Tag: bankruptcy and student loan debt

Debt Relief, student loan debt, Student Loans

An Alarming Number of Student Borrowers Have Made No Progress on their Loan Balances

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A disturbing number of student loan borrowers who began their repayment plans between 2010 and 2012 have made little to no progress towards reducing the principal balance owed on their student loans. According to a recent report from Moody’s Investor Services, 49 percent of student loan borrowers whose loan repayment plans began during that time have made no progress. Even worse, many of them have seen their balances grow.

This problem could be due to several factors, including poor job prospects and low salaries in their first jobs after graduation. Depending on the degree pursued by each borrower, it can be difficult, if not impossible, to find a viable job that will allow the borrower to make appropriate payments to pay down their student loan debt.

Debt Relief, student loan debt, Student Loans

Changes Coming in 2020 for Student Loan Borrowers

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Student loan debt has reached an all-time high in this country with an estimated $1.6 trillion owed nationwide. Student loan debt is a major issue being discussed in the 2020 presidential race, and it is also an issue being addressed in the current legislative session. The U.S. Department of Education is also considering changes for student lending. No matter how you look at it, major changes are coming in 2020 for student loan borrowers.

These changes come at the height of the student loan debt crisis. According to a recent study from Politico/Morning Consult, more than half of American consumers consider student loan debt to be a major problem facing the country. In fact, student loan debt has now surpassed both credit card and auto debt. With the average college graduate walking away with $30,000 in student loans, which is up from $10,000 in the 1990s.

student loan debt

Six-Figure Parent Loans and the True Cost of Parent PLUS Loans

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Parents will often do anything they need to when it comes to their children, and for many parents, that means taking on student loans for them, on top of the ones they already have left over from their own college education. These loans are normally taken on in the form of Parent PLUS Loans, and can often end up being a struggle for the parent to pay off in the end.

The Parent PLUS program was introduced in the 1980s as a means of financial support for middle- and upper-income families to help pay for their children’s college expenses. Most of the time, parents in these income classes did not qualify for other financial assistance, but the Parent PLUS program allowed them to obtain financing while keeping their liquid assets. However, since that time, the program has also become more popular among lower-income families who may not be able to pay down the loans once they are taken so easily.

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, 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.

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.

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

Student Loan Borrowers Diagnosed with Cancer Still Waiting for Promised Relief

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In September 2018, President Donald Trump signed a bill into law, allowing student loan borrowers who have been diagnosed with cancer to delay their federal student loan payments. This new law was created to allow these individuals to focus on their treatment and not their student loan obligations through the course of their medical treatment and six months afterward. However, just nine months after the law took effect, borrowers who have requested this deferment are still waiting for approval.

The delay seems to be due to the U.S. Department of Education not yet providing student loan providers that administer its federal student loan programs an official application through which qualifying borrowers can apply. While the law may be in effect, service providers have no way to implement it.

The Department of Education insists that they are taking steps towards resolving this problem and creating an application for the cancer deferment. However, many borrowers are questioning why this was not done previously. As of January 2019, the Department of Education asked that the Office of Management and Budget conduct an emergency review and approval of the cancer deferment form created.

The Department of Education is also requiring a 60-day comment period on the proposed form, which is delaying the process even further. With cancer patients, time is of the essence. Many consumer advocates question why the comment period was not shorted to 30 or even 15-days.

Student loan servicers are offering temporary forbearances for borrowers who are seeking the cancer deferment. However, forbearance does not stop interest from accruing on the debt while payments are paused. Deferment, on the other hand, puts payments on hold while pausing interest from accruing, as well.

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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. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

student loan debt, Student Loans

Lawsuit Filed Against Betsy DeVos for Failure to Cancel Defrauded Students’ Debt

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More than 150,000 student loan borrowers have filed a lawsuit against the U.S. Dept. of Education and Education Secretary Betsy DeVos alleging they are being deprived of student loan debt forgiveness they are rightfully entitled to. The lawsuit accuses the Department of Education of failing to implement an Obama-era regulation known as “borrower defense, ” which allows students to have their federal student loans cancelled if their school misled them or engaged in other misconduct.

The attorney representing the Plaintiffs in the case say, “The law is clear: Students who experienced fraud should not be required to pay back federal loans that should never have been made by the Department in the first place.”

Borrower Defense Applications continue to pour in, but it has been reported that the Dept. of Education has not approved or denied a claim since June 2018.  The majority of the complaints concern “for-profit” schools, of which there are some 7,000 around the country, which take in around 15% of government financial aid.

Last year, a federal judge ruled that DeVos’ delays of the borrower defense protections were unlawful.  Still, the agency continues to neglect the applications.

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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. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

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

Possible Changes Ahead for Student Loan Debt in Bankruptcy

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Student loans have traditionally been very difficult for borrowers to discharge in bankruptcy, but this fact may soon change with legislation proposed this week in the U.S. Senate. Lawmakers have introduced a bill that would make it easier for student loan borrowers to cancel their debt in bankruptcy. The measure has been titled the “Student Borrower Bankruptcy Relief Act of 2019” and has the support of 14 Democrats, one Republican, and one Independent Senator.

This legislation marks the first time that the Senate has proposed giving student borrowers the ability to discharge their federal student loans.

The average student will end up taking out $33,310 in 2018 to attend college, according to data from the Institute for College Access & Success. The total amount of student loan debt in the country is approximately $1.5 trillion. It is estimated that the country’s student loan balance will reach $2 trillion by 2022. Financial experts believe that a significant portion of the total debt will never end up being repaid. In fact, more than one-fourth of all student loan borrowers are either in delinquency on their student loan debts or are in default.

For people carrying federal or private student loans, their debts can only be discharged in a bankruptcy case if they can prove that the loans pose an undue hardship. However, no definite test has ever been given on what qualifies as an undue hardship, leaving it as a matter of interpretation for the bankruptcy judge to decide.

Student loan advocates have called for Congress to force the U.S. Department of Education to establish clear rules on when student loan debt can be discharged in bankruptcy. Many argue that the interpretation of what is an undue hardship depends on that specific judge’s interpretation of the law, which can be very unfair to the borrower if the judge hearing his or her case happens to be tough on discharging certain debts.

By making it easier to discharge student loan debt in bankruptcy, it is a distinct possibility that lenders will be more willing to work with a borrower who is struggling to pay on his or her loans. If the borrower is not able to work out a payment plan with the lender, he or she should then have the option to discharge that debt just as easily as other debts in a bankruptcy case and receive a fresh financial start.

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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Source:

https://www.wsj.com/articles/lawmakers-plan-would-let-borrowers-cancel-student-loans-in-bankruptcy-11557440856

 

 

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

Millennials Hold Over $1 Trillion in Debt

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With the increase in student loan debt, it is hard to ignore the effects it is having on a particular generation.  The most recent statistics reveal that “Millennials,” individuals who were born after 1982, hold more than $1 Trillion in debt – much of that being student loan debt.  In fact, the amount has risen 130 percent since 2008. These figures come from the New York Federal Reserve Consumer Credit Panel and are the highest debt levels reported since before the 2007 recession.

Most students end their undergraduate careers with an average of $37,000 in student loan debt. If they choose to move onto graduate studies, that debt can reach six figures before the student is done. Following graduation, most of these students are struggling to meet basic living expenses on top of meeting their monthly student loan payments.

The student loan debt burden has also impacted millennials’ ability to purchase a home. Consumer debt is reported at a record high of $13.5 trillion. Mortgage debt constitutes most consumer debt nationwide, but that is not the case for the millennial generation. Since 2009, mortgage debt increased by only 3.2 percent while student loan debt jumped 102 percent.

Overall, student loans make up the second largest category of consumer debt. Credit cards and auto loans follow. At the end of 2018, car loans made up the third largest percentage of debt in the U.S., followed by credit card debt.

If a borrower is not able to maintain payments on his or her student loan debt, the damage that results to that person’s credit can be significant, and this hit to a credit score can seriously hurt the person’s chances of obtaining a mortgage down the road. This fact could be another reason why fewer millennials are taking out mortgages.

Student loan debt is different from other types of debt. It is currently estimated that somewhere around 40 percent of all student loan borrowers will default at some point on their student loans. Many different mistakes can be made when it comes to student loan repayment. If you believe you qualify for student loan debt relief, speak with an experienced bankruptcy attorney about your options.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Related Resources:

https://www.badcredit.org/average-student-loan-debt/