student loan debt Archives - Page 26 of 27

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.

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. 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

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.

Click here to read more on this story.

Bankruptcy Law, Credit, Timothy Kingcade Posts, Uncategorized

Student Loan Default in the U.S. and Steps the Govt. is taking to address the Problem

Posted on October 31, 2013by Admin

With student loan debt approaching $1.2 trillion it has become a threat to our children’s futures. Senator Elizabeth Warren, D-Mass., a leading consumer activist and advocate for student loan reform in Congress recently co-sponsored a bill, “Keep Student Loans Affordable Act of 2013.” The new bill would have rolled back interest rates and frozen them for a year at 3.4 percent. During that year, Warren and her colleagues planned to reform the student loan system to eliminate profits, provide better consumer protection and address “the college affordability problem,” which, she says, forces families into debt in the first place.

The bill unfortunately failed, but Warren is continuing to press for the following changes:

– Eliminating government profits from the student loan program.

– Reducing the burden of student debt on existing borrowers by letting them refinance their loans during this period of historically low interest rates.

– Restoring basic consumer protections, such as bankruptcy relief. Under current law, student loans cannot be dismissed when someone files for bankruptcy protection.

President Obama gave his support to Warren’s key issue saying that, “government shouldn’t see student loans as a way to make money; it should be a way to help students.” The urgency from Warren and other advocates is that students and their parents are increasingly turning to loans to pay for higher education, as college costs have become out of reach for most families.

Nationally, about 11 million students take out college loans each year. One reason loan numbers are spiking is that college costs have soared since 1982-83, by 257 percent at four-year state colleges and universities and by 166 percent at four-year private colleges and universities, according to the College Board. At the same time, state support of public colleges and universities has slipped. State funding for public universities dropped by 23 percent between 2007 and 2012, Warren said.

Defaulting on student loans can have a lasting impact on your financial future. The Federal Student Aid website lists the following consequences of defaulting on your student loans: The outstanding amount of the loan-both principal and interest- becomes due immediately; the borrower loses eligibility for any additional student aid or forgiveness program; you are reported to credit bureaus; the overall debt will increase as interest keeps building, which can include late fees, collection fees and court fees. The following consequences can also result: Wages may be garnished; tax refunds may be withheld; pay can be withheld and the lender may even file a lawsuit against you.

The debt that students are taking out to finance their lives and futures is crushing! Student loans are the toughest because they start so early, when students are trying to launch their careers and gain their financial footing. This is also the time young people are the most vulnerable and have the fewest resources available to them.

If you are having trouble making your student loan payments or you have recently defaulted on your federal or private student loans, contact an experienced Miami bankruptcy attorney. Although student loans are often not dischargeable in bankruptcy court, an attorney can help you eliminate other debts and obligations so you can take control of your finances and better handle your student loan debt.

Bankruptcy Law, Timothy Kingcade Posts

U.S. Dept. of Education to Contact Borrowers with NEW Options for Repaying Student Loans

Posted on September 26, 2013by Admin

Starting next month, the U.S. Department of Education will contact borrowers who are struggling to repay their federal loans to make sure they know of all the options available to them. The challenge will be getting the word out as there are many people who can benefit from the income-based repayment programs being offered. To accomplish this, the department is planning to send e-mails to those who seem most likely to benefit from the programs, explaining debt-relief plans based on the borrower’s income.

Efforts to help alleviate student debt, now at more than $1.1 trillion, and make college more affordable have been central issues for the Obama administration. It has expanded debt relief for low-income borrowers with a Pay as You Earn program for recent graduates, and simplified enrollment by putting the application online and allowing applicants to import information from their tax return.

Once enrolled in a program, low-income borrowers with high debt will pay a percentage of their discretionary income every month, and after a certain time period — 20 years in the new program, 25 years in older plans and 10 years for those in public service jobs — the remaining federal debt is forgiven.

Of course, income-based programs have a downside: because the repayment period is longer than the standard 10 years, except for those in public service jobs, interest costs are higher. The U.S. Dept of Education stresses that the programs are not meant for all borrowers, but as a safety net for those struggling with their student loan debt.

Click here to read more on the new options available for repaying student loans.

Bankruptcy Law, Credit, Timothy Kingcade Posts

Parents on the Hook for Child’s Student Loans

Posted on September 25, 2013by Admin

American student loan debt tops $1 trillion, according to the Consumer Financial Protection Bureau. But with many recent graduates facing a tough job market and limited employment opportunities, what happens when they cannot afford their monthly student loan payments? If a parent co-signed the loan, the burden shifts to them.

Bankruptcy attorneys are seeing an increasing trend with parents struggling to pay off their child’s student loans. Unfortunately, even bankruptcy cannot wipe the slate clean- unless of course undue hardship can be proven. Al Franken, on the Senate Education Committee, said that he has backed several pieces of legislation he thinks could help. One example is the Fairness for Struggling Students Act, which, if passed, would make it possible to eliminate private student loan debt in bankruptcy. Franken has also backed legislation that aims to help students receive better counseling when taking out a loan.

Experts say parents can and should co-sign their child’s student loans, but must be “informed borrowers,” meaning they need to closely scrutinize the terms of the loan. Many banks are getting out of the student loan business, largely because of the increased scrutiny from lawmakers. JPMorgan Chase announced its departure just a couple of weeks ago. Bank of America, Citigroup, and U.S. Bank have already done the same. So for future borrowers, it means more student loans will come from the federal government.

Click here to read more on the story.

Bankruptcy Law, Credit, Timothy Kingcade Posts

As Debt Grows, Students Delay Payment

Posted on March 4, 2013by Admin

Student loan debt surpassed both credit card debt and mortgage loan debt last year. While recent graduates are struggling with a weak job market and bad economy, many borrowers are delaying principal and interest payments, causing an even larger surge of student loan balances. The housing market showed signs of recovery during 2012, however unemployment rates remained high. According to Ezra Becker of one of the three major credit-reporting agencies, TransUnion, students can only defer repayment for a short period of time, after which, borrowers often find themselves in financial troubles.

TransUnion tracked active student loans in its credit database from March 2007 to March 2012 and determined that 65.5 million of the 128.8 million in outstanding student loans were in deferment. The report also showed that the balance of loans including all lenders that are in deferment represent $388 billion of the $893 billion in total outstanding loan debt. The average in student debt had also increased to $23,829 since 2007, approximately a 30 percent increase. The surge in student loan debt has had negative impacts on individuals, lenders and the economy as a whole. According to U.S. Senator Dick Durbin D-III., Americans are struggling with such significant student loan debt that many are forced to put off major life decisions such as buying a home or starting a family.

If you have any questions on this topic or are in a financial crisis and are considering filing bankruptcy, contact an experienced 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, P.A. at www.miamibankruptcy.com.

Bankruptcy Law, Credit, Timothy Kingcade Posts

Senate Proposes Bankruptcy Option for Private Student Loan Debt

Posted on February 5, 2013by Admin

Last Wednesday, Sen. Dick Durbin unveiled a proposal that would give student loan debtors an option for bankruptcy. The proposal targets former students who have loans through private lenders such as Sallie Mae, Wells Fargo Corp. and Discover Financial Services. The proposed bill does not apply to federal education loans, which make up more than 80% of the $1 trillion in outstanding student loan debt.

Currently, Federal law prohibits private or federal student loans from being discharged in bankruptcy court, except in rare cases. Consumer advocates believe this to be the reason that many borrowers are unable to unload their student debt. In many cases, student loan debt is so high; there is little hope the borrowers will ever repay them. Other types of major consumer debt including mortgages, credit cards and auto loans are all dischargeable in bankruptcy court.

If you are in a financial crisis and are considering filing bankruptcy, contact an experienced 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, P.A. at www.miamibankruptcy.com.