Debt Relief, student loan debt, Student Loans

White House Considering Executive Action to Cancel Portion of Nation’s Federal Student Loan Debt

The Biden administration is considering issuing an executive order that would effectively cancel some portion of the $1.6 trillion in federal student loan debt held by 43 million Americans. This statement comes as no surprise as student loan forgiveness and student loan reform were consistently topics of discussion during the 2020 Presidential campaign.  

The statement came last Thursday from White House press secretary Jen Psaki. She indicated the administration was looking into whether President Biden had the executive authority to cancel a portion of the nation’s outstanding student loan debt. However, they also indicated that they would welcome any legislation brought forth by Congress to do the same.  

Bankruptcy Law, Student Loans, Timothy Kingcade Posts

More than 1 million student loan borrowers default each year

Student loans are a problem for many Americans, but recent loan statistics show just how serious the problem is. More than one million student loan borrowers reportedly go into default on their loan obligations every year, surpassing auto loans and credit card debt.

In fact, the amount of student loan debt Americans carry has tripled in size over the last decade and is now over $1.5 trillion.

Default occurs when a borrower has not made a payment on their loans in over a year, thus triggering the debt being sent to a third-party debt collector.

Why are so many borrowers defaulting on their loans? For many of them, continuing to make the payments has become not feasible. Because of this, it is estimated that approximately 40 percent of borrowers are expected to default on their student loan obligations by the year 2023.

According to a report from the Urban Institute, a progressive Washington, D.C., think tank, within four years after graduating or leaving school, approximately one-fourth of all borrowers have defaulted.

Borrowers who end up defaulting on their loan obligations are less likely to carry some type of debt that requires a risk assessment, like a mortgage or credit card, but they are more likely to have medical bills or utility bills that end up being sent to collections. All these additional debt obligations can put added pressure on the borrower, and for this reason, many of the borrowers will put the student loan payments dead last next to other obligations.

Those who defaulted on their student loan obligations were found to live in an area where the median income was $50,000. Those who did not default on their loan obligations typically lived in areas where the average income was around $60,000.

The report further showed that the amount of the loan balance did not seem to matter. Even those who carried a small loan balance still struggled to pay off their debt.

What happens to a borrower’s loan when it goes into default?

As soon as someone’s student loan goes into default, their credit score will take a hit of approximately 60 points, dropping the average defaulter’s score to 550, which is a “poor” score. If the borrower stays current, the average credit score has been in the high 600s.

If the case ends up going into collections, the borrowers find themselves in the danger zone of receiving a judgment against them and wage garnishment. Collections judgments and wage garnishments can be extremely difficult to shake in bankruptcy cases, which can make the situation even worse if the borrower falls into a dire financial situation.

If someone finds himself or herself not able to make student loan payments, the first recommendation is to contact the student loan servicer. Many of these servicers will work with borrowers on payment plans that are capped at a monthly payment based on a percentage of the borrower’s income. The borrower can request the loan be put in forbearance, which temporarily postpones payment of the debt- however, the interest on the loan will continue to accrue. If the loans are in default, contact the loan servicer to see what can be done to get the account in good standing. The worst thing that a borrower can do is to ignore the loan payment requests.

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. 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.

 

 

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

How Student Loan Debt Can Affect Your 401K

Student loans and retirement planning may not seem like two things that would affect each other. Usually, the first thought after graduating is to get a job to start paying back student loan debt. However, student loan debt has become an increasing problem when it comes to saving and planning for retirement.

More and more students are graduating with student loan debt today.  And for those starting their careers fresh out of college, many are finding it hard to save for retirement along with meeting their monthly obligations, the biggest of these being student loan payments.

New research shows that families age 45 to 54 with zero student loan debt have an average 401(k) balance of $80,000. Take that same age demographic and add the issue of student loans, and the median balance for their 401(k) drops to $46,000. Families who have heads of household younger than 35 with student loans carry a median 401(k) balance of $8,000.

Some companies are helping their employees with student loan debt. In January 2016, Fidelity launched a program to help their own customer service associates pay up to $2,000 of student loan debt annually, with a lifetime maximum of $10,000. Fidelity employees responded well to the program with 8,400 employees taking advantage of it, the majority of them being in the younger demographic.

Another company, Gradfi, a fintech company, started a student loan repayment program, offering this service to 100 employers in 2016. Gradfi is now working with 350 companies across the United States, including Peloton and Pricewaterhouse Coopers. Employers can use these programs to draw in key hires, but also work on retaining employees once they are hired.

One downside to these student loan repayment programs, however, is the fact that these employer payments must be considered as taxable income to employees.

For the time being, it is advisable to factor in both payments on student loan debt and contributions to retirement savings. Every bit helps and making those smaller contributions today will build up to larger contributions over time as student loan debt decreases. Take advantage of employer-matched money when making these contributions, and speak with your financial advisor to see how much you can contribute comfortably.

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. 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.

 

 

Bankruptcy Law, Credit, Debt Relief, Student Loans

Trump Proposal Could Protect Student Loan Debt Collectors

Bloomberg reported the U.S. Department of Education could issue a directive that says federal law prohibits state governments from regulating student loan debt companies that collect student loan debt on behalf of the Education Department.

A document from the Department of Education that was obtained by NPR states:

“Congress created and expanded the Direct Loan Program with the goal of simplifying the delivery of student loans to borrowers, eliminating borrower confusion, avoiding unnecessary costs to taxpayers, and creating a more streamlined student loan program. Recently, several States have enacted regulatory regimes or applied existing State consumer protection statutes that undermine these goals.”

If the directive is enacted, the student loan debt collectors will benefit because they would face less regulations. Student loan borrowers are currently protected by state regulators who do not allow collectors to use aggressive tactics and unfair business practices to collect on debts.

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 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.

Credit, Student Loans, Timothy Kingcade Posts

How To File For Bankruptcy with Student Loan Debt

For consumers struggling with significant debt, filing for bankruptcy may be your best option to provide you with a fresh start. If your debts consist of federal student loans, it is not an easy process to get these discharged in bankruptcy; however, it is possible.

The first thing you must do is to decide whether you will file for Chapter 7 or Chapter 13 bankruptcy. In Chapter 7 bankruptcy, the goal is to get unsecured debt wiped out. This means, you have little disposable income available to pay off your debts. If you choose to file for Chapter 13 bankruptcy, your plan is to get your debts restructured in order to repay some of it. This also means you likely have some disposable income to repay part of your debt.

The most important part of your case when you have student loan debt is that you must prove “undue hardship” to the court. This means that you must prove that you cannot pay back your federal student loans. In order to prove undue hardship, you and your bankruptcy attorney must file a petition called an adversary proceeding, which is unique to bankruptcy involving student loan debt.

In most courts, The Brunner Test is used to evaluate hardship. Below are 3 factors of The Brunner test outlined by the U.S. Department of Education’s Federal Student Aid office:

  • The filer cannot maintain a basic standard of living if paying back federal student loans
  • The filer can prove the hardship will last for a large percentage of the repayment period
  • The filer honestly tried to repay the loans before filing

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 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.

Bankruptcy Law, Credit, Debt Relief, Foreclosures, Timothy Kingcade Posts

Richard Cordray Resigning As CFPB Director by December

Director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, recently announced in an email to his employees that he is resigning by the end of November. Cordray was nominated in 2012 by President Obama and was confirmed as the first official head of the CFPB the next year.

Under Cordray’s leadership, the CFPB supervised and enforced $11.8 billion in financial relief to consumers, including monetary compensation, principle reductions and canceled debt. The CFPB also spearheaded the lawsuit against Wells Fargo last year. The bank was ultimately forced to pay $185 million in fines after secretly opening phony accounts that were not approved by current customers.

Since President Trump has taken office, the CFPB has come under fire with some Republicans in Congress who believe the agency has too much power and no oversight. However, many in the democratic party such as Elizabeth Warren see Cordray as a tireless public servant. Warren said in a statement, “he held big banks accountable,” and “he will be missed.”

If you are in 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 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

Related Resources:

https://lendedu.com/news/richard-cordray-resigning-as-cfpb-director-by-december/

https://www.boston.com/news/politics/2017/11/15/heres-what-elizabeth-warren-said-about-the-expected-resignation-of-cfpb-director-richard-cordray

 

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

When Unpaid Student Loan Bills Mean You Can No Longer Work

Many former students across the country have realized that the loans they took out to pay for their education are now derailing their careers. In 20 different states, government agencies can and have been seizing state-issued professional licenses from residents who default on student loans.

As debt levels rise, creditors are taking increasingly tough actions to pursue people who fall behind on student loans. Across the nation, firefighters, nurses, teachers, attorneys, massage therapists, barbers, psychologists and real estate brokers have all had their licenses suspended or revoked.

In the past, lenders have pursued delinquent borrowers by filing lawsuits, garnishing their wages, putting liens on their property and seizing tax refunds. However, lenders believe if borrowers are faced with losing their licenses, they will find the money. On the other hand, critics of the laws say that enforcing these terms will shove some borrowers off a financial cliff.

Florida is among the 20 states that can seize state-issued licenses if a borrower defaults on student loans. The other 19 states include: Washington, California, Alaska, Hawaii, North Dakota, South Dakota, Minnesota, Iowa, Illinois, New Mexico, Texas, Arkansas, Mississippi, Louisiana, Tennessee, Virginia, Georgia, Kentucky and Massachusetts.

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 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.

 

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

Student Loans Vs. Other Debt: Find your Most Powerful Debt Payoff Strategy

Many Americans struggle when trying to prioritize which debts to pay off first. Here is a helpful guide for deciding when to prioritize paying off student loans before other debts.

4 Reasons You Should Pay Down Your Student Loan Debt First

  1. You have high student loan rates. If your student loans have the highest interest rate of all your debt, that is where you should begin. You may also want to explore refinancing your student loans if you qualify for a lower rate.
  2. Your student loans have a small balance. Paying off your student loan with a small balance first is called the debt snowball method. This method allows you to see results and to stay motivated to keep up with your payoff plan.
  3. You have private student loans. Private student loans are considered “riskier” forms of debt than federal loans, which is why you should pay them off sooner rather than later. The reason they are riskier is because they do not offer the same repayment protections and options as federal loans, such as income-based repayment plans.
  4. You are close to defaulting on your student loans or declaring bankruptcy. Defaulting on a federal loan can lead to wage garnishment much more quickly than if you are not making credit card payments. Therefore, if you are struggling with student loan debt, make it a priority to make those payments first.

 

5 Reasons You Should Pay Down Other Debts First

  1. You are following the debt snowball method. The debt snowball method may lead to you paying off student loans first, however; it may also lead you to target other debts with higher interest rates or lower balances first.
  2. You value federal loan protections. Federal student loans offer repayment options and other protections that other types of debts do not offer.
  3. You hope to qualify for the Public Service Loan Forgiveness program (PSLF). The PSLF is slated to forgive federal student debt for more than 550,000 Americans, according to the Washington Post. Any balance remaining after 10 years will be forgiven to eligible borrowers. The more you pay on this debt, the less you will be left for the government to forgive.
  4. You want to improve your credit. Decreasing your debt is a good way to improve your credit score. However, certain types of debt will increase your score faster than others. Higher balances on revolving debt will give you a higher utilization ratio – which can damage your credit. If you have your credit cards maxed out, you should target this debt first.
  5. You want to claim interest tax deductions. When considering which debt to prioritize, it can help to consider the potential tax benefits you can claim. Most consumer debt cannot be claimed as a tax write-off, but student loan debt and home mortgages are exceptions.

Click here to see 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 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

Credit Card Debt a Growing Concern for College Students

A recent study conducted by Nellie Mae, the nation’s leading student finance firm, revealed that the average undergraduate carries a credit card balance of $2,169.  According to the study, many students use their credit cards without knowing how the bills will even be paid off.  It also showed that many students used credit cards to pay for tuition and books, instead of federal student loans that offer lower interest rates.

Four out of five college students amass nearly $1,000 a year in credit card debt.  One cause of credit card debt is college students’ difficulty in adjusting to their newfound financial freedom.  Parents and students need to come up with a budget for credit card spending before their child leaves for college.  Make sure your college student knows not to use money they do not have, even for a one-time purchase.

Use resources available to keep them on the right path.  You and your college student should sign-up for overdraft alerts on all accounts. Online alerts and apps on your Smartphone can help with this.

If you are in 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 www.miamibankruptcy.com.

Related Resources:

https://www.fastweb.com/personal-finance/articles/dealing-with-credit-card-debt

http://www.nbcdfw.com/news/local/Credit-card-debt-a-mounting-concern-for-college-students-441338263.html

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

The New Shape of U.S. Household Debt

Household debt in America has been reshaped in ways that could potentially affect how financial experts are able to help manage a consumer’s liabilities. The overall debt of U.S. households is $100 billion smaller than it was in 2008. According to the Federal Reserve Bank of New York, it also looks a lot different now than it did then.

Mortgage debt remains the largest debt burden. However, its share of household debt has declined along with that of credit card debt, while the share of student loan debt and auto loan debt has grown.

By the end of 2016, mortgage debt accounted for 71 percent of household debt, down from almost 79 percent in 2008. Student debt had more than doubled since 2008 and more than tripled since 2003 to 10.4 percent.

Auto loan debt had a 9.2 percent share at the end of 2016, which is approximately one-third larger than it was in 2008. All three types of debt had larger shares of households’ income than credit card debt.

All of this means that housing debt fell $1 billion from its peak in 2008 of $9 trillion, while student loan debt rose $700 billion and auto debt rose $350 billion.

Financial experts attribute the change in household debt to a change in the demographics of U.S. debt. Households that are headed by those 60 years old and older now account for just over 22 percent of outstanding U.S. debt, which is up from 16 percent in 2008.

Click here to read more on this story.

If you are in financial crisis and considering filing for bankruptcy, 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.