happened to a Louisiana woman, when her husband passed away in January.  The 65-year-old widow was told by her mortgage company that she owed $107,000 for the principal, accrued interest and fees from the couple’s reverse mortgage on their home of 16 years. The woman was a “surviving spouse,” whose name did not appear on the reverse-mortgage note. Loan officers and representatives had assured the couple that she could remain in the home, if her husband passed away. Unfortunately, she was not protected as she had been led to believe. Instead, she was told to pay the money or her home would be foreclosed.

An estimated 12,000 other widows and widowers face similar circumstances because their name does not appear on the reverse mortgage note. Research has shown that in some cases, the loan broker offered a higher maximum mortgage to those who only had the older spouse on the note. In other cases, one spouse might not have reached the required borrower threshold age, therefore only one of the spouse’s names was placed on the note.

Fortunately, a recent federal policy shift may help surviving spouses in this situation. Up until last month, all non-borrower surviving spouses whose loans were issued before Aug. 4, 2014, were subject to payment demands, similar to the Louisiana woman’s case. On June 12, HUD changed its policy and advised loan servicers of an updated option. Instead of foreclosing on non-borrower surviving spouses, the loan would be assigned back to HUD, which would make a claim for monies owed against the agency’s FHA insurance fund.

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 website at www.miamibankruptcy.com.

Source: Kenneth Harney – The Washington Post

Bankruptcy Law, Timothy Kingcade Posts

Bankruptcy Checklist: What to Bring when Meeting with your Lawyer

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Are you considering filing for bankruptcy? Before you sit down with an experienced and qualified bankruptcy attorney, there are several important documents you need to bring with you. If you decide bankruptcy is the best option for you, your attorney will thoroughly review your financial background. Additional documentation will be required by your attorney to determine the type of bankruptcy you should file.

The following documents are needed when you first meet with your bankruptcy attorney:

• Financial Documentation. Wage statements, tax returns, bank account statements and large purchase receipts.

• 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, business 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.

• A list of any personal questions you may have for your attorney.

If you are a business filing for bankruptcy, additional documentation will be required such as company reports, financial statements, budget reports, and company property information.

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 fraud or being accused of “hiding” assets.  By providing all necessary documentation and working closely with your attorney, you will help ensure that the bankruptcy process runs as smoothly as possible.

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, 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.

Source:
http://www.legalmatch.com/law-library/article/bankruptcy-checklist-what-to-bring-when-meeting-your-lawyer.html

Foreclosures, Timothy Kingcade Posts

More than Half of Underwater Homeowners Still Struggling

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Home values in the U.S. are growing at such a slow rate, many struggling homeowners may be stuck with their mortgages for years to come. Zillow’s Negative Equity Report sheds some light on the situation. When a homeowner’s mortgage balance is higher than the fair market value of their property, it is called an “underwater” mortgage. Of those homeowners who were underwater, nearly half—about 4 million—owed 20% or more of their home’s actual value. In 2015’s first quarter, 15.4% of homeowners had negative equity in their home. While this is a decrease from 16.9% in 2014’s last quarter, the outlook is grim for homeowners who want to sell. Also, the report showed that lower-end homes were more than three times as likely to have negative equity as higher valued homes.

With spring and summer marking the busiest time of year for buying and selling homes, there has been a spike in demand. Unfortunately, many homeowners remain stuck because they cannot afford to sell at the buyers desired price. While it is great news to see the amount of negative equity decreasing across the nation, the extent of negative equity is a concern for many. Millions of Americans’ homes are so far underwater, they may not be able to regain equity for a decade or longer, according to Zillow’s Chief Economist, Dr. Stan Humphries.

The fact that the highest amount of negative equity is found in lower-valued homes means that this imbalance will directly affect future affordable home sales. With so many homeowners stuck underwater, the housing economy will face inflated home prices, limited inventory and a strained growth on home values. Among the 35 largest housing markets, Miami and Detroit were shown to have the greatest amounts of homeowners underwater. Both Miami and Detroit showed more than 60% of homeowners with negative equity and more than 20% percent of those homeowners were underwater.

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 website at www.miamibankruptcy.com.

Source:

http://www.nhbr.com/June-26-2015/4-million-US-homeowners-still-underwater/

http://www.prnewswire.com/news-releases/more-than-half-of-underwater-homeowners-are-nowhere-near-re-surfacing-300098266.html

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

How Puerto Rico’s Bankruptcy Crisis Could Affect Florida

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Puerto Rico’s recent financial crisis has sparked a heated debate among Congress. More than $72 billion in debt, the island territory is ready to declare bankruptcy. However, our nation’s bankruptcy code currently does not allow Puerto Rico access to do so. In a recent statement, Puerto Rico’s governor Garcia Padilla stated that the commonwealth’s debt is far too much for them to handle and now Congress is under pressure to make a decision.

Lawmakers have been considering whether they should implement a legislative solution to allow Puerto Rico to declare bankruptcy. If Congress passes a new law to remedy this, advocates believe it will finally resolve a technical oversight from a 1984 update to the nation’s bankruptcy law. Apparently the update inadvertently excluded Puerto Rico. Since the law says nothing about Puerto Rico, it is currently unable to receive aid. Even though Puerto Rico is supposed to have the same ability as the states, lawmakers called it an “error.”

Puerto Rico’s Resident Commissioner Pedro Pierluisi (D), is working to build support for legislation, as well as Senators Chuck Schumer (D-N.Y.) and Richard Blumenthal (D-Conn.), who are also working to build support for similar legislation in the Senate. Former Florida Governor Jeb Bush (R) expressed support for the bankruptcy proposal when he visited Puerto Rico in April. Hillary Clinton also expressed her support for allowing Puerto Rico to declare bankruptcy. At this time, the path ahead is unclear but Pierluisi states that he hopes to see the bill move before Sept. 1, 2015.

Meanwhile, many investors oppose the possible change, fearing that they too might go bankrupt if the law does pass. Skeptics say that the law would put billions of investors’ dollars at risk across the country. Even with a granted bankruptcy, many feel this will not solve all of Puerto Rico’s financial problems. Puerto Rico’s financial troubles have been long standing, since the territory was hit hard by the global financial collapse of 2007. Since then, many Puerto Ricans have moved to the U.S. mainland, namely Florida, to seek better opportunities.

More than 2 million Puerto Ricans reside in Florida. These numbers continue to grow as Puerto Rico looses approximately 1% of its population every year as thousands migrate to Florida’s more robust economy. South Florida is one of Puerto Rico’s largest trade partners. As a result, millions of Puerto Ricans living and working in Florida are an important part of the economy on the island. Unfortunately, if Puerto Rico defaults, Florida’s economy will certainly be affected.

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, 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.

Sources:

http://thehill.com/policy/finance/246820-puerto-rican-debt-crisis-hits-congress

http://www.miaminewtimes.com/news/puerto-rico-is-broke-what-you-need-to-know-about-looming-bankruptcy-7718094

Bankruptcy Law, Timothy Kingcade Posts

Bankruptcy is an Option to Consider for Some Retirees

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Many retirees might not consider bankruptcy as a viable option to help their financial situation. However, if you are struggling financially, bankruptcy may be the best way to protect your retirement assets from creditors. Today, more seniors are considering bankruptcy as an option in retirement.

A Chapter 7 bankruptcy requires at least $10,000 of outstanding unsecured debt (such as credit cards, taxes, medical bills, and court ordered money judgments) in order to file.  Filing for bankruptcy can significantly help you get rid of unwanted debt in your golden years. For retirees with a second mortgage, they may want to consider a Chapter 13 bankruptcy. In a recent U.S. Supreme court ruling, it was decided that filing for a Chapter 7 bankruptcy will not allow homeowners to cancel a second mortgage if their homes are not worth the value of their first mortgage.

Retirees would likely be able to qualify for bankruptcy, regardless of their retirement savings, because filings are based on a six-month average of income. Even if you receive more income from Social Security, a Chapter 7 bankruptcy would consider it protected. Other protected assets include 401(k) plans, IRAs, and public retirement pensions. While a bankruptcy filing will remain on your credit report for 10 years, the benefits of filing for bankruptcy often outweigh the cost.

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, 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.

Source:
http://www.thestreet.com/story/13177003/1/why-some-retired-people-might-consider-filing-for-bankruptcy.html
http://www.wsj.com/article_email/supreme-court-underwater-homeowners-cant-void-second-mortgages-in-bankruptcy-1433173699-lMyQjAxMTA1MDA0MTIwMjEyWj

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

Bankruptcy’s “Undue Hardship” Requirement Increasingly Difficult for Students to Meet

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For many consumers, student loan debt has become a major financial burden. When it becomes too difficult to afford basic living expenses, some turn to bankruptcy as an option. However, if you do not meet the undue hardship requirements, your student loan debt cannot be discharged.

This is exactly what happened to a 45-year-old Maryland woman who was struggling with growing student loan debt. Despite being unemployed, disabled and living far below the poverty line, the court did not allow her to discharge over $37,000 in student loan debt. The reason behind why the judge declined the request was because she had not made any good-faith attempts to repay her loans.

If you have student loan debt that you would like discharged in bankruptcy, an “undue hardship” test is required by the bankruptcy code. This is where you must be able to prove that repaying your student loans would cause “undue hardship” on your life. Unlike credit card debt, the only way to remove student loan debt when filing for bankruptcy is through the undue hardship test. Since the test is not regulated by any law, the courts must determine the severity of the debtor’s circumstances to qualify them for relief.

A three-pronged test can be used to decide whether paying back a student loan would be too difficult for you. The following three items must be proven in order to qualify:

• You must prove that you are unable to maintain a minimal standard of living, while repaying the debt;
• You must prove that your current destitute circumstances will last for a long time;
• You must show that you have made “good-faith efforts” to repay your loan in the past.

Should you fail to adequately prove these three items, you could be denied the option of discharging your student loan debt in bankruptcy. If this occurs, you may also seek help from a federal loan-consolidation program. While a consolidation program would not completely discharge your student loan debt, it could offer a repayment plan that might be more manageable for you.

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 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, 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.

Source:
http://www.bloomberg.com/news/articles/2015-06-22/courts-rule-that-disabled-woman-living-below-the-poverty-line-must-repay-student-loans

Bankruptcy Law, Timothy Kingcade Posts

Is Bankruptcy An Option for Those With Good Credit but Mounting Hospital Bills?

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Several factors come into play when deciding whether or not you should file for bankruptcy because of looming medical bills. If you have good credit, you may want to handle the issue outside of bankruptcy. It is true that filing for bankruptcy will affect your credit, but making late payments or missing them altogether would be more harmful to your credit. Also, there is the possibility of your medical provider suing you, followed by wage garnishment. If you are unsure of how to handle medical bills with good credit, now is the time to review all of your options before it is too late.

Bankruptcy Options

If your medical provider is unable to work with you regarding your medical bills, creditors will likely pursue you for payment, and their collection actions will begin to appear on your credit. If the provider sues you and receives a judgment, they could garnish your wages, which can put even more financial stress on you. By filing for bankruptcy, you can stop further collection attempts and prevent wage garnishment from happening.

For those who do not earn a lot of money and have assets with little or no equity, filing for Chapter 7 bankruptcy may be the best option. Not only will this cease collection attempts, it can result in your medical debt being wiped away completely.  Many consumers believe that they should only file for bankruptcy if they have bad credit. This is not true. Many debtors file Chapter 7 on a single, but substantial debt. Medical debt is an unsecured debt and can be easily discharged in a Chapter 7 bankruptcy.

Non-bankruptcy Options

You may try to negotiate a settlement with your medical provider directly. If all insurance payments have been made, and your bill was for uninsured medical costs, the medical provider may waive a part of your bill. If you qualify for the Hospital Care Assurance Program (HCAP), you may be able to receive free or reduced hospital care, based on your income. Your hospital’s financial aid counselor can help you with this option. Under the Affordable Care Act (ACA), non-profit hospitals must provide free or low-cost coverage for low-income individuals.

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, 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.

Source:
http://www.nolo.com/legal-encyclopedia/i-great-credit-huge-medical-bill-should-i-file-bankruptcy.html

Bankruptcy Law, Timothy Kingcade Posts

Florida Music Producer Files for Chapter 7 Bankruptcy as His $70 Million Fortune Dwindles

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Music Producer Scott Storch recently filed for bankruptcy in Florida, after allowing his once $70 million fortune to dwindle down to just $3,600 in assets. The hip hop prodigy had once been highly successful, producing popular hits for Snoop Dogg, Justin Timberlake, Christina Aguilera, and Beyonce. At 41 years old, Storch has managed to land himself $4.4 million in debt, according to the Daily News.

Exotic cars, prime real estate, jets, and lavish jewelry were among the items Storch spent his millions on, prior to his bankruptcy. Now, Storch has only $100 in cash, $500 in clothing and a $3,000 watch to his name. The court filing reveals that Storch valued his corporations, Tuff Jew Productions and Storch Music at $0. This comes as a shock, for a millionaire who once held night-long parties at his exclusive Palm Island 10-bedroom mansion in Miami and owned a luxury 117-foot yacht.

This is not the first time Storch has suffered financial woes due to his extravagant lifestyle. In 2009, he was reported to have blown an estimated $30 million in just three years. That same year, he filed for Chapter 13 bankruptcy and his $10 million waterfront mansion was foreclosed on.

In an interview with MTV, Storch acknowledged that his poor decisions had caused him to become poor financially. He also referred to his lavish expenditures as, “ego investments,” which have now forced the producer to change his entire lifestyle.

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, 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.

Source:
http://www.nydailynews.com/entertainment/gossip/scott-storch-files-bankruptcy-100-cash-report-article-1.2269224
http://www.huffingtonpost.com/2015/06/25/scott-storch-bankruptcy_n_7661638.html

Bankruptcy Law, Student Loans

How to Deal with a Student Loan Wage Garnishment

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Imagine you have received a warning letter, stating that your student loans are in default and you may face garnishment of your wages. Or maybe your employer has already garnished your wages. If this has happened to you, it is important to examine your options carefully.

Certain reasons may allow you to challenge a student loan wage garnishment based on your income, employment status, the procedures that are followed when starting the garnishment, and other details. The sooner you address a student loan wage garnishment, the more likely you may be successful in reducing or stopping the garnishment.

First, you will want to find out why your employer is garnishing your wages. This cannot occur unless you are in default of your student loans. Defaulting on your student loans means you have not made a payment for more than 270 days. Loans may vary, so it is a good idea to review the promissory note you signed when you took out your loan.

Your loan servicer is required to give you 30-day’s notice, with a “Notice of Intent to Garnish” before garnishing your wages. The following information should be included in the notice. You have the right to:

• Request and inspect copies of your student loan records;
• Request a hearing to present evidence that the garnishment should not be allowed;
• Enter into a repayment plan with the loan servicer.

Requesting a Hearing

If you are in default, your employer can begin the garnishment process with your loan servicer. The loan servicer contacts your employer to determine your earnings and based upon the information provided, the servicer calculates the amount that can be legally garnished from your wages. The amount is typically 15% of your disposable earnings.

You may request a Hearing to Challenge a Student Loan Wage Garnishment because of the following reasons:

• You have filed for bankruptcy;
• You are already on a repayment plan;
• You qualify for forgiveness, cancellation, or discharge of your loan;
• You were involuntarily terminated from your last job of less than 12 months;
• You have already repaid your loan, the loan was forgiven, or you no longer owe funds.

Stopping a Wage Garnishment

If your income is very low, you may be exempt from garnishment. Also, if your employer is taking too much out of your paycheck, contact your loan servicer and request a correction. Another way to avoid wage garnishment is to place the debt into a new Direct Consolidation Loan with the U.S. Department of Education. This will allow you to enter an income based repayment plan, with your monthly payment based on your income or available budget. This will allow your new loan to be reported as current.

You may also stop wage garnishments with voluntary payments. Voluntary payments offer many advantages over garnishment, such as improving your credit rating or reinstating eligibility for federal student loans in the future. You may also opt for a reasonable repayment plan with the Department of Education. Payments may be as low as $5 and if you commit to the required five required payments, the wage garnishment will stop. Once the loan is rehabilitated you can return to a good status with the Department of Education.

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 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, 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.

Source:
http://www.nolo.com/legal-encyclopedia/challenging-student-loan-wage-garnishment.html

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

Private Student Loans May Prove Too Risky for Students

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When we think of student loans, we often think of federal loans offered by the government. However, private student loans are another type of loan that students should be wary of. Private loans, which have been termed as the “Wild West” of student borrowing, represent a potentially dangerous trap for consumers. These make up a significant yet often overlooked part of the nation’s $1.2 trillion of student loan debt. Approximately $150 billion of U.S. student debt comes in the form of private loans, which can be issued by banks and directly from schools.

According to a recent investigation by the Miami Herald, many students attending for-profit colleges claimed to have been lied to and lured into enrolling in their school’s loan program. Interestingly, many for-profit colleges were reported to have extremely high private loan default rates. Recently, the U.S. Secretary of Education unveiled the outline for a massive student loan forgiveness plan. The option will focus on the long-overlooked provision of federal law that allows borrowers to seek a clean slate if their school is guilty of misconduct.

According to financial aid experts, private loans should be utilized only as a last resort. Unlike federal student loans, private student loans:

  • Often demand their own separate monthly payments;
  • Have far less flexible repayment options;
  • Have extremely high interest rates;
  • Are NOT eligible for loan forgiveness programs;
  • Will NOT not be included in the newly introduced option, which allows relief from student loan debt if a student is defrauded by their college.

A predatory-lending lawsuit has been filed by the federal Consumer Financial Protection Bureau (CFPB), against ITT Technical Institute. Some of their private loans had interest rates as high as 16.25 percent, with an origination fee as high as 10 percent. While the college disputes the CFPB’s allegations of fraud, the U.S Securities and Exchange Commission sued ITT’s top executives last month. Allegedly, ITT tried to hide its high rate of private loan defaults from auditors and investors.

The American Student Financial Group (ASFG), which has helped administer Dade Medical College’s private loans, is also facing a lawsuit. Dade Medical College of Coral Gables had more than 2/3 of their students with private loans in default. One student was instructed to drop her monthly payments at the campus, only to later receive a “delinquent” letter from ASFG, stating that she was more than six months behind on her payments.

Students taking out private loans often do not realize that these are far riskier than federal loans. A report by the Consumer Financial Protection Bureau found that many borrowers who took out private loans had not maxed out on federal loans, which should always come first before private loans are even considered. Even though for-profit school default rates are nearly twice as high at non-profit schools, students still take out private loans. Some for-profit students complained that they were even pressured into taking out private loans they did not want.

Many colleges have convinced students to accept a “forbearance,” where the student temporarily postpones any payments, the past due balance is added to the loan principal, and the account is made current. Unfortunately, forbearance is a short-term solution that does not solve the larger issue of students who cannot afford to pay back their loans. It also increases the student’s total amount of debt because of accruing interest.

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 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, 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.

Source:

http://www.miamiherald.com/news/local/education/article25678696.html