student loan debt Archives - Page 21 of 28 - Kingcade Garcia McMaken, P.A. Bankruptcy Attorneys

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

The U.S. Government is Collecting Student Loans it Promised to Forgive

Posted on December 27, 2016by Admin

In recent years, the U.S. Department of Education has taken on two different roles in the lives of indebted former college students. The same bureaucracy must collect on the $1.1 trillion in student loans in an attempt to protect taxpayer dollars and it also oversees the nation’s largest-ever effort to forgive student loan debt.

The government’s dual roles have since caused problems for former Corinthian Colleges Inc. students. Tens of thousands of these former students had their student loans cancelled and according to the Obama administration they were supposed to be reimbursed in full. However, the Department of Education has been actively collecting on federal student debt owed by the former students.

Corinthian Colleges Inc. filed for bankruptcy in 2015 under a cloud of fraud investigations. As a result, government officials had reason to believe that some of these students’ debts should be forgiven. However, former students have come forward saying that they are still being approached for payment on their loans. When companies have made similar attempts at collecting on debt that is not actually owed in the past, they have been charged by federal and state regulators with violating the law.

According to the former director of the Federal Trade Commission’s consumer protection division, David Vladeck, “There’s no clear-cut reason why there shouldn’t be automatic loan forgiveness for people who otherwise would have a legal claim for deceptive conduct against this now-bankrupt company.” He went on to say, “These kids by and large have been scammed, and the Department of Education in some sense is continuing that harm by making them jump through hoops to get the relief to which they are entitled.”

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

For-Profit College Debt Strikers Plead with Obama to Discharge their Loans before Trump’s Inauguration

Posted on December 5, 2016by Admin

More than 1,000 students (calling themselves the Debt Collective) from for-profit schools are protesting, claiming their colleges used manipulative financial tactics while providing them with a subpar education.

They released a statement and video on Monday, pleading with President Obama to discharge their student loans before President-elect Trump’s inauguration. The Debt Collective claims that the Obama Administration has yet to provide the relief it promised. One former Corinthian student said she had $32,000 of student loan debt and was unemployed, despite having applied to about 300 jobs in the criminal justice field. She said she had either received no response or had been told she did not qualify.

The Department of Education refunds federal loans to students enrolled in the last 120 days before a college closes in what is called a closed school discharge. ITT Tech closed its doors in September. But students who left the school before that 120-day time frame or who graduated but still feel they were defrauded by their college must instead file a “borrower’s defense to repayment” claim.

The Obama Administration had planned to resolve back-logged relief claims from Corinthian and ITT Tech students by the spring of 2017, but will likely now be under additional pressure to speed resolution of the claims.

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

Bankrupt Student Can Discharge Debt because it “Technically” Was Not a Loan

Posted on December 1, 2016by Admin

A financial agreement between a student and an educational institution is not considered a student loan and as a result in the bankruptcy case ( D’Youville Coll. v. Tucker (In re Tucker), the borrower was able to discharge her debt.

Judge Michael J. Kaplan of the U.S. Bankruptcy Court for the Western District of New York concluded that because the debt was not “an education benefit overpayment or a loan,” the exception to discharge under Bankruptcy Code Section 523(a)(8)(A)(ii) does not apply.

The financial agreement entered into between both parties was “no more than an agreement to pay for tuition, fees and other registration costs (whatever they turn out to be), at some unspecified future time, and not for an ‘educational benefit overpayment or loan’ as contemplated in §523(a)(8)(A)(i), the court said.

This case is similar to two other recent cases in the Western District of New York, with the exception that in this one, there was no promissory note signed by the debtor.

Exceptions to discharge under the Bankruptcy Code are construed narrowly and a creditor must prove by a preponderance of the evidence that its claim falls within one of those exceptions.

The court sided with the borrower in this case because it did not find a specific amount due in the financial agreement. The agreement contained a monthly interest provision and indicated that an adjustment would be made for financial aid received at a later time.

The financial agreement between the parties was “nothing more than a running account,” the court said.

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

Xerox Ordered to Pay $2.4 Million to Settle Illegal Debt Collection Charges

Posted on November 30, 2016by Admin

Many of us know Xerox as the company that handles office supplies, printers and similar products. However, back in 2009 the company acquired ACS and has been operating as a lender of student loans through Xerox Education Services (XES).

The division has come under much scrutiny in the past year for allegedly violating debt collection laws and overcharging borrowers. Now the company has decided to settle the charges by paying a $2.4 million settlement.

The initial investigation began in December of 2015. After analyzing the company’s loan servicing practices, officials found that XES had failed to properly process applications for federal loan relief associated with the Income-Based Repayment Plan under the Higher Education Act. This forced student loan borrowers to pay more than they needed on their debt. They were also hit with more late fees when they could not afford to make their payments.

The company was charged with violating debt collection regulations by making frequent and repeated phone calls to borrowers and not investigating credit reporting disputes. This led to false information being reported to credit agencies.

Under the settlement, XES will pay $2.4 million, which will be be used as restitution for borrowers who tried to apply for relief but were not able to enroll. The company has also agreed to credit late fee overcharges, reform service members’ accounts, stop its illegal debt collection practices, and establish a “Borrower Advocacy Group” that will help loan recipients apply for income-based repayment plans.

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

Government Likely to Forgive Billions in Student Loan Debt – but only if you qualify

Posted on October 12, 2016by Admin

Student borrowers who have been working since 2007 in public service are looking forward to next year. This will be the first time the government will forgive debt under the Public Service Loan Forgiveness (PSLF) program. The program states that individuals who work for ten years in specific careers are eligible to have the remaining balance of their loans forgiven.

These areas include working for:

Non-profit organizations;
Libraries;
Schools;
Certain government jobs.

To qualify, borrowers must make on-time payments on their student loans during the ten years they work in public service. The payments can be made under an income-based repayment plan if the borrower qualifies.

With as many as 25% of working individuals qualifying, the government may have to forgive more than anticipated. More borrowers took advantage of the program than the government had expected. The average amount of loans carried by those in the program is $60,000. About 30% have debt over $100,000. This means the government will have to forgive more than $12 billion in student loans between 2017 and 2027.

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Credit, Debt Relief, Student Loans, Timothy Kingcade Posts

Consumer Financial Protection Bureau Concerned by Student Loan Servicers’ Practices

Posted on October 7, 2016by Admin

The Consumer Financial Protection Bureau (CFPB) recently expressed concerns over a practice that is being used by some student loan servicers known as “redisclosure” of payment terms. Redisclosure causes a borrowers monthly bill to fall when extra payments are made.

Experts believe that student loan servicers are using the redisclosure tactic to make it harder for borrowers to save money on interest. Once the monthly payment amount is reduced, the term of the loan is extended, causing the borrower to pay more in interest over time.

For example, if a borrower starts out owing $25,000 in student loans payable for a 10-year term with $300 monthly payments and decides to pay an extra $100 each month toward the principal, some loan providers will drop the monthly bill to be less than $300 per month to possibly extend the term of the loan.

“When borrowers pay more than they owe, they expect to save money on interest charges and get out of debt faster. But the practice we highlighted can hold these borrowers back, making it harder and more expensive for student loan borrowers to pay back their loan and get out of debt,” CFPB official Mike Pierce said.

The good news is that you can tell your loan servicer to set your monthly payment back to a requested payment amount, if you discover it has been lowered. You can also tell your service provider what to do with your extra money each month. For example, you can ask that a standing instruction be placed on your account so that the extra money you pay each month goes toward the loan with the highest interest rate.

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

More than half of all student loan borrowers have seen scams

Posted on September 15, 2016by Admin

Approximately 60% of more than 6,300 student loan borrowers surveyed said they have seen scams for advertisements promising relief from their student loan payments. Nearly 45% of the respondents said at least one of these companies reached out to them directly, according to the survey conducted by the personal finance site NerdWallet, and student loan advocacy group, Student Debt Crisis.

These predatory companies offer to help borrowers with their student loan payments for a fee, but typically provide services borrowers can access from the government for free- or sometimes they provide nothing at all. The more than 40 million student loan borrowers with $1.3 trillion in student loan debt has become a vulnerable part of the population.

In response to borrowers’ struggles, the Obama administration has gone to great lengths to expand the assistance programs borrowers can use to manage their debt. But scammers have used these programs as an opportunity to lure borrowers, advertising their services with government logos and phrases like “Obama student loan help.”

About 9% of the survey respondents said they paid for student debt relief services, spending an average of $613. The Consumer Financial Protection Bureau has taken legal action, accusing various student loan debt relief companies of deceiving borrowers into paying for services they can get for free from the government and keeping borrowers on the hook for a repeating charge illegally.

Consumer advocates say the prevalence of these student loan debt relief scams is reminiscent of the mortgage crisis, where servicers failed to provide homeowners with necessary information and scammers targeted a vulnerable portion of the population.

The Department of Education is taking action and working on revamping the student loan servicing system, giving servicers more of an incentive to work with borrowers, and repay their loans through one government-branded portal. By fixing the current system, borrowers will not be as tempted to turn to these predatory companies.

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

The collapse of ITT Tech gives former students a chance to wipe out their student loan debt

Posted on September 1, 2016by Admin

Students who graduated or dropped out of ITT Technical Institute may be the biggest winners in the federal government’s aggressive actions against the for-profit school. The Education Department’s sanctions on the Carmel-based ITT Educational Services Inc. allow past students to take advantage of the “defense to repayment” rule that can wipe out their student loans.

Federal law gives the Education Department broad discretion to forgive student loans for borrowers who claim they were defrauded or that their college violated state laws. The government recently made the case that ITT has done just that and is inviting former students to request what could amount to hundreds of millions of dollars in loan forgiveness.

The “defense to repayment” rule applies to all former students with federal loans, but does not cover private loans.

Another piece of good news- The Education Department is simplifying the claim process for borrowers. The defense to repayment rule falls under the U.S. Higher Education Act. It has existed for years, but received little attention until recently.

The Education Department has already forgiven more than $4.2 million in loans from more than 2,000 Corinthian College students who claim they were defrauded by the for-profit chain. Students at other for-profit colleges, such as Brown Mackie College, which is closing most of its campuses, will likely have a strong case as well due to the precedent set by Corinthian.

ITT has been ordered to begin working with other colleges to facilitate transfers for students. Anyone already enrolled in ITT can continue to access federal loans if they want to finish their program. If ITT closes, the Education Department has said it will forgive current students’ loans.

Here are some ways you can submit a claim:

Go online: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/borrower-defense

Email your claim: FSAOperations@ed.gov

Mail your claim: U.S. Department of Education, PO Box 194407, San Francisco, CA 94119

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

Ads Promote Fake ‘Obama Student Loan Forgiveness’

Posted on August 23, 2016by Admin

If you have student loan debt, you have probably already seen the advertisements online promoting “Obama’s New Loan Forgiveness Program.” Companies are charging borrowers upfront fees for services they can receive for free from the Department of Education.

Nine percent of student loan borrowers have used debt-relief companies, according to a recent survey by borrower advocacy group Student Debt Crisis and personal finance website NerdWallet. These consumers paid an average of $613 for income-based repayment plans and loan consolidation that they could have received at no cost from the federal government, the survey found. Sixty-five percent said the services did not improve their financial situation.

The Consumer Finance Protection Bureau has shut down three companies and the Department of Education has sent cease-and-desist letters to five just this year.

The Obama administration did expand repayment options for federal student-loan borrowers. In 2012, the Department of Education offered the “Pay-as-you-Earn” plan that reduced monthly payments to 10 percent of a borrower’s discretionary income, which was lower than the 15 percent required under the original income-based repayment plan.

Last year, an update was made to the plan, giving more than 1.6 borrowers more affordable student loan repayment options entitled, “The Revised Pay-as-you-Earn” plan. The percentage of borrowers enrolled in income-based repayment plans has quadrupled over the past four years from 5 percent in 2012 to nearly 20 percent in 2016.

The Department of Education offers four income-based repayment options for federal student loans. To enroll in any one of these plans, borrowers must complete an application from their loan servicer or online at StudentLoans.gov to verify their income.

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

How the Presidential Candidates will Address Student Loan Debt

Posted on August 17, 2016by Admin

Student loan debt has topped $1.3 trillion and impacts approximately 43 million Americans, prompting a variety of efforts to help struggling students pay for college. It is also a very hot topic politically, with both presidential candidates expressing concerns about the federal government profiting off these loans. While some attribute the decline of state funding to driving up education costs, the presidential campaign has emphasized what Democratic nominee Hillary Clinton has called “the crushing burden of debt.”

Hillary Clinton’s Plan

One of the provisions in Mrs. Clinton’s plan to provide tuition-free education at public colleges and universities for students whose families make under $125,000 a year has sparked the most debate. But when she originally rejected Democratic rival Bernie Sanders’ more expansive plan, it invoked a long-running argument about who should shoulder the costs.

“I disagree with free college for everybody. I don’t think taxpayers should be paying to send Donald Trump’s kids to college,” she said at a Democratic debate in November 2015.

But some researchers have argued that certain provisions in Clinton’s plan will not have as much impact on how students pay for college as she claims. One example is her platform’s promise to “significantly cut interest rates so the government never profits from college student loans.”

Donald Trump’s Plan

Mr. Trump’s plan would give more oversight to colleges to decide whether to grant loans to a student based on their prospective major and future earnings.

“If you are going to study 16th-century French art, more power to you. I support the arts,” said Dr. Clovis, a professor at a professor at Morningside College in Iowa, who now serves as the campaign’s policy director. “But you are not going to get a job.”

Some researchers say these efforts defeat the purpose of providing government aid for students hoping to attend college in the first place, putting lenders in the positions of picking “winners and losers,” and determining destinies for young people who, like all of us, deserve a shot at the American dream. The campaign’s plan would also give private banks oversight over government-backed student loans, reversing a 2010 decision under President Obama to make the federal government the lender.

There is a substantial racial gap in who holds student loan debt. Some 54 percent of young African-American households (aged 25 to 40) have student debt, compared to 39 percent of young white households, according to a recent study.

Some advocacy groups have pushed for more transparency in how the Education Department collects debts from borrowers. In March, the American Civil Liberties Union and the National Consumer Law Center sued the department, in an attempt to learn more about how debt collection practices could impact borrowers of color.

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