student loan debt Archives - Page 26 of 28 - Kingcade Garcia McMaken, P.A. Bankruptcy Attorneys

Bankruptcy Law, Credit, Timothy Kingcade Posts

Grieving parents hit with $200,000 in student loans

Posted on August 12, 2014by Admin

Losing their 27-year old daughter, Lisa, to liver failure was devastating enough, but then the student loan bills started coming. Steve Mason and his wife Darnell immediately took in their daughter’s three children- ages 4, 7 and 9 following her death. The family had co-signed on $100,000 in private student loans that his daughter took out for nursing school. Unable to keep up with the payments and mounting expenses, the $100,000 debt ballooned to $200,000 as a result of late fees and interest rates as high as 12%.

Steve called the lenders to explain he could not afford the $2,000 a month payments, but unfortunately private lenders are not bound by any federal requirements to help borrowers or co-signers. Loan forgiveness is up to the discretion of the individual lender. Navient Corp., which manages several of the loans said they reduced the balance owed to $27,000 from nearly $35,000 and lowered the interest rate to 0% on three of four loans. The family was less fortunate with American Education Services, which handled the bulk of Lisa’s student loans. The lender refused to provide the family with any relief.

Dreams for retirement have been shattered for the Masons. The family has considered filing bankruptcy, but student loans are the only type of debt that generally cannot be discharged through bankruptcy. Legislation aiming to help families in similar situations, including recent bills that would allow student loan debt to be discharged in bankruptcy, have been introduced over the years but have yet to pass in Congress.

“People with other debt from splurging — they can discharge that,” Mason said. “Student loans should really be the one type of debt they do discharge because it’s done to further an education and career. But somehow getting [my daughter] an education has encumbered me for the rest of my life.”

The Masons are not alone. Similar financial nightmares are facing families throughout the country. For now, the only option parents have is to negotiate a payment plan with the lender or try to prove undue financial hardship to the courts in order to get the debts discharged in bankruptcy.

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 of 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, Timothy Kingcade Posts

Consumer Warning: Beware of Companies Offering Student Loan Debt Relief

Posted on July 15, 2014by Admin

With student loan debt exceeding $1 trillion, a record number of graduates facing a tough job market are struggling to afford their monthly payments. For the debt settlement industry, these consumers are an irresistible target and represent of gold mine of potential new customers. Federal and state regulators have spotted new instances of abuse as these companies are shifting away from their traditional targets- credit cards and mortgage debt- and focusing in on student loans.

Illinois is expected to become the first state to bring legal action against debt settlement companies in connection with their student loan practices, contending in two separate lawsuits that Broadsword Student Advantage and First American Tax Defense tricked vulnerable borrowers into paying for help that never arrived.

In the lawsuit, the Illinois attorney general contends that these two companies lured unsuspecting borrowers into paying hundreds of dollars upfront, misled customers about those fees and in some instances pretended to be affiliated with federal relief programs. Even more egregious, the companies sometimes charged customers for debt relief assistance they could have received free from the Education Department.

The abundance of these student loan debt relief companies reflects a growing crisis- students taking on more debt than they can ever afford to repay. Of the $1.2 trillion dollars in outstanding student loan debt in the United States, an estimated seven million Americans have already defaulted on a total of $100 billion, with tens of thousands more borrowers defaulting each month, according to the Consumer Financial Protection Bureau.

Bankruptcy Law, Credit, Timothy Kingcade Posts

Debt Collectors Using Social Media to Track down Consumers

Posted on July 1, 2014by Admin

After dodging collection calls for more than 10 years, a Brighton Heights man said his experience with a third-party collection agency went from annoying to cyber stalking. He said his student loan debt ballooned from around $80,000 to $270,000 following years without payment. In 2012, he hired an attorney and an accountant to help him set up a payment plan. He believed the worst was behind him.

This was until a picture taken at Regent Square restaurant Square Café with PBS personality Rick Sebak was posted on Facebook and shared with more than 5,000 people. Within days, a person who was looking for him contacted the Square Café and left a number that traced back to the collection agency, Windham Professionals, Inc.

The laws outlined in the Fair Debt Collections Practices Act of 1977 apply to collection attempts made through digital media (i.e. – text messaging and social media). Full and honest disclosure of identity and the intent to collect a debt is mandatory for collection agencies.

The act prohibits the following:
• Contacting third parties without prior consent from the debtor or a court unless they are seeking location information for the debtor;
• It bans disclosing debt obligations to third parties;
• Contacting debtors BEFORE 8 a.m. and after 9 p.m.;
• Directly contacting consumers who have attorneys handling the debt (i.e. – bankruptcy attorney);
• Making false or misleading statements;
• Using obscene or profane language;
• Using threats of violence to collect.

Debt collectors who violate these provisions can face fines of up to $1,000 per violation- money that goes directly to the debtor.
If the debt collector in fact researched Square Café by becoming friends with the Brighton Heights man on Facebook under false pretenses or by connecting with the debtor’s friends under false pretenses and without prior consent, the company is in violation of the Fair Debt Collections Practices Act.

Recently, the Consumer Financial Protection Bureau clarified debt collection rules, including proposed guidance to financial institutions warning that the debt collection act also applies to digital forms of communication, including text messaging and social media.

It is important that consumers check their credit reports at AnnualCreditReport.com to ensure the debt being reported is what is being collected and to know their rights.

A 2014 report says last year the commission received 204,464 debt collection complaints, up from 202,616 in 2012. Thirty-eight percent involved collectors misrepresenting the type of debt, amount or status; 19.7 percent were failure to identify as a debt collector and 16.6 percent involved repeated calls to third parties.

If you are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of 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 http://www.miamibankruptcy.com.

Bankruptcy Law, Credit

President Obama Extends Student Loan Debt Relief

Posted on June 11, 2014by Admin

On Monday, President Obama signed an executive order allowing millions of student loan borrowers to cap their monthly payments at 10 percent of their monthly income. “The cost of college and burden of student loan debt are suffocating middle-class families and putting students at an economic disadvantage before they enter the workforce,” Obama said.

Many borrowers already have the option to limit payments to 10% of their income. Obama’s order on Monday extended that option to about 5 million others who were not covered by the previous changes, including those who took out loans before October 2007.These new regulations are expected to be implemented in December 2015 at the earliest.

Student loan debt has reached $1.2 trillion. The average debt per borrower from the class of 2012 ranged from $17,994 in New Mexico to $33,649 in Delaware. President Obama has also endorsed legislation sponsored by Senator Elizabeth Warren (D-Mass.) that would allow students to refinance both public and private loans. This would be paid for by closing a tax loophole currently available to the wealthy. In another effort to help ease the burden for struggling borrowers, Obama ordered the Education Department to renegotiate its contract with student loan providers and give financial incentives to borrowers who make their payments on time.

Bankruptcy Law, Credit, Timothy Kingcade Posts

The WRONG ways to eliminate Student Loan Debt

Posted on May 22, 2014by Admin

This month thousands of graduates will be tossing their caps in the air with the excitement and hope of a prosperous future. But upon entering the “real world,” many of these graduates will soon be faced with a monthly burden: student loan debt. For many graduates, the first dose of reality begins with the first job; a job they estimated would pay more when they were taking out their student loans.

Do not make these mistakes when it comes to paying off your student loan debt.

1. Not paying. Many borrowers have tried this tactic, which seems simple enough. The student loan lenders are hoping you will make this mistake. With penalties and interest accruing, this is simply making a bad situation worse. In addition, this approach will hurt you when you try to get a mortgage or even lease an apartment, as these student loan payments tend to be some of the first credit accounts new graduates have in their name.

2. Making payments with credit cards and then declaring bankruptcy. This approach will end up costing you big time. The rates on credit cards are much higher than those on student loans. Not to mention, the bankruptcy court will see right through this scheme and it is unlikely the debt will be discharged.

3. Using home equity to pay off student loans. For borrowers who have returned to school later in life and are homeowners, they may think that using the equity in their home will help them consolidate their student loans and lower their monthly payments. The drawback here is that most student loans have comparable interest rates to what banks are charging homeowners right now. You are not paying off debt, just trading it in for some new debt, which is tied to your home. You can also be putting your house on the line. Missing a student loan payment can result in a late fee, but missing several mortgage payments can put you at risk of foreclosure.

If you’re having trouble meeting your obligations on federal student loan debt there are options out there ranging from Income-Based Repayment and Pay as You Earn plans to Income-Contingent Repayment. There are ways to legitimately satisfy student loan debt.

Bankruptcy Law, Credit, Timothy Kingcade Posts

Student loans come with Unexpected Hardship for some Borrowers

Posted on April 29, 2014by Admin

For borrowers who take out private student loans, the death of a parent can come with an unexpected hardship. Even borrowers who have a perfect payment history can face sudden demand for payment in full or be forced into default if the co-signer of their student loan passes away. Many students who take out loans for college have minimal income or have yet to build up enough credit, so borrowing from banks and other private lenders often require a co-signer, usually a parent or other relative.

The problem arises from a little known provision in private loan contracts, which states: “If the co-signer dies or files for bankruptcy, the loan holder can demand complete repayment, even if the borrower’s payment record is spotless.” If the loan is not repaid, it is declared to be in default and can do damage to a borrower’s credit record that can take years to repair.

The Consumer Financial Protection Bureau said that after a co-signers death or bankruptcy, some borrowers are placed in default without ever receiving a demand of repayment. An increase in consumer complaints indicate this is becoming a common practice among certain banks and private lenders; some are even doing this automatically- combining public records of deaths and bankruptcies, comparing them to loan records and generating repayment demands and default notices.

A little known fact: Borrowers can have their loans released from the co-signer requirement if they have a few years of earnings and credit history, or have the loans transferred to a new co-signer. However, many borrowers are unaware of this because the loan companies make it difficult to exercise these options.

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Bankruptcy Law, Timothy Kingcade Posts

How to get your Student Loan Debt Erased

Posted on April 1, 2014by Admin

Two-thirds of college students in the U.S. are graduating with some level of debt. According the Institute for College Access and Success, the average borrower will graduate $26,600 in the red. That’s a staggering number! Getting student loan debt erased in bankruptcy court is difficult, but not impossible. Several recent court decisions have challenged the notion that only the worst-off borrowers, typically those who are permanently disabled, can get student loan debt erased.

In many cases, borrowers filing for bankruptcy do not even ask about their student loan debt being discharged because they figure it’s a rare possibility. A recent study published in the American Bankruptcy Law Journal, found that only 213 out of 170,000 student loan debtors tried to have their education debt discharged by filing what’s known as the “adversary proceeding.”

Of those who tried to get their student loan debt discharged, two out of five received at least some relief. Based on the characteristics of those who were able to get discharges, the researcher who conducted the study calculated that an additional 69,000 people who filed for bankruptcy that year would have a “good chance” of erasing their student loans after filing adversary proceedings.

The study concluded that one reason so few student loan borrowers seek to discharge their student loan debt is because they have been convinced that it is a hopeless fight. A borrower must prove that repaying his or her student loans would be an “undue hardship.” This means meeting following requirements:

1.) A current inability to pay the loans, because doing so would not allow you to maintain a minimal standard of living given current income and expenses;

2.) A future inability to repay the money, because your financial situation is likely to continue;

3.) A good-faith effort to repay what you owe.

In two recent decisions, courts granted relief to borrowers who had not made voluntary payments on their debt and who refused to enroll in income-based repayment plans. The appeals court judges in both cases said enrolling would have been pointless given the women’s incomes. In a third case, the borrower was both employed and healthy, but wage garnishments by his student lenders left him unable to support his wife and two children.

Bankruptcy Law, Credit

Three Potential Student Loan Changes to Watch for in 2014

Posted on February 3, 2014by Admin

Student loan debt and borrower default rates continue to capture headlines. Federal student loan programs and interest rates for 2014-2015 are expected to change- and not for the better. Below are three potential student loan changes borrowers should watch out for in 2014.

1.) PLUS loans: Unlike Stafford loans, approval of PLUS loans and graduate PLUS loans are subject to credit history. Borrowers that have either filed for bankruptcy, foreclosure or have loan default within the last five years are not eligible for a PLUS loan. Congress is set to tackle this issue next month. Adjustments being proposed would help reduce default rates, but could also shut out a larger portion of students and parents.

2.) Interest rates: Congress battled student loan interest rates throughout 2013, finally agreeing on market-based rates. While the agreement lowered student loan interest rates- this was only a temporary fix. Experts predict the Treasury rate will rise as high as 3.75 percent, while others have a more conservative forecast of 2.96 percent. Either way, students taking out federal loans for the upcoming year should expect to pay more.

3.) Student loan counseling. The Smarter Borrowing Act could make student loan counseling more comprehensive by requiring colleges and universities to send students annual updates on their balance, interest rates and repayment options. The bill would also require colleges with higher default rates to include financial literacy and budgeting to their student loan counseling sessions.

Click here to read more on this story.

If you are in a financial crisis and are considering filing bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of 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, Timothy Kingcade Posts

Five Common Debt Traps and how to avoid them

Posted on January 29, 2014by Admin

Consumer debt stands at more than $3 trillion, according to the Federal Reserve. Below are five of the top debt traps Americans face and how you can avoid them.

1.) Job loss.Unemployment is steadily improving; but the level still remains above 7 percent. Unemployment or underemployment is the number one reason people seek financial counseling. Having an emergency savings fund totaling three to six months’ living expenses can help bridge the gap between jobs, if necessary.

2.) Medical costs. An unexpected illness can be emotionally and financially devastating, even for those with health insurance. It’s tempting to choose lower healthcare coverage to bring down a monthly premium. But those who forgo needed medication to mediate costs can face substantially higher emergency and ambulatory costs. Those with chronic health conditions or medication needs should consider a plan that’s more all-inclusive.

3.) Credit card overuse. When expenses increase and income decreases, many turn to credit cards to cover the difference. When managing credit card debt, pay off the cards with the highest interest rates first.

4.) Loss of a partner. Whether going through a divorce or losing a spouse to an illness, the loss of a partner can be financially devastating. Many times, this loss cannot be predicted. Paying down debt and building savings can provide a cushion if tragedy strikes.

5.) Student loans. The average student loan balance among borrowers is more than $24,000 and 66 percent of all bachelor’s degree recipients incur student loan debt. In some circumstances, student loan payments can be postponed through deferment or forbearance- sometimes these can even be forgiven. Federal lenders also offer extended payment and loan consolidation programs, which can extend the term of the loan and lower your monthly payments.

Click here to read more on this story.

Bankruptcy Law, Credit, Foreclosures

U.S. Consumer Debt on the Rise- Highest Since Early 2008

Posted on November 18, 2013by Admin

According to data from the Federal Reserve Bank of New York, U.S. household debt increased in the latest quarter by the most it had in more than five years and student loans in delinquency hit a record high. Total consumer debt rose to $11.28 trillion, which marked the biggest quarterly jump since 2008. The increase in the third quarter suggests that the cycle may be nearing its end.
There is has been an increase of household debt essentially across all spectrums. Americans have recently put more on credit cards, borrowed more money to buy houses and cars and took out more student loan debt.

The continued rise in student debt continues to be a cause for concern. Outstanding balances increased $33 billion to $1.03 trillion in the third quarter. A record 11.8 percent of loans were behind by 90 days or more, the New York Fed said, up from 10.9 percent in the second quarter. Student loan debt can unfortunately not be discharged under current bankruptcy law. Economists worry that in the coming years delinquencies could lock people out of economic participation.

Foreclosures which continue to decline, hit their lowest levels since the end of 2005.

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