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

SEC Settles Fraud Charges against ITT Technical Institute

Posted on July 6, 2017by Admin

The fraud case has been settled against ITT Technical Institute, but the Securities Exchange Commission continues to pursue top executives from the college for deceiving investors about the high rates of late payments and the number of defaults on student loans backed by the company.

ITT executives assured investors in conference calls that the programs were performing well when in fact the company was making secret payments on the delinquent accounts to delay defaults, according to the complaint.

ITT Technical Institute ended its operations in September, shutting down 137 campuses after the U.S. Department of Education cut off access to federal loans and grants and threatened to pull the school’s accreditation amid mounting lawsuits and investigations. The company filed for bankruptcy protection, leaving 35,000 students with worthless degrees and many with high interest student loan debt.

The student loan programs are what is at the heart of the SEC lawsuit. ITT created two in-house student loan programs. To get investors to finance the programs, the company offered a guarantee to limit the risk of students not repaying the debt. According to the complaint, if a certain percentage of loans defaulted, the company agreed to cover the principal, interest and fees.

The SEC said investors did not have accurate information about the performance of the debt because ITT kept the loan programs off its balance sheets. Regulators said executives failed to tell investors that the company was facing $30 million in guarantee obligation payments at the end of 2012 and used accounting tricks to cover up the numbers.

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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, Debt Relief, Student Loans

Public Service Student Loan Forgiveness Program- Here’s how you qualify

Posted on May 19, 2017by Admin

The government’s Public Service Loan Forgiveness Program promises to cancel any remaining student debt for those who work government jobs or for non-profit organizations and have been making continuous payments for 10 years. The first borrowers to receive forgiveness will be eligible in October of this year, which is 10 years from the launch of the program.

Many teachers, public defenders, Peace Corps workers, and law enforcement officers may qualify for forgiveness. More than 400,000 people have applied for the program so far, but signing up for the program can be a confusing, (and not surprisingly) complicated process.

Here are 5 steps you can take to help ensure your eligibility:

Find out if your job qualifies. There are three different types of jobs eligible.

Government jobs, which include federal, state, local and tribal government entities, as well as the military, Peace Corps and AmeriCorps positions.
People who work for a 501(c)(3) non-profit.
People who work for a non-profit that does not have 501(c)(3) status, but provides a public service.

Turn in the Employment Certification form annually. Ask your loan servicing company to certify that your employer qualifies on an annual basis and keep detailed records. Otherwise, you risk finding out that your job does not qualify after making years of payments.
Verify you have the right kind of loan. Only Direct Loans qualify for this forgiveness program.
Enroll in an income-driven repayment plan, each year. You must be enrolled in an income-driven repayment plan for at least a portion of your repayments. These plans cap your monthly bill at a certain portion of your income.
Make 120 qualifying monthly payments. FedLoan Servicing will tell you how much you need to pay each month for the payment to count toward the 120 needed to receive debt forgiveness. If you pay any less, it will not count. And if you pay more, it will only count as one payment. Payments must be made no later than 15 days after the due date. Any payments you make while in school, during the six-month grace period after school, or while in deferment or forbearance do not count toward the 120.

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

Americans are Dying with an Average of $62K of Debt

Posted on March 29, 2017by Admin

According to data released in December 2016 by Credit.com, approximately 73 percent of consumers have outstanding debt when they die. On average, those consumers carried a total of $61,554, including mortgage debt. Excluding mortgages, the average balance was $12,875.

The data was collected by Experian’s FileOne database, which includes 220 consumers. Out of the 73 percent of consumers who had debt when they died, approximately 68 percent had credit card balances. The second most common kind of debt was mortgage debt at 37 percent, followed by auto loans at 25 percent, personal loans at 12 percent and student loans at six percent.

Most debt is eligible for cancellation after the borrower dies, such as federal student loan debt. However, the deceased person’s estate becomes responsible for most debt. If someone has enough assets to cover their debts, the creditors get paid and beneficiaries receive whatever remains. If there are not enough assets to satisfy debts, creditors lose out. In most cases, family members do not become responsible for the debt.

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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, Debt Relief, Student Loans, Timothy Kingcade Posts

More than 1.1 Million Borrowers Defaulted on Their Federal Student Loans Last Year

Posted on March 22, 2017by Admin

An average of 3,000 borrowers default on their federal student loans every day. The number increased 17 percent from 2015 to 2016, according to a consumer Federation of America analysis of U.S. Department of Education data.

Despite a growing economy, 42.4 million Americans owed $1.3 trillion in federal student loans last year. By the end of the year more than 4.2 million borrowers were in default. This is up from 3.6 million the previous year, meaning that 1.1 million borrowers went into or re-entered default last year.

How to Avoid Defaulting on Student Loans

If your debt is unmanageable, you have options:

If you have federal student loans, you can qualify for income-based repayment plans. The percentage of federal student loan borrowers enrolled in repayment plans has quadrupled over the past four years. Keep in mind you must re-apply every year for income-based repayment.
If you have private loans you have limited options. Some lenders offer forbearance if borrowers can’t make their payments. The benefits are not as vigorous as they are with federal loans and typically last no more than 12 months.

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

The Student Loan Crisis Facing Older Americans

Posted on January 13, 2017by Admin

When we think of those struggling with student loan debt, we typically think of millenials still living with their parents. However, many boomer parents are struggling, too. According to a report from the federal Consumer Financial Protection Bureau (CFPB), older Americans are carrying an “unprecedented amount of student loan debt into retirement.”

In 2015, older consumers owed an estimated $66.7 billion in student loan debt. Nearly 867,000 borrowers 65 and older owed federal student loans in 2015, now the fastest growing segment of student loan borrowers.

With these new findings, it seems the education debt crisis and retirement are closely tied. A growing number of older borrowers are struggling to make their loan payments, oftentimes due to reduced incomes in retirement.

A growing number of federal student loan borrowers age 65+ had their Social Security benefits reduced or offset because of unpaid student loans – 8,700 in 2005 and 40,000 in 2015. The vast majority of the older borrowers, approximately 73%, took out student loans to finance their children’s or grandchildren’s education. Many of these loans were taken out under the Parent PLUS Loan Program, with a current interest rate of 6.31%, the only federal program that allows parents to borrow for the undergraduate education of their children.

Here are some tips for older borrowers struggling with student loan debt:

If you have co-signed your child or grandchild’s student loan, request the servicer send you an account statement so you can learn the outstanding balance and pay off the loan.

If you are struggling to make federal student loan payments, you may qualify for a payment plan that can substantially cut your costs. For example, if you retire and your income drops substantially, you can apply for an income-based repayment plan. This could reduce your payments and even suspend them.

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Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Student Victims Seek to Become Creditors in ITT’s Bankruptcy

Posted on January 9, 2017by Admin

Five former ITT students have taken matters into their own hands by petitioning a federal bankruptcy court to consider student loan forgiveness as part of the school’s liquidation. The now defunct Corinthian Colleges or ITT Educational Services left students with worthless degrees and mountains of student loan debt. Because tax payers backed most of these loans, the Department of Education has been reluctant to forgive them.

For years federal regulators allowed ITT schools to keep operating, even though they were well aware of the company’s questionable practices. For example, ITT had been under investigation by the Education Department since 2014, and state regulators had accused it of misleading students about the quality of its programs and their job potential upon graduation.

The Consumer Financial Protection Bureau filed a lawsuit against ITT nearly three years ago, accusing the chain of predatory student lending. But even with all of this evidence it hasn’t helped former students of the college discharge their student loan debt.

ITT filed for bankruptcy last year after the Education Department cut off the school’s access to federal student aid. At the time, the company operated 137 campuses in 39 states. The company was successful for years, thanks to the revenues from federal student aid. Over the past 10 years, ITT students took on over $7 billion in debt; roughly $1 billion were private loans.

In a first of its kind approach, student loan borrowers will be at the table, not just banks and regulatory agencies fighting over ITT’s assets. They in fact contributed to the creation of assets at ITT. The five former ITT students involved in the suit are seeking to establish themselves and other former ITT students as creditors in the company’s bankruptcy. Typically a company’s creditors are people or entities to whom it owes money.

ITT reported assets of $389 million and liabilities of $1.1 billion to the bankruptcy court. The company had also deposited $94 million in escrowed funds with the Education Department before it collapsed. That money could go toward some loan forgiveness.

The company’s assets include almost $80 million owed by ITT students who were enrolled at the time of the bankruptcy filing or who had withdrawn funds within the previous 90 days. Some of the $80 million is likely from students who never even had the opportunity to attend a class because of the school’s collapse.

The lawyers fighting on behalf of the students hope the judge will make a legal finding that ITT violated state consumer protection laws. This would make it easier for the students to get their loans canceled by the Department of Education. The lawyers in the case are also requesting that the five students’ claims be asserted on behalf of all former ITT students.

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Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

6 Things College Grads Should Be Doing About Their Student Loans

Posted on July 27, 2016by Admin

On average, college graduates have approximately $37,000 in student loan debt, according to Cappex.com. Most student loan companies allow students a grace period after graduation of six months to one year before they start requiring payments. However, it is important to get your student loans in order immediately after graduation so that you know what to expect down the road.

Below are six things recent grads should be doing to prepare for their student loan repayment.

Get organized. Most students graduate with anywhere between eight and ten separate student loans. As a result, many tend to lose track of their total loan amount by the time they graduate. If you have only taken out loans through the federal government, you can find everything you need to know on the National Student Loan Database System website. This site will simplify your loans in terms of breaking down exactly how much you owe and when you took out each loan. However, if you have also taken out private student loans, it is best to check your credit report. This will show you the status of each loan, the date you opened it and your remaining balances. Also, make sure you note the interest rates for each individual loan.
Determine the Best Monthly Payment for You. Now that you know how much you owe, it is time to determine how much you can afford to pay each month. If you do not select a repayment option, your lender will put you on a standard 10-year repayment plan. When deciding how much you can afford to pay each month, it is best to select highest payment you can afford. This will potentially save you thousands in interest. However, if it means you cannot afford to put money into a retirement fund or a savings account, opt for a lower payment.
Stay on Top of Your Payments. Although student loans take longer to default than other debts, it will negatively impact your credit store if you miss a few payments.
Be Strategic in Paying Off Your Loans. If you have extra money to put toward your student loans, put it toward the loan with the highest interest rate. Also, if you pay extra one month, contact the company to be sure they put the additional amount toward the principal balance. Otherwise, they may treat it as the next month’s payment.
Consider Consolidation. Before you consolidate your loans, make sure you take your interest rates into account. If you have some loans with higher interest rates than others, it might not be the best move to consolidate. If you combine your loans and pay extra some months, you can no longer put the additional amount toward the loan with the higher interest rate.
Educate Yourself on Deferment and Forbearance. Deferment refers to the period when your payments are placed on temporary hold. Sometimes interest does not accrue during the deferment period. Deferment is typically available to students who have enrolled in grad school, are unemployed or experiencing economic hardship. On the other hand, forbearance is what you apply for if you are ineligible for a deferment. This is a time period, typically 12 months, when interest is accrued and added to the principal balance.

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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.

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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, 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.