student loan debt Archives - Page 23 of 28 - Kingcade Garcia McMaken, P.A. Bankruptcy Attorneys

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

Vermont House Asks Congress to Allow Students to Discharge Student Loan Debt in Bankruptcy

Posted on May 3, 2016by Admin

With national student loan debt increasing to more than $1 trillion and Vermont’s graduates stuck with the highest debt-to-earnings ratio, state lawmakers are urging Congress to let students file for bankruptcy to discharge their student loan debt.

This week, members of the Vermont House gave preliminary approval to J.R.H. 27, a resolution that calls for “federal action to alleviate the national student loan debt crisis.” Federal bankruptcy code prohibits student loan debt from being discharged in bankruptcy, except in cases of “undue hardship.”

“The General Assembly requests Congress to amend the federal bankruptcy code to eliminate the prohibition on relief from federal or private student loan debt through the federal bankruptcy system,” the resolution states.

J.R.H. 27 illustrates the scope of the problem. Student loan debt tripled between 2005 and 2015, increasing to $1.19 trillion, according to the Federal Reserve Bank of New York’s Consumer Credit Panel. Nationwide, almost 7 million student loan borrowers, or 17 percent, are in default as of summer 2015. This is up 400,000 defaults, or 6 percent, compared to 2014.

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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

Murphy Bill will Stop Garnishment of Social Security Benefits to Pay Student Loans

Posted on April 27, 2016by Admin

A bill has been introduced by U.S. Representative Patrick Murphy that will prevent social security benefits from being garnished to repay student loan debt. Murphy says it is a problem that needs to be addressed and believes expanding higher education opportunities and protecting Social Security benefits are key to bolstering the middle class.

In the fiscal year that ended in October, 860,000 individuals had their Social Security benefits reduced to pay for federal debts, with the federal government collecting $382 million, according to the Senate Finance Committee. This number included attempts to collect other debts besides student loans.

According to the General Accountability Office, the number of people whose Social Security benefits were reduced specifically to pay off student loan debt increased from 31,000 in 2002 to 155,000 in 2013. The numbers for those older than age 65 increased from 6,000 to 36,000 in the same period. Some of those were paying down debts incurred to educate their children through co-signing or Parent PLUS loans. In fact, people older than 65 owe $18.2 billion on student loans.

The Murphy Bill is a step in the right direction, but still falls short by failing to alleviate the debt for seniors. Consumer advocates believe the real solution is a change in the law to permit unsustainable student loan debts to be discharged in bankruptcy.

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Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Duxbury Father Wins Student Loan Debt Relief Settlement

Posted on April 19, 2016by Admin

A federal appeals court this week has urged a bankruptcy judge to consider a settlement that would allow a Duxbury father to discharge more than $246,000 of student loan debt he borrowed to send his three children to college.

The case has generated national attention amid the growing concern about student loan debt and what it means for our nation’s economy. For the past four years, The Educational Credit Management Corp., a company hired by the US Department of Education, has vigorously fought the efforts to have the loans discharged in bankruptcy.

Four months after the US First Court of Appeals heard oral arguments in the case and urged the parties to try to settle, the company signed an agreement acknowledging that the debtor should be forgiven because he has proven that repaying the debt would pose an undue hardship. The following day, the appeals court sent the proposed settlement to the bankruptcy court. The final decision lies in the hands of the bankruptcy judge.

Most courts rely on one of two tests when defining hardship. These include: The Brunner test, which requires a borrower to show that he has made a good faith effort to repay the debt, cannot maintain a minimal standard of living for himself and his dependents if forced to repay the loan, and is facing additional circumstances that make it unlikely he will be able to pay in the future.

The second test, called the “totality of the circumstances” test, considers a debtor’s past, present, and future financial resources; living expenses; and any other facts and relevant circumstances surrounding each particular bankruptcy case. When assessing hardship, most courts require borrowers to show extraordinary circumstances, such as a serious illness, psychiatric problem, or permanent disability.

In this case, the debtor Robert Murphy lost his $165,000-a-year position as president of a Canton manufacturing company when it moved overseas in 2002, and had been unable to find another job. He depleted his retirement savings to pay bills, which included more than $61,000 that was applied to his student loan debt, which left him and his wife primarily dependent on her $13,200 teacher’s aide annual salary.

Murphy sought to discharge the $246,000 he still owed on a dozen Parent Plus loans he took out between 2001 and 2007 to send two of his children to Loyola University Maryland and a third to the University of Connecticut and Bridgewater State.

If he had it to do over again, Murphy says he would have never borrowed the money, even though he was unemployed when the government issued him the majority of the loans. Like many in his situation, he believed he would be able to find another high-paying job and repay them. He launched an exhaustive search and attributed his inability to find work to his age, a failing economy and the decrease in manufacturing jobs.

Murphy’s case was being watched by consumer advocates across the country, who hoped the appeals court would take a new look at what defines undue hardship. The settlement has the possibility to preempt a decision that could establish a precedent.

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

Judge’s Ruling on Law School Grad’s Debt Could Trigger ‘Seismic’ Shift in Loan Practices

Posted on April 18, 2016by Admin

A judge’s recent ruling to discharge a portion of a law school grad’s student loan debt could have major implications for those struggling with insurmountable student loan debt. The law student applied for the loan while she was studying for the bar exam as a student at Pace University Law School in 2009. She received a “bar loan” of $15,000 from Citibank, according to the bankruptcy court documents, and she made payments on the loan until June 2012. But in November 2014, after having failed the bar exam, she filed for Chapter 7 bankruptcy.

She wanted the $15,000 loan to be discharged arguing that it was not an “educational benefit” under the U.S. bankruptcy code. Citibank disagreed, arguing that the loan was an “educational benefit” in the fact that the eligibility for the bar loan was dependent on her being a law student.

But Judge Carla Craig of U.S. Bankruptcy Court in Brooklyn wrote in her decision, “However, this argument could be advanced by the myriad private lenders who provide funds to borrowers who are taking educational or training courses. The fact that [Citibank’s] underwriting standards required [Campbell] to be a law student does not turn an arm’s length consumer credit transaction into a ‘benefit’ within the meaning of [the bankruptcy code],” Craig wrote in her opinion.

Although there have been cases involving student loans where judges have ruled the opposite of Judge Craig, this recent decision may have an effect on future cases. This opinion is a confirmation that these loans should be dischargeable in bankruptcy.

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

The Truth about Millennials and Student Loan Debt

Posted on April 8, 2016by Admin

According to a survey from Citizens Bank, 47 percent of millennials (those in the 18-35 age group), who are college graduates, would be willing to limit their online food delivery in return for reducing their student loans. Concerts, vacations, sporting events and lattes were also priorities.

Limiting any of these luxuries got a “no thanks” from the majority of millennials who were asked if they would consider cutting back to lower their student loan payments. More than half (57 percent) said they regret taking out as many student loans as they did, and about a third of them said they would not have even gone to college if they knew who much it was going to cost them in the end.

Part of the problem has to deal with numbers and denial. The same survey found that nearly half of millennials (45 percent) with student loans do not even know how much of their annual salary they spend on student loan debt. It is 18 percent on average. On the upside, the vast majority of millennials at least know what they owe- more than $40,000 for most.

Here are some suggestions for getting that number down:

Know what you owe.
Millennials who have graduated and have jobs often qualify for better rates than when they had little to no income at the start of school.
Get help at work. A number of companies, including Fidelity and PwC, are offering employees help with paying down their student loan debt.
Seek forgiveness. Certain professions, such as public service jobs, offer student loan forgiveness. Others include public defenders, law enforcement officers, doctors, nurses and some teachers. For example, teachers who work in low-income school districts and teach certain subjects may qualify for complete cancellation of their student loans.

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

Bankruptcy Judge Rules that Law School Grads can Cancel Bar Exam Loan Debt

Posted on March 28, 2016by Admin

Judge Carla Craig of the U.S. Bankruptcy Court in Brooklyn, N.Y. ruled that bar-exam loan debt is a “product of an arm’s length agreement on commercial terms” and does not fall into the category of a student loan that stays with a borrower who files for bankruptcy.

This means law school graduates who file for bankruptcy protection can cancel debt they have accrued preparing for the bar exam. This decision is the most recent ruling on the matter, which strongly contradicts the widely accepted notion that student loan-related debt can only be canceled in bankruptcy under rare cases of undue hardship.

The case involves a 36-year-old Pace University School of Law graduate, who sought to cancel the unpaid portion of a $15,000 loan she took out from Citibank to study for the bar exam. She graduated in 2009, failed the bar exam after graduating and took a secretarial job at a hotel-management company with a $49,000 annual salary, she said. She filed for bankruptcy in 2014.

The loan was only a small portion of the nearly $300,000 in student loan debt. But the ruling comes as consumer advocacy groups and some federal lawmakers are pushing for student loan debt relief through bankruptcy.

Recently, the U.S. Supreme Court declined to hear a case that would have made it easier to discharge student loan debt in bankruptcy, but the White House has said it would examine whether it should be easier for student loans to be wiped out in bankruptcy. This ruling is just one step closer to student loan debt being discharged in bankruptcy.

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

Student Borrowing Affects Retirement and Home Ownership

Posted on February 25, 2016by Admin

New data released from The Center for Retirement Research at Boston College revealed that student loan debt is preventing Americans from saving for retirement. Student loan debt has reached massive levels, with 40 million people stuck with at least one student loan. It accounts for more than 30 percent of non-mortgage related household debt. According to the St. Louis Federal Reserve, more than 27 percent of student loan borrowers in repayment are delinquent on those payments.

The report found that student loan debt has the same impact on retirement savings as unexpected healthcare costs. This means that a greater percentage of households are at risk of not being able to maintain their standard of living in retirement, because they are unable to save while they are in the workforce.

Most college bound students are not thinking about retirement when they take out student loans for expensive degrees. Unfortunately, if students choose a degree that will prepare them for a low-earning career or a career with a deficit in jobs, student loans are going to be harder to pay back.

Student loan debt is not only affecting retirement, it’s also affecting borrowers abilities to purchase homes and buy new cars. Many borrowers are unable to obtain a mortgage because their student loans push their debt-to-income ratio disqualifies them.

The Center for Retirement Research used the National Retirement Risk Index, which measures the percentage of working households age 30 to 60 who are on track to be able to maintain their standard of living in retirement. It looks at what a person’s age 60’s retirement security would be if the person had the same level of student loan debt as today’s average, $31,000.

The Center found that the percentage of people at risk went from 51.6 percent to 56.2 percent, a 4.6 percent increase. Although it doesn’t seem like a great increase, a 19.6 percent across-the-board cut in Social Security benefits would raise the index by 10.7 percentage points. This means that the impact is roughly half of the impact of an unprecedented move such as cutting Social Security benefits.

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

Texas Man Arrested by U.S. Marshals for Unpaid Student Loan

Posted on February 19, 2016by Admin

U.S. Marshals arrested Paul Aker of Texas last week for $1,500 in unpaid federal student loans. Aker borrowed the loan in 1987 and claims that he was unaware he had any outstanding debt.

“I paid two other student loans and thought I had consolidated everything and paid it all off,” Aker said. The U.S. Marshals reportedly made several attempts to serve Aker with a court order requesting that he appear in federal court. The agency said they had searched numerous known addresses before locating Aker. They also said they made contact with Aker by phone in 2012 requesting that he appear in court and he refused.

According to CNNMoney, Aker does not remember having that conversation and said he has not received any notification about the outstanding loan in a long time. A warrant was issued for his arrest soon after he failed to appear in court in 2012.

Two U.S. Marshals went to arrest Aker last Friday at his home. “I went inside to get my gun because I didn’t know who these guys were,” Aker said. The Marshals called for backup after Aker told them he was armed.

After two hours, Aker finally put down the gun and went outside to be arrested without further incident.

Although Aker’s original loan was for $1,500, he now owes approximately $5,700 including interest. He agreed to be placed on a payment plan before a judge last week.

According to CNNMoney, it is common practice for U.S. Marshals to serve summonses to people who fail to appear in court for unpaid federal student loans. However an arrest warrant is only issued after the debtor fails to appear in court.

Arrest warrants were issued for 25 people in the Houston, Texas area for failure to appear in court regarding unpaid student loans.

After 90 days, the loan becomes delinquent and damages the borrower’s credit score. However, student loans are not considered to be in default until nine months of nonpayment.

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

Florida Student Debt Relief Company Files for Chapter 7 Bankruptcy

Posted on February 15, 2016by Admin

A Doral, FL-based student loan debt relief company filed for Chapter 7 bankruptcy this month. The company, Student Aid Center, Inc. estimated between $500,000 and $1 million in assets and 50 to 99 creditors.

Student Aid Center reportedly offered assistance to students dealing with student loan debt. However, a lawsuit filed by the Minnesota Attorney General in July 2015 claimed that the company misled consumers by promising to reduce or eliminate their student loan debt and not producing results.

According to a statement from the Attorney General’s office, the debt relief company promised students that it could immediately qualify them for loan forgiveness with advertisements such as, “Get Your Student Loans Forgiven Now!” and “Say Good-Bye to Student Loan Debt.” The company promoted itself on social media sites and collected upfront fees from borrowers.

After numerous consumer complaints, the company was named in a class action complaint on September 21^st that alleged the company used robo-dialing without obtaining consumer consent.

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

Student Loan Relief Scammers Using Social Media to Target Borrowers

Posted on January 19, 2016by Admin

Scammers are now targeting struggling borrowers on social media websites such as Facebook to offer student loan debt relief. Higher education and consumer protection officials say that if you see advertisements on social media sites they are likely a scam. These scammers are circulating personalized ads using school information that is posted on user profile pages.

These companies are not affiliated with any of the student loan servicers and are scamming borrowers with fee-based assistance they can get for free through the federal government’s financial aid office.

Student loan debt in the United States has reached nearly $1 trillion making it the second largest consumer debt market. Approximately eight million federal and private student loan holders are in default and millions more are struggling to make their minimum payments each month.

Moira Vahey, a spokeswoman for the Consumer Financial Protection Bureau (CFPB) said, “Companies offering these type services do not have the ability to negotiate with creditors in order to obtain a special deal under the federal student loan program.”

Companies such as College Education Services (CES) in Florida are telling borrowers they can have their student loans consolidated and lower their monthly payments. CES requires debtors to pay upfront fees and sign over power of attorney to the company. After failing to deliver results, there have been multiple complaints filed with the Florida Attorney General against this company.

Some debt relief companies promise to save borrowers thousands of dollars, charging them upfront fees and then enrolling them in a repayment plan that is available and free to anyone with a federal student loan.

The CFPB offers the following warning tips to borrowers when it comes to these so-called student loan debt relief companies:

The promise of immediate loan forgiveness or debt cancellation;
Demands for a power of attorney;
Requests for federal student aid PIN numbers;
Charging large upfront fees.

Related Resources:

http://www.winknews.com/2015/11/12/warning-student-loan-scams-hitting-swfl/

http://www.wvgazettemail.com/news/20160118/ads-offering-student-loan-relief-scamming-borrowers