Tag: student loan bankruptcy

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.

Bankruptcy Law, student loan debt

How to Handle Zombie Student Loan Debt

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Student loan debt has been known to haunt borrowers for years, if not decades, after that first loan is issued. Many borrowers find themselves on payment plans that can least up to 25 years. To them, a student loan is like a mortgage without the benefit of having the house to live in. Once the debt is paid in full, the last thing that person wants to think about again is that loan. However, for many borrowers, that debt never seems to go away and often comes back in the form of zombie debt.

Most forms of debt are limited by a statute of limitations, which governs how long a creditor can sue the borrower for the debt. Federal student loans were once governed by a six-year statute of limitations until 1991 when that statute of limitations was lifted. Now they are technically collectible indefinitely. Private student loans, however, are still limited by statute.

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.

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

Student Loan Debt Relief Scams to Watch Out For

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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, 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.

Debt Relief, student loan debt

Loan Forgiveness Applications Stall at the U.S. Department of Education

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Student Loan Forgiveness

More than 180,000 applications remain pending in the hands of the U.S. Dept of Education, leaving borrowers with little to no answers when it comes to their student loan forgiveness. This lack of progress has many borrowers feel that their chances of receiving any type of relief for their student loan debt is slipping away.

Last year, a federal judge ruled that the Department of Education’s delays in processing student loan forgiveness applications from borrowers who were defrauded through for-profit school lending schemes was illegal and in direct violation of federal law. The ruling supported claims that the Department was purposely ignoring borrowers seeking promised relief from their debt.

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.

student loan debt, Timothy Kingcade Posts

Teachers Sue U.S. Over Student Loans that Were Not Forgiven

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The American Federation of Teachers has filed a lawsuit against the U.S. Department of Education on behalf of educators who argue that they have been wrongfully denied loan forgiveness under the federal public service loan forgiveness program.

The Public Service Loan Forgiveness program was created more than a decade ago to encourage young graduates to seek employment in a government job or in public service industries. While the pay in these types of jobs tends to be lower, the promise of having their federal student loans forgiven at the end of a ten-year period was created to entice them to apply for these positions.

Under the program, borrowers who work in certain public service professions, including law enforcement, nursing, and teaching, and who make payments consistently for ten years, can have their federal loans forgiven. It is estimated that more than one million borrowers have filed official paperwork to participate in the program. However, many of these borrowers are finding out that they suddenly do not qualify for forgiveness for one reason or another, including not carrying the correct type of loan.

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.

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.

Debt Relief, student loan debt, Student Loans, Uncategorized

$5.3 Million in Student Loan Debt Canceled as Part of the ITT Tech National Lawsuit Settlement

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Hundreds of Pennsylvania students who attended the now-bankrupt ITT Technical Institute will receive $5.3 million in student loan debt relief as part of a national settlement. Pennsylvania Attorney General Josh Shaprio said 570 former ITT students will have their student loan debt canceled as part of a multi-state settlement.

“With the private student loan program that ITT and CUSO established, ITT Tech was able to take advantage of thousands of hardworking students who were simply trying to complete their education,” Shapiro said in a statement.

The national settlement provides $168 million for more than 18,000 students harmed by abusive lending practices. ITT Tech targeted “low income” students who could not afford to pay tuition out of pocket and relied on federal loans to pay for school, according the settlement. A coalition of 44 states reached a settlement with Student CU Connect CUSO LLC, which was managing the loans for ITT.

ITT Tech had more than 136 campuses in 38 states when it shut down in September 2016. This $600 million settlement cancels all the student loan debt owed to the school.

The agreement specifically deals with student borrowers who attended ITT Tech between the years 2006 and 2016. The settlement also returns $3 million to students who made payments on their loan to the school after the school’s parent company, ITT Educational declared bankruptcy in 2016.

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.