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

Student Loan Debt Relief Scams to Watch Out For

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

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

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Can you spot the signs of a Debt-Relief Scam?

When bills begin to pile up and collection calls start coming in, people can become so desperate to get out of debt they will believe anything.   Some turn to ‘quick-fix’ debt relief companies that promise to solve their financial problems.  But for many, not only does the relief never come but it puts them even more in debt- sometimes out thousands of dollars.

The Federal Trade Commission announced a $7.9 million settlement with DebtPro 123, a debt-relief agency that scammed people by making false promises.  Here is the anatomy of how the scam worked:

Promotion: DebtPro 123 is not alone.  Look for company names intended to lure vulnerable debtors.  These agencies will make you think they feel your pain and promise to eliminate your debt easily in just a couple of years.

Pitch:  According to the FTC’s complaint, DebtPro 123 told consumers that its “debt resolution program would completely resolve consumers’ credit card and other unsecured debts (including department store accounts, personal loans, medical bills, student loans, and accounts with collection agencies).”

It also boasted: “DebtPro will reduce a client’s total debt by 70 to 80 percent on average including all fees” and “With settlements as low as 10 percent, this means when all is said and done, a client’s savings could be as much as 20 cents on the dollar including our fees.”

Remember the old adage- When it sounds too good to be true, it usually is.

Two-phased program: In the first phase, customers put money in a “Creditor Fund/Settlement Account.”  They were told they needed this money for negotiations with their creditors. In phase two, customers were promised that the company was working on their case to settle with creditors and get rid of their debt.

During this time, customers were advised to stop paying their bills and to cease all communication with their creditors.  Consumers later found out that nothing had been done on their case.  Instead, interest, penalties and fees began to pile up.

Strategy:  The real plan was to make money off desperate people. “For many consumers, more than half of their monthly payment went towards defendants’ fees,” said the FTC. “For consumers who were in the program longer than 18 months, defendants also charged a $49 monthly ‘maintenance fee.’ ”

More failed promises: Debts were not reduced quickly. In fact, many times, the debt-relief company did not start settlement negotiations until after the client had received letters from creditors warning of an impending lawsuit for failure to make debt payments.

In the end, people ended up more in debt, some lost their homes, and others had their wages garnished.

Click here to read more on this story.

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.

 

Bankruptcy Law, Credit, Timothy Kingcade Posts

CFPB Issues Warning about Student Loan Debt Relief Scams

The Consumer Financial Protection Bureau (CFPB) has issued an advisory warning to consumers about student loan debt relief companies. While the CFPB warns all student borrowers to stay away from companies with aggressive marketing tactics that promise savings of thousands of dollars on their loans, it is also taking steps toward stopping these companies from engaging in illegal practices.

In a recent lawsuit against Student Loan Processing, the CFPB and Florida’s Attorney General shut down student loan debt relief company College Education Services for its illegal practices. These scams are all too common. The CFPB has provided some useful tips to help student borrowers recognize the red flags associated with student loan debt relief scams.

1.) Upfront fees. No upfront fees should ever be charged by a student loan debt relief company. In addition, you should not be required to sign a contract with the company. The CFPB notes that free assistance is available through your student loan servicer and advises that oftentimes taking upfront payment before debt relief services have been provided is illegal.

2.) Promises. Student loan debt relief companies will often promise borrowers loan forgiveness or even complete cancellation. The false promise of negotiating with your lender under federal student loan programs is a flat out lie.

3.) Signing documents. Student loan debt relief companies should not require that you sign a “third party authorization” or a “power of attorney.”

4.) Requests for your Federal Student Aid PIN: Borrowers should be extremely cautious of any student loan debt relief company that asks for this information. The CFPB states that, “honest companies will work with you to come up with a plan and will never use your PIN to access your student loan information.”

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 http://www.miamibankruptcy.com.

Related Resources:
http://www.consumerfinancialserviceslawmonitor.com/2014/12/cfpb-issues-warning-to-consumers-and-springs-into-action-against-student-debt-relief-scams/