Kingcade Archives - Page 33 of 48

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

Possible Changes Ahead for Student Loan Debt in Bankruptcy

Posted on May 16, 2019by Admin

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.

Click here to read more on this story.

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

Student Loan Debt Can Affect Your Job in These 13 States

Posted on May 10, 2019by Admin

It is hard to believe that student loan debt can cost you your job. But in 13 states it is legal to revoke a professional license if the borrower defaults on their student loan debt. These states include:

Arkansas
California
Florida
Georgia
Hawaii
Iowa
Louisiana
Massachusetts
Minnesota
Mississippi
South Dakota
Tennessee
Texas

All of these states have laws on the books that make it possible for a professional license to be revoked in the event a borrower defaults on his or her student loans.

This situation puts borrowers at a distinct disadvantage in these states. After all, you need to be able to work to continue making student loan payments every month. However, if your professional license is revoked due to your student loan burden, how are you able to continue paying on your loans?

Many different professions require a license for a person to work in that specific career field. According to the National Conference of State Legislatures, approximately 25 percent of all U.S. workers need to hold a license to work in their field, including lawyers, doctors, nurses, teachers, and hair stylists. For many of these individuals, not only did they need to go through years of education to work in their profession, but they also had to obtain a license, which can be a difficult and expensive process. Without that license, they are not able to earn a living in their respective fields.

Recently, more than 100 Florida healthcare workers lost their licenses to practice medicine due to their inability to repay their student loans. If someone is struggling to pay his or her student loan obligations, it can often be beneficial to first reach out to the loan servicer to see if an arrangement can be made. For federal student loans, borrowers have the option of forbearance or deferment. However, this option can add thousands of dollars to the loan balance, as the interest will continue to accrue.

Bipartisan legislation was introduced last month in Congress that would prohibit states from taking these types of measures to penalize student loan borrowers who default on a federal student loan. Six states, including Alaska, Illinois, Kentucky, North Dakota, Virginia and Washington already have enacted laws that prohibit this practice.

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.usnews.com/education/blogs/student-loan-ranger/articles/2019-04-10/these-states-could-revoke-your-professional-license-over-student-loan-debt

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

How Divorce Can Hurt Your Credit Score

Posted on May 9, 2019by Admin

Divorce can not only wreak havoc on your emotional state, it can have a significant impact on your financial health as well. Many people discover this too late and end up having to file for bankruptcy within a year of divorce.

The process of divorce itself does not automatically hurt a person’s credit score. In fact, a person’s marital status is not even reflected on a his or her credit report. Problems arise when decisions made during settlement negotiations in a divorce come back to haunt one or both parties later. What complicates the issue is that divorce can lead to a lot of non-dischargeable debt, such as spousal or child support, which cannot be discharged in bankruptcy.

A divorce decree will take joint assets and debts and assign responsibility for these debts or ownership of the asset to one party. However, when it comes to creditors, the divorce decree is only a piece of paper. For the most part, creditors or debt collectors do not honor divorce decrees, which means if your ex-spouse was ordered to pay on a debt but does not follow through on this obligation, your credit could suffer, as well.

Additionally, joint accounts will continue to stay on both spouse’s credit reports, regardless of the divorce decree. If your ex-spouse is responsible for continuing to pay on a joint account and misses a payment, this late payment will not just show up on the ex-spouse’s credit report but yours as well.

Studies have shown that divorce can be financially harder on women’s credit although the impact is not necessarily direct. According to a study by Experian, 54 percent of divorced women surveyed said that their credit score dropped after the end of their marriage. Because of the unique challenges that women face when it comes to finances and family dynamics, they can be at a distinct disadvantage after a marriage ends.

Certain steps can be taken to protect your credit following a divorce. After the divorce is final, make sure and close any joint credit cards shared with your ex-spouse and remove him or her as an authorized user from any of the credit cards that are in your sole name. It can also help to freeze your credit with all three credit reporting agencies in the event your ex-spouse tries to ruin your credit actively by opening fraudulent accounts in your name.

Sometimes, no matter how hard you try, your credit will take a hit after a divorce. For example, if you were a stay-at-home parent in a marriage and are suddenly responsible for extra expenses, you may struggle with making payments on time, which could hurt your credit. Many individuals find themselves filing for bankruptcy following a divorce to receive protection from creditors and get their financial future back on track. If you are struggling with insurmountable debt following your divorce, our experienced Miami bankruptcy attorneys can help.

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.bankrate.com/personal-finance/credit/divorce-hurts-credit-women/

Bankruptcy Law, Debt Relief, Student Loans

Another Broken Promise to Student Loan Borrowers: Public Service Loan Forgiveness

Posted on May 8, 2019by Admin

Public Service Loan Forgiveness Program Proves Unforgiving for Borrowers

A program that was once promoted as a way for student loan borrowers to receive forgiveness for their student loans is now coming under fire after it has been discovered that 99 percent of its applicants have been rejected.

The Public Service Loan Forgiveness Program was created in 2007 and promised to cancel any remaining student debt for those who work government jobs or for non-profit organizations and have been making continuous payments on their student loans for 10 years. Many teachers, public defenders, Peace Corps workers, and law enforcement officers have applied for the student loan forgiveness offered by the program.

It is estimated that over 73,000 borrowers have applied for debt forgiveness as of March 31, 2019, according to data from the U.S. Department of Education. However, only 864 of these borrowers have had their loans forgiven. In fact, only one percent of all Public Service Loan Forgiveness (PSLF) applications submitted were approved for loan forgiveness. This rate of approval leaves borrowers frustrated and confused as to why they worked so hard to qualify for a program that is now failing them.

Consumer advocates claim that the legislation was poorly written while others claim that mismanagement by loan servicers has led to the issues these borrowers are now facing.

According to the breakdown from the U.S. Department of Education, 16 percent of the denials were due to the borrower having the wrong type of loan while 25 percent were due to information missing in the applications. In addition, 53 percent of applications were denied due to the borrower not making enough payments.

One of the major issues that borrowers are discovering is that while their loans are federally-guaranteed, they are actually privately owned. Many law schools have been accused of offering only private student loans in their financial-aid packages but not clarifying this fact to the borrower. Congress has fixed this issue by eliminating federally-guaranteed private loans as of 2010, but if you are a borrower who took out one of those loans before that time, this fact may hurt your chances of qualifying for the loan forgiveness.

Government officials have also been accused of not properly educating borrowers on the requirements of the program or publishing clear guidelines on which employers qualify as a public-service organization and which do not, another issue that has resulted in denials for many borrowers.

Click here to read more on this story.

Bankruptcy Law, Student Loans, Timothy Kingcade Posts

99 Percent of Public Service Student Loan Forgiveness Applicants Rejected

Posted on May 7, 2019by Admin

According to recent U.S. Department of Education statistics, more than 99 percent of people who have applied for available public service student loan forgiveness have been rejected. As of December 31, 2018, it was reported that 65,500 total applications for the public service student loan forgiveness program had been submitted. However, of this total, 58,000 applications had been processed with the majority of them resulting in denials. An additional 7,200 applications were marked as pending.

The program’s requirements are complicated, and not well-explained to qualifying borrowers. Approval requires more than simply working in public service. The Public Service Student Loan Forgiveness Program is offered through the federal government and requires the borrower work full-time, meaning more than 30 hours per week, in an eligible federal, state or local public service job. The borrower can also work for a 501(c)(3) nonprofit, so long as the position is a full-time, eligible one. The borrower must make 120 eligible on-time payments to qualify.

Several different reasons were given for these denials. Seventy-three percent of these rejected applications were denied due to the applicant not meeting the “program’s requirements.” These requirements could mean either the borrower did not have student loans that were eligible for forgiveness, did not have qualifying employment, or did not make the 120 consecutive required qualifying student loan payments. Another 25 percent of these student loan forgiveness applications were denied because the applications were incomplete or had missing information on the employment certification form.

The report indicated that only 610 applications for student loan forgiveness had been approved and that 338 borrowers had received a collective amount of $21.1 million in public service student loan forgiveness. Less than 0.5 percent of the applications submitted were successful.

Click here to read more on this story.

Bankruptcy Law, Credit, Debt Relief, Timothy Kingcade Posts

Tips for Buying a Home Post Bankruptcy

Posted on May 6, 2019by Admin

Many people assume that filing for bankruptcy means that they will never be able to qualify for a home loan or take out credit again. This is one of the many bankruptcy myths out there. The following steps can help you achieve the goal of purchasing a home post-bankruptcy.

Review Your Financial Situation

After receiving your fresh start from bankruptcy, you should review your financial situation. Ensure that all of the debts that would have qualified for discharge in a bankruptcy case have, in fact, been discharged. It also helps to get a clear picture of where you are financially by reviewing your credit report. Most financial experts recommend you review your credit report every year to ensure that no mistakes exist on the report and to ensure that progress is being made in rebuilding your credit.

Establish a Budget

Not only is it helpful to get a good idea of your financial situation by reviewing your credit report and keeping tabs on your progress in rebuilding your credit, it is also important to establish and stick to a budget. Review your monthly household expenses, as well as your monthly income. Lay out any upcoming annual expenses, including taxes or vehicle registration, and make sure enough money is available to pay for all of these necessary expenses. If any additional funds are available after all needed expenses are met, use this money to help build up a savings for a down payment, as well as unexpected emergency expenses. Stick to this budget throughout the year, as much as possible to help build up savings for a down payment on a home.

One practical way to grow your savings is to follow the adage of paying yourself first. When creating a budget, make sure that putting money into savings is a priority by doing it before you use any extra money on unnecessary expenses. While the more you are able to put away into savings is better, also be realistic in how much you set aside for savings. Do not stretch yourself too thin to the point where you have nothing left for any other costs and expenditures.

Rebuild Your Credit

Building up savings is important, but it is equally important to rebuild your credit after bankruptcy. One important tool used by bankruptcy filers to rebuild credit is a secured credit card. These types of cards carry lower spending limits and higher interest rates but using a secured credit card for a short period of time can help rebuild credit. After a set period of time, you can begin using a conventional credit card, so long as the balance is kept low and paid in full every month. It also helps to continue paying all bills on time and not missing payments, which will improve your credit score over time.

Formulate a Plan

You should go into the home purchasing process with a plan in mind. Calculate what type of down payment you can afford, but also keep in mind what type of monthly mortgage payment your budget can handle. Financial experts recommend that you not spend more than 28 percent of your income on housing costs. Also ensure that your budget allows for additional expenses, such as regular maintenance and costs that come along with home ownership. If you have a house you are interested in, make sure you schedule a thorough inspection to ensure that no additional, unidentified problems come along with the purchase.

Get Organized

Before applying for a mortgage, it is recommended that you get yourself organized and prepared with all of the financial information that will be required for a mortgage application. If you have just completed a bankruptcy case, odds are you are familiar with compiling important financial documentation, including paystubs, tax returns, list of assets and other financial documentation. Common documentation that is required includes bank, credit card and other loan statements, tax records, insurance documents, employment records, paystubs, and investment records. If you have recently gone through a bankruptcy, you may also need to provide legal documentation, such as your bankruptcy petition.

Research Your Mortgage Options

It pays to do the research to determine the best available lending options. Conventional mortgages are available through private lenders, mortgage companies, commercial banks and credit unions. These types of mortgages tend to be more rigid in their criteria. The Federal Housing Administration (FHA) also offers loans that are backed by the government. These loans are a little more flexible in their criteria but come with other restrictions on the person’s ability to flip the property or rent it out later. FHA loans, however, are beneficial for first-time or lower-income homeowners. Be sure to research the different interest rate options available before signing on the dotted line. Financing can be done through a fixed-rate mortgage, which locks the purchaser into an interest rate at the time he or she signs loan documents, or an adjustable rate mortgage, which can mean rates can fluctuate with the market.

How smoothly purchasing a home after bankruptcy goes can depend heavily on the type of consumer bankruptcy that was filed, whether it be Chapter 7 or Chapter 13 bankruptcy, and the type of loan being sought. Mortgage lenders have different “seasoning periods” that determine when someone is ready to receive a mortgage following a bankruptcy or foreclosure. For a Chapter 7 bankruptcy, the period usually is four-years after discharge for a conventional mortgage or two years for a VA or FHA loan. However, for a Chapter 13 bankruptcy, a borrower may be able to get a conventional mortgage just two years after receiving a discharge or even less than two years if the borrower is seeking a VA or FHA mortgage.

Related Resources:

https://blog.credit.com/2017/11/5-steps-to-buying-a-home-after-bankruptcy-115998/

https://blog.credit.com/2014/10/how-soon-can-i-buy-a-house-after-bankruptcy-or-foreclosure-98939/

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

One in Four Millennials Depleting Their 401(k)s to Pay Down Debt

Posted on May 3, 2019by Admin

According to a new report released by Merrill Lynch and Age Wave, one in four consumers under the age of 34 have made the decision to take money out of their retirement accounts to try and get out of debt. Of the reasons reported for why these individuals took money out of their retirement accounts was to pay down student loan debt or credit card debt.

This is a critical mistake and one that comes with a 10 percent tax penalty, not to mention more long-term consequences. Since any money that goes into a 401(k) account is from pre-tax dollars, the IRS taxes money taken from a 401(k) at a higher rate than normal income.

Not only will a person be paying a higher amount in taxes on money taken from a 401(k), but they will also be jeopardizing their retirement and borrowing against their future wealth. The goal of retiring can seem far off for millennials, but the earlier you plan and save for retirement the better.

The fact that younger consumers feel they have no choice but to reach into their retirement savings comes as no surprise, especially considering the fact that many of these individuals carry a significant amount of credit card and student loan debt. This is before some of them even apply for their first job.

It is estimated that Americans hold a total of $1.6 trillion in student loan debt. The average undergraduate student graduates with approximately $37,000 in student loan debt, according to the Merrill Lynch study. On top of that, these individuals also are carrying an average of $3,700 credit card debt. However, despite this fact, financial experts do not advise using retirement savings to pay off debt.

It is important that consumers be aware of the fact that money in 401(k) accounts is protected in bankruptcy. In fact, social security, 401(k)’s and pensions worth up to $1.245 million are all exempt from creditors during bankruptcy. This means that retirement income and savings are out of reach and protected under federal law. A Chapter 7 bankruptcy allows you to hold onto all of your retirement savings and keep every penny of your 401(k).

However, this is only the case if the money remains in your 401(k) retirement account. Removing funds from the 401(k) or any retirement account before filing for bankruptcy turns the funds from a protected asset to an unprotected asset.

If the amount of debt you are struggling to pay is so unmanageable that you are considering filing for bankruptcy, it is important to remember that retirement savings are protected under Florida’s bankruptcy exemptions. It is important to speak with an attorney, especially if you have recently lost your job and have considered pulling from your retirement savings to help pay for day-to-day living expenses.

Related Resource:

https://www.cbsnews.com/news/one-in-four-millennials-with-401ks-are-raiding-retirement-savings-early-to-pay-down-debt/

Debt Relief, Timothy Kingcade Posts

U.S. Supreme Court To Decide on Debt Collection Violations Case

Posted on May 2, 2019by Admin

The U.S. Supreme Court is currently deciding a case that could change how harshly debt collectors will be penalized after they pursue a debt that a person is no longer is legally obligated to pay. More specifically, the court will be deciding whether debt collectors should be given some leniency in fighting fines imposed on them from pursuing collections after a consumer has received a bankruptcy discharge on a debt.

Consumer advocates worry that the case could weaken protections for Americans that file for bankruptcy protection. Debt collectors are arguing that it is not that easy to see that a debt has been discharged, especially in cases where the law does not allow for a debt to be discharged.

For the most part, bankruptcy rules are fairly strict on creditors pursuing collection on a debt that has been discharged in a bankruptcy. If a creditor has received notification of a bankruptcy discharge but still tries to collect on that discharged debt, the creditor can be held in contempt and face serious fines.

Oral arguments were heard before the U.S. Supreme Court justices on Wednesday from both sides. It is estimated that approximately 750,000 consumers were successfully able to receive a bankruptcy discharge in the twelve months immediately preceding September 30, 2018. However, after these individuals received their discharge, no one tracks just how many debt collectors continue to pursue any debt that was discharged for these individuals in bankruptcy.

One of the major concerns brought up by Chief Justice John Roberts had to do with who would be the responsible party for showing that a debt collector knew about a bankruptcy filing, as well as who would be paying for legal disputes over alleged violations. The Chief Justice made a statement to the effect that it should be on the creditor to bear the risk of making the decision on whether to proceed on a debt, including the cost of legal fees.

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 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.

Bankruptcy Law, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Debt Collectors May Soon Be Able to Text and Email Consumers

Posted on April 25, 2019by Admin

Debt collectors may soon have even more ways to reach consumers who are past-due on their debts. A new proposed rule from the Consumer Financial Protection Bureau (CFPB) may make it possible for debt collectors to contact consumers via email or text communications as they attempt to receive payment on overdue debts.

This news does not come as a pleasant surprise for many. After all, debt collectors do not have a good reputation for this very reason. They can be persistent, if not relentless, when it comes to debt collection.

It is reported that the CFPB received a record 84,500 complaints from consumers about debt collectors in 2017. The industry earns $10.9 billion annually and does whatever it takes to receive payment on a debt. The industry does not seem to be slowing down either. Since the end of the recession, American consumers have taken on more debt, including car loans, mortgages and credit card debt.

This news follows recent revelations that are now coming out about the direction the CFPB has taken since the start of the Trump administration. Many critics argue that this move is further evidence that the agency is no longer going after corporations for financial abuses as hard as they have in the past. After all, this latest move does not seem to protect consumers as much as it protects the companies seeking to reach these consumers.

Arguably, the number of communications from collectors will increase, if and when this rule takes effect. However, the law does limit the frequency and content of communication being received. The Fair Debt Collection Practices Act (FDCPA) provides rules that collectors must follow. However, this law was originally written in 1977, which means it has not been updated to include email and texting technology. It is unclear at this point whether the law will be modified to reflect the updates in technology.

Without having any strict regulations to guide debt collectors on how often they can communicate with a person via text or email, collectors are essentially free to do what they want when contacting someone. The number one piece of advice we give to people dealing with creditors is to be honest. If you are unable to make a payment, do not make a promise to do so and never hide from creditors.

If you are ready to put an end to creditor harassment and make a fresh start, consult an experienced Miami bankruptcy attorney at Kingcade Garcia McMaken. 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.cbsnews.com/news/text-me-debt-collectors-may-soon-be-able-to-text-and-email-consumers/

Debt Relief, Timothy Kingcade Posts

Mulvaney’s Role in Dismantling Consumer Financial Protection Bureau Highlighted in New York Times Magazine

Posted on April 23, 2019by Admin

After Mick Mulvaney was appointed as the acting director of the Consumer Financial Protection Bureau (CFPB), following the start of President Trump’s term, many consumer advocates feared that he would bring sweeping changes that would undo any of the progress that the CFPB had made in protecting consumers. A recent opinion piece published by New York Times Magazine highlighted many of the events following Mulvaney’s appointment that showed that many of those fears were, in fact, quite valid.

The CFPB was originally created with the assistance of Senator Elizabeth Warren, following the 2008 financial crisis. The agency was meant to be an economic watchdog for American consumers and protect them from predatory lenders. However, after its creation, opponents of the agency in the Republican party disputed efforts made by the CFPB. It was not surprising that President Trump would appoint someone who did not fully support the agency’s mission to run the CFPB soon after being elected.

Shortly after Mulvaney began working at the CFPB, he ordered a total hiring freeze, put many enforcement cases on hold and also informed the Federal Reserve, the agency that funded the CFPB a zero dollar budget, stating that the CFPB could handle its affairs with money already in their account.

Within weeks, Mulvaney announced that he would reconsider one of the bureau’s major long-term initiatives: rules to restrict payday loans, products that are marketed to the working poor as an emergency lifeline but frequently leave them buried in debt.

“Anybody who thinks that a Trump-administration C.F.P.B. would be the same as an Obama-administration C.F.P.B. is simply being naïve,” Mulvaney told reporters. “Elections have consequences at every agency.”

A payday loan is a short-term loan given in exchange for the borrower’s paycheck, along with a fee paid to the lender. Mulvaney was not supportive of the CFPB’s role in restricting payday lenders. While he agreed that these loans were not always financially sound, it was his stated position that borrowers should be wiser and not take out these loans without understanding the terms.

However, the CFPB and Warren previously viewed payday companies as predatory lenders who took advantage of borrowers who were desperate to get out of a bad financial situation.

‘These are entities that suck up billions of dollars a year from people making $25,000 a year. And it’s going into the pockets of the wealthiest people in the world.’

Borrowers take out these loans in a last-ditch effort to pay for an emergency expense but very rarely are informed of the terms in fine print, or misinformed of the consequences if they fail to pay the loan off timely. If a borrower cannot pay the loan off at the end of the period, the companies often roll the older loans into new ones with even higher fees.

Many states offer protection for borrowers when it comes to predatory lending and payday loans. However, it was Warren’s position and the original mission of the CFPB to provide uniform protections for all borrowers nationwide. Florida offers consumers who take out payday loans from licensed lenders certain protections, including the following:

A borrower may borrow up to $500 per loan;
A borrower can only have one outstanding loan at a time;
The maximum fee that can be charged is 10 percent of the total amount borrowed, plus a $5.00 verification fee;
The loan contract cannot exceed 31 days but can also not be less than seven days;
Contract terms that otherwise limit your rights as a borrower are prohibited;
A borrower must pay a previous loan in full and wait a full 24 hours before entering another loan;
If the borrower is not able to pay the loan in full at the end of the term, the lender must give a 60-day grace period without any additional charge.

The New York Times Magazine piece also highlighted the fact that Mulvaney received campaign donations in the past from many different payday lenders, which leads one to question the motivation behind the CFPB’s sudden change in policy when it comes to payday loans. Mulvaney is now working as the President’s Chief of Staff, but the changes made at the CFPB have had longstanding ramifications when it comes to consumer protection from predatory lending practices.

Click here to read more on this story.

Additional Resources:

https://www.accountsrecovery.net/2019/04/16/nyt-feature-details-how-mick-mulvaney-took-apart-the-cfpb/

https://www.flofr.com/sitePages/PaydayLenders.htm