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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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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, Timothy Kingcade Posts

Certain Private Student Loans Eligible for Discharge in Bankruptcy

Posted on June 23, 2016by Admin

Just because your so-called private student loan uses the term, “student loan” it doesn’t necessarily mean it is one. In fact, for purposes of the U.S. Bankruptcy Code, a student loan must be from an “eligible educational institution” to be considered non-dischargeable. If it does not qualify, discharging the loan can be easier than you think.

A student loan must meet specific bankruptcy code requirements. U.S. Bankruptcy Code states a private student loan must be a “qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986.”

The student loan must be from an “eligible educational institution.” The Department of Education publishes a list every year of the qualifying schools. If an institution is not on the list, the loan is not considered a “student loan” under the Bankruptcy Code. Therefore, it can be automatically discharged in bankruptcy.

So how do you know whether your student loans are from a qualified educational institution?

Make sure you know what type of loan you have. This argument only works for private student loans. Just because your loan is with Sallie Mae or Navient does not signify whether it is a federal or private loan. Go to the National Student Loan Data System, and check if your loan is there.
If your loan is a private rather than a federal student loan, the next step is to see if the loan is from an “eligible educational institution.” The Department of Education publishes a list every year. You will need to locate the list for the year you received your student loans and see if your school is on there.
The law is not always “black and white” when it comes to discharging student loan debt. Oftentimes, it is left to the interpretation of judges on a case-by-case basis. Private student loan debt is the most problematic debt in America. Many courts are finding private student loans should also be considered as an “educational benefit” as that term is understood in the Bankruptcy Code.

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

Federal agency warns student loan companies about automatic defaults

Posted on March 14, 2016by Admin

The Consumer Financial Protection Bureau (CFPB) is giving student loan companies a strict warning when it comes to collecting from borrowers in default when the co-signer of their loan dies or files for bankruptcy. These “auto defaults” leave borrowers with no choice but to repay the loan in full or ruin their credit, making it difficult to purchase a home or car.

This practice often occurs in the private student loan market, where banks and other lenders provide educational financing with loan contracts that give them the right to trigger a default even if the loan is being paid on time. Now the student loan companies are at risk of breaking the law, if they continue with this practice.

When parents or grandparents take on the legal responsibility of a loan, students can get lower interest rates because the co-signers are obligated to repay the debt if the borrower does not.

Lenders often require a co-signer to make the debt more attractive to investors. They will typically release a co-signer from the loan agreement if the borrower has made consistent on-time payments. However, some lenders and loan servicers make this process difficult by having the borrower jump through hoops to get such a release, according the CFPB. They often request proof of graduation, transcripts, employment or salary, and even conduct credit checks.

The bureau first brought attention to auto defaults two years ago after receiving complaints from consumers whose loans were placed in default because of the death or bankruptcy of a co-signer.

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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.

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

Student Loan Debt- Not just a burden to the student

Posted on December 3, 2015by Admin

Ninety-four percent of parents of college students are increasingly feeling the burden of student loan debt, according to a 2014 survey by Citizens Financial Group. More than half of those parents are worried that the cost of college will impact their ability to retire. Parents who cosign on their child’s student loan debt assume equal responsibility for repaying the loan. That means any late payments not only hurt the child’s credit, but the parents as well.

The problem is wide-reaching, but the middle class seems to have been hit the hardest. In many instances, the debt is held by private lenders because federal loans have been maxed out. Those taking out the loans oftentimes do not qualify for need-based aid since their parents make “too much” money.

Parents who are shouldering the burden of student loan debt are encouraged to look for ways to improve their cash flow by reducing monthly expenses like cable bills, refinancing mortgages to lower interest rates and shopping around for the best insurance coverage.

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Bankruptcy Law, Credit, Timothy Kingcade Posts

Private Student Loans Just as Dangerous as Using a Credit Card to Pay for College

Posted on November 12, 2013by Admin

A recent analysis done by the Consumer Financial Protection Bureau’s Student Loan Ombudsman report concluded that private student loans are a “risky and high-cost” method to pay for a college education, “no better than paying for college on a credit card.” These private student loans total approximately $165 billion and account for 15 percent of the nation’s total outstanding student loan debt.

Private student loan repayment was the subject of nearly 65 percent of more than 4,300 complaints received by the Consumer Financial Protection Bureau from October 1, 2012 through September 30, 2013. Repayment concerns included fees, billing, deferment, forbearance, fraud and credit reporting.

What’s most concerning is how borrowers incurred these private student loan debts. “In 2008, a majority of private student loan borrowers took out less in federal student loans than they could have. Of these borrowers, a full quarter took out no federal student aid whatsoever … In large part, private student borrowers fell prey to a range of unsavory marketing tactics… Some lenders deliberately misled borrowers into believing that their private student loans were superior to federal loans.”

The CFPB’s Student Loan Ombudsman is a statutory office created within the Bureau to assist consumers in resolving their issues with private student loan lenders. Through this effort, the CFPB has assisted hundreds of borrowers obtain relief from their lenders. The median monetary recovery is $700; the maximum amount of relief granted thus far is $75,000.

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If you are having trouble making your student loan payments or you have recently defaulted on your federal or private student loans, contact an experienced Miami bankruptcy attorney. Although student loans are often not dischargeable in bankruptcy court, an attorney can help you eliminate other debts and obligations so you can take control of your finances and better handle your student loan debt. 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. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Timothy Kingcade Posts

Student Loan Borrowers Face Payment Processing Pitfalls

Posted on November 1, 2013by Admin

A new report from the Consumer Financial Protection Bureau (CFPB) reveals that the companies hired by lenders to collect payment for private student loans are not always acting in the borrowers’ best interest. In fact, sometimes their actions increase the total cost of higher education. The most common complaint deals with the problem encountered when borrowers try to pay off their loans early or pay them off in a certain order.

Oftentimes, it makes the most sense to pay off the student loan with the highest interest rate first, but the CFPB report found that loan servicers do not always do that. Instead, they frequently divide the payment or over-payment and apply it to all of the person’s outstanding loans. According to the report, these “payment processing pitfalls” can lead to increased costs, extended periods of repayment and harm the borrower’s credit profile.

The CFPB also found problems for borrowers who had multiple loans with the same servicer and were unable to make their monthly payment in full. They were oftentimes told by the loan servicer to pay as much as they could. But instead of putting all of the money toward the highest-rate loans, the loan servicer applied it evenly to all of the loans. This practice maximizes late fees and can intensify the negative impact of a single late payment to the borrower’s credit profile.

Another problem encountered by borrowers was when their loans were transferred to another service provider. These complaints included lost paperwork, processing errors that resulted in late fees and an interruption in billing statements. More than 3,800 complaints about private student loans were received between October 1, 2013 and September 30, 2013. 49 percent of these complaints were with Sallie Mae.