student loan debt relief Archives - Page 2 of 4

What Borrowers Need to Know About the New Executive Order- “Continued Student Loan Payment Relief During the COVID-19 Pandemic”

Posted on August 11, 2020by Admin

A new executive order signed by President Trump is expected to give additional relief to student loan borrowers during the coronavirus (COVID-19) pandemic. It is important that all student loan borrowers be aware of what these changes entail and how they can affect their outstanding student loan balances.

At the start of the COVID-19 pandemic, Congress passed the CARES Act, a $2.2 trillion stimulus bill, that included relief effort for numerous aspects of the economy. The CARES Act paused all federal student loan payments and stopped interest from being incurred on federal student loans. Additionally, the stimulus bill put a stop to all federal student loan collection efforts. However, this bill was passed at the beginning of the pandemic with the thought that relief would no longer be needed through the end of 2020 with the hopes that the COVID-19 crisis would eventually be subsiding. Given the fact that numbers of positive cases are growing, and states are struggling to manage the crisis, it has quickly become clear that additional relief was needed. The original relief offered through the CARES Act was set to expire on September 30, 2020.

student loan debt

Tax Consequences That Come With Student Loan Forgiveness

Posted on January 9, 2020by Admin

Receiving student loan forgiveness can be difficult to accomplish, which is why so many loan forgiveness applicants are rejected. It is also why many student loan borrowers choose to take the route of income-driven repayment plans to pay off their debt over the course of 10 to 25 years before having the remainder forgiven. However, what many of these borrowers do not realize are the tax consequences that come along with these income-based payment programs.

Under Section 61(a)(12) of the Internal Revenue Code, gross income includes revenue from the discharge of debt amounting to $600 or more in any calendar year, which means any debt that is forgiven at the end of the repayment period is considered taxable income. Depending on how high the outstanding balance is on the borrower’s debt, this taxable amount could be significant.

Debt Relief, student loan debt, Student Loans

FTC Takes Legal Action Against Corrupt Student Loan Debt Relief Companies

Posted on September 18, 2019by Admin

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

Posted on August 29, 2019by Admin

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

Posted on August 27, 2019by Admin

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

Posted on August 20, 2019by Admin

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.

student loan debt, Timothy Kingcade Posts

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

Posted on July 23, 2019by Admin

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.

Bankruptcy Law, Debt Relief, student loan debt, Student Loans

Possible Solutions to the Student Loan Debt Crisis

Posted on June 5, 2019by Admin

With more than $1.5 trillion in student loan debt owed nationwide, it can be safe to say that the student loan crisis has reached a breaking point. For lawmakers, one solution to bring change to this problem is allowing student loan debt to be discharged in bankruptcy court.

Another measure that has received a great deal of public support is Senator Elizabeth Warren’s proposal to completely wipe out the majority of America’s student loan debt through a loan forgiveness program. Her proposal has received support from other presidential hopefuls, including Senators Bernie Sanders, Kamala Harris, and Amy Klobuchar, as well as Representative Eric Swallwell, all of whom are co-sponsoring it.

Recently, the American Bankruptcy Institute’s recommendations to allow student loan debt to be discharged in bankruptcy were published.

The average college student graduates with about $30,000 in student loans. This number does not include those students who pursue a master’s or post-graduate degree. Many of those students end up owing six figures in student loan debt.

The burden these loans present to young graduates is intense and can even follow them into retirement. Outstanding student loan debt can affect a person’s job in 13 states. To keep up with loan payments, many borrowers have accumulated credit card debt, just to be able to afford basic living expenses.

Student loans, while not impossible to discharge in bankruptcy, are extremely difficult to eliminate in a Chapter 7 or Chapter 13 bankruptcy case. Other obligations may be eliminated at the end of the case, but the student loan ones will stay with the borrower even after other obligations are discharged.

Bankruptcy courts use the “undue hardship” test to determine whether a filer should have his or her student loan debt discharged, but no set standard has ever been made on what qualifies as an undue hardship, making it very difficult to ever receive relief. New bi-partisan legislation has been introduced and proposes regulations that ensure student loan debt is treated like other forms of consumer debt in bankruptcy, meaning it can be easier to discharge.

Without the ability to discharge the largest amount of debt many bankruptcy filers are carrying; these individuals will never be able to receive the fresh start bankruptcy is meant to give them. While this change may not completely solve the student loan crisis, many financial experts are hopeful it can be a catalyst for change.

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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. 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 Loans, Timothy Kingcade Posts

How Student Loan Debt is Different From Other Debt

Posted on January 4, 2019by Admin

Debt plagues so many Americans today, but the type of debt varies from person to person. When it comes to debt collections or even bankruptcy, how the debt is treated depends on the type of debt. Student loan debt is one category that is treated differently than other common debt categories involved in bankruptcy.

Student loan debt has doubled since the most recent recession, which presents a major problem for many borrowers who are struggling to repay their loans, so it is extremely important to understand how student loan debt is treated in bankruptcy and collection matters.

Debts normally fall into two different categories: secured and unsecured. Secured debt is “secured” by either another person or an asset purchased, meaning if the consumer defaults on the debt, the lender has recourse to seize the asset.

Unsecured debt is not connected to another person or asset and commonly includes credit cards, personal loans, and medical debt. Student loan debt is also another form of unsecured debt, although it is not treated the same way as other unsecured debt. One major difference is the fact that student loan debt does not go away so easily.

If the borrower fails to pay on a student loan, the lender will likely initiate a collection action, which will result in a judgment against the consumer and likely a garnishment of that person’s wages. The same situation occurs with any other unsecured debt, but the difference is student loan debt is not easily discharged through bankruptcy.

It is possible, but the legal standard that needs to be met for this to be done is quite strict. The borrower will need to prove to the court that a good faith effort has been made to repay the loan, as well as proving undue hardship that is likely to continue if the debt is not discharged. It is not an easy burden of proof, and if the court does not discharge the debt, it will remain with the individual once the bankruptcy is over.

Student loans include both federal and private loans. Those loans that are federal are backed by the federal government and are disbursed by the U.S. Department of Education. On the other hand, private loans are backed by private lending institutions. The difference is critical in that federal student loans are not restricted by a statute of limitation when it comes to collecting on the debt.

In addition, federal loans have certain protections that private loans do not and offer different types of repayment plans in the event the borrower’s life circumstances change. For the most part, federal loan repayment terms are around ten years, but they can be extended or graduated or even income-based in terms of repayment. Additionally, some federal loans offer forgiveness programs.

Private student loans are oftentimes a last resort when it comes to financing education. However, many students max out their federal lending and have no choice but to supplement with private options given the cost of education.

It is currently estimated that somewhere around 40 percent of all student loan borrowers will default at some point on their student loans. Many different mistakes can be made when it comes to student loan repayment. If you believe you qualify for student loan debt relief, speak with an experienced bankruptcy attorney about your options.

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Avoid these Student Loan Repayment Mistakes

Posted on November 12, 2018by Admin

Repaying student loan debt can be a daunting process. It can seem like the end is never in sight. Student loan borrowers and those who co-signed these loans are not alone in the struggle. The amount of student loan debt has increased by $110 billion in the last 16 months to a total of $1.41 trillion nationwide. With the higher balances’ students are graduating with every year, that feeling of discouragement is understandable. Here are some of the biggest student loan repayment mistakes to avoid.

Know how much you owe.

It is important that you know what this amount is so that you can plan repayment accordingly. You should know what the interest rate is, as well as how much the monthly payment will be so that you can prepare a budget to keep up with payments. It is also equally as important to keep an eye on that balance as you pay it off.

Structure your repayment plan upon graduation, if not before.

Once you know how much you owe, the next step is to develop a strategy to repay the loans. Financial experts even recommend students work on a repayment strategy while they are still in school. It can be tempting to avoid the inevitable, especially with the grace period most student borrowers get after they graduate. However, the best plan of action is to get ready for the payment plan and make sure your budget accounts for these monthly payments. This way when the borrower begins payments upon the expiration of the grace period, he or she is ready.

Know all your repayment options.

It is also important to know what repayment options are available. One mistake many borrowers make is to not properly research their options for paying back their loans. If you have federal student loans, several different repayment plans may be available for you, and you can pick which plan works best for your life situation.

Change the due date to accommodate YOU.

Many borrowers are unaware of the fact that they can adjust a payment due date if it does not work with their income flow. For instance, if you only get paid once a month at the end of every month, it may be wise to change the payment date to mid-month to allow for income to come in to make the payment on time.

Keep all balance and payment information up to date.

One common mistake that many borrowers also make is to not keep their contact information updated with the lender. This information includes your email address, telephone number and mailing address. Most lenders send bills electronically, but even if the lender sends the bill in paper form to the borrower’s home, it is up to the borrower to make sure the lender has his or her current information. Not receiving the bill is not a valid excuse for missing a payment, as it is the borrower’s responsibility to update his or her information with the lender if anything changes.

Do not be fooled by student loan forbearance.

Another mistake many borrowers make is utilizing the forbearance option too frequently during repayment. It is oftentimes something student loan lenders push, as it can add thousands of dollars to the loan balance, due to the interest continuing to accrue. Forbearance allows the borrower to temporarily suspend their payments during times of financial difficulty. While the option can be helpful if the borrower loses his or her job, it is only meant to be a short-term solution and should only be used if absolutely necessary.

Beware of student loan debt relief scams.

Unfortunately, many borrowers fall prey to scams that are out there, preying on individuals who are looking for the quick fix to help them with their student loan debt. These fraudulent offers often come in the form of an unsolicited phone call, email or letter, where a company tries to offer student loan forgiveness or a way to reduce the borrower’s total debt. Do your research and do not take an offer at face value. These companies are not out to help you. If something sounds too good to be true, it likely is.

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