Tag: U.S. Department of Education

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

More than 40% of Student Loan Borrowers Not Making Payments

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This shocking statistic raises concern that the $200 billion owed might never get repaid.  The new figures represent the after effects of a borrowing boom that has spanned over a decade, with a record number of students enrolling in trade schools, universities and graduate schools.

While most of these borrowers have now entered the workforce, 43% of the roughly 22 million Americans with federal student loans were not making payments as of January 1, according to the Education Department’s $1.2 trillion student-loan portfolio.

Approximately 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt, meaning they had not made a single payment in more than a year; Three million more were at least a month behind, owing roughly $66 billion.  Another three million owing nearly $110 billion were in “forbearance” or “deferment,” meaning they had received permission to temporarily halt payments due to a financial emergency, such as unemployment.

Some borrowers are not even repaying their student loans when they can, according to research from Navient Corp.  The study showed that borrowers prioritized other bills—such as car loans, mortgages and heating bills—over student loan debt. A borrower who defaults on an auto loan might have their car repossessed; with student loans, the penalty is not as immediate or severe.

Advocacy groups, some members of Congress and the federal Consumer Financial Protection Bureau blame the loan servicers for not doing enough to reach out to struggling borrowers to offer manageable payment options.

The Obama administration has stepped up efforts to reach borrowers and offer the income-based repayment plans. In certain cases, the government is garnishing wages and tax refunds of borrowers who refuse to pay.  Private debt-collection agencies hired by the Dept. of Education garnished $176 million in Americans’ wages in the final three months of last year for student debt, according to federal data.

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, 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, Timothy Kingcade Posts

Feds Shut Down Illegal Student Loan Debt Relief Company

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The Consumer Financial Protection Bureau (CFPB) filed a lawsuit last December against Student Loan Processing.US, a debt relief operation that allegedly stole millions of dollars from consumers promising to provide repayment benefits.  Today, the CFPB has taken some drastic measures to put an end to this organization once and for all. It requested that a federal district court enter a final judgment and order it to shut down Student Loan Processing.US and refund customers millions of dollars.

According to the CFPB’s lawsuit, since 2011, Student Loan Processing.US (a fictitious business name of Irving Web Works, Inc.) along with its owner, allegedly marketed and advertised services to advise and assist borrowers applying for Dept. of Education federal student loan repayment programs.

The CFPB alleges that College Education Services and Student Loan Processing.US illegally tricked borrowers into paying upfront fees for these benefits. Many times the company told consumers that it was a “consultation service” for the Dept. of Education. The company even went so far as to use a logo that resembles a government seal, stamps “official business” on its mail to consumers and cites federal law prohibiting mail tampering to create the impression that its marketing material are sent or endorsed by the federal government.

The company would then charge consumers upfront enrollment fees of either 1% of their federal student loan balance or $250, whichever amount was higher. The CFPB reports that the company required borrowers to pay the entire fee before it would even mail an application to consumers.

The ruling also found in favor of the CFPB on its claims that College Education Services and Student Loan Processing.US violated the Telemarketing Sales Rule and the Dodd Frank Act’s prohibition against deceptive acts or practices by collecting payment information from customers before disclosing the total cost of the company’s services.

According to the final judgment, Student Loan Processing.US will be ordered to pay more than $8.2 million in relief and damages to customers.

For individuals struggling with student loan debt, it’s important to remember that the Department of Education provides numerous plans to borrowers with federal student loans to make payments more affordable FREE of charge.

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, 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

How Victims of School Fraud Can Apply for Student Loan Forgiveness

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This past year, thousands of student loan borrowers have discovered that they can apply to have their student loan debt forgiven. The forgiveness program was enacted in 1994 is called the “borrower defense” or “defense to repayment.” The program is intended to assist students’ whose schools violated a state law during the recruiting process.  However, the vague nature of the program has forced the Education Department to begin drafting new rules that will clarify what is required to prove fraud.

How To Apply

Anyone who has borrowed from the government’s Direct Loan program for any institution is eligible to apply for the forgiveness program. If you wish to apply for the program, visit: https://borrowerdischarge.ed.gov and fill out the online application. Although it states that the application is for Corinthian College borrowers, any eligible student from any college can apply.

The U.S. Education Department has hired a “special master” to review the applications and make recommendations to the agency. Two reports have been issued since and can be found at:

https://www2.ed.gov/documents/press-releases/report-special-master-borrower-defense-1.pdf

https://www2.ed.gov/documents/press-releases/report-special-master-borrower-defense-2.pdf

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.

Related Resources:

http://blogs.wsj.com/briefly/2016/01/20/student-debt-forgiveness-for-victims-of-school-fraud-at-a-glance/

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

Thousands Appeal to have their Student Loans Forgiven

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Student loan borrowers are appealing to the government to have their student loans forgiven under an obscure federal forgiveness program. Since 1994 the program has only been used successfully three out of five times. The law forgives borrowers’ debt who prove their schools used illegal tactics to recruit them, such as lying about their graduates’ earnings.

The forgiveness program was used successfully in a case last year where the U.S. Education Department agreed to cancel nearly $28 million in debt for 1,300 former students of Corinthian College. The college was also forced to pay $550 million to the Consumer Financial Protection Bureau and later liquidated in bankruptcy.

The Education Department is unsure what to expect due to the law’s vague explanation of what evidence is needed to prove a school has committed fraud. However, the 7,500 borrowers who applied to have their $164 million in student loan debt expunged believe the forgiveness program will be their lifeline.

The Education Department’s undersecretary, Ted Mitchell said, “The law is clear about giving students redress when they’ve been defrauded.” He went on to say this goes for forgiveness on current loans as well as potential reimbursement of repaid loans.

Education Department officials said the agency failed to draft rules for the law due to a lack in urgency to do so since they had only received five applications since 1994. The recent surge in applications reflects the growing savvy of student activists who discovered it last year.

The majority of the borrowers who have applied for the forgiveness program have attended for-profit colleges such as Corinthian College. Others have attended Art Institutes owned by Education Management Corp. and ITT Technical Institutes owned by ITT Educational Services Inc. The federal government has investigated all three of these institutions in recent years for illegal recruiting tactics.

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.

Related Resources:

http://www.wsj.com/articles/thousands-apply-to-u-s-to-forgive-their-student-loans-saying-schools-defrauded-them-1453285800

https://www.washingtonpost.com/news/grade-point/wp/2015/10/28/government-watchdog-wins-530-million-lawsuit-against-for-profit-corinthian-colleges-too-bad-it-will-never-see-a-dime/

 

 

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

Discharging Student Loan Debt is Easier than You Think

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Contrary to popular belief, it is not impossible to have your student loan debt discharged in bankruptcy. Findings from a study conducted by Jason Iuliano, a Harvard Law graduate and a Ph.D. candidate at Princeton reveal that 40% of those who filed received some sort of discharge from the bankruptcy court.

Iuliano reviewed every bankruptcy case involving student loan debt from 2007. Of the 169,774 student loan debtors who filed for bankruptcy, only 213 filed adversary proceedings. An adversary proceeding is a lawsuit filed within a bankruptcy case. It is also a necessary step in bankruptcy when you are seeking to have student loan debt discharged. Out of the 213 who filed an adversary proceeding, 51 debtors received a full discharge, 30 received a partial discharge and 25 received an administrative remedy.

This means that only 0.1% of those who filed for bankruptcy tried to have their student loan debts discharged and of those who tried, half of them received some form of relief from the court.

Due to the public’s perception that student loan debt cannot be discharged, most student loan debtors who are struggling with large amounts of debt do not attempt to have their loans forgiven.

Below are the steps you should take if you are considering filing for bankruptcy to have your student loan debts discharged:

Hire an attorney. Do not be discouraged if you have to meet with several attorneys before finding one who is willing to take on your case. There are some bankruptcy attorneys who do not take on cases involving student loan debt.

Do some background research for yourself. Look into some of the successful cases where the debtors experienced similar financial struggles that you are experiencing.

Try to negotiate with your lender before filing for bankruptcy. The Department of Education has issued a guidance stating when a lender should not contest a debtor’s claim of undue hardship in bankruptcy.

Bankruptcy court can be invasive. If you decide to file bankruptcy, expect that all of your finances and purchases will be questioned.

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, 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 Sources:

http://www.alllaw.com/articles/nolo/bankruptcy/adversary-proceedings-bankruptcy.html

 

Bankruptcy Law, Student Loans, Timothy Kingcade Posts

More Student Loan Debt Forgiven for Corinthian College Students

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The government is erasing student loan debt for more than 7,000 former students of the now-defunct Corinthian Colleges- totaling over $100 million.  According to a recent report, the Education Department has approved a second wave of loan forgiveness for students who attended this college and took out loans.  This one is for students who filed “borrower’s defense” claims with the government, alleging they were lied to or mislead. At one time, Corinthian was one of the largest chains of for-profit colleges, but filed for bankruptcy protection in May 2015 after allegations of fraud surfaced.

The department’s undersecretary, Ted Mitchell said, “We will continue to provide forgiveness to every student who has been similarly mistreated.”

In a progress report released by the department, Joseph Smith, who is overseeing the debt relief, said his team has approved relief for 1,300 former Heald College students, totaling nearly $28 million in loans that now will not have to be repaid to the government.

Heald, which had campuses in California, Hawaii and Oregon, was one of three schools under the Corinthian umbrella.  The other two were Everest (with 10 Florida campuses) and WyoTech.

Another 5,800 former students from Heald, Everest and WyoTech who filed “closed-school” claims with the government will see their debt discharged, totaling $75 million. It is expected that tens of millions of dollars of additional relief will be granted in the coming months under the closed-school claims.

Education officials have predicted that if all Corinthian students who borrowed government money (dating back to 2010) would seek relief, the total cost would be $3.2 billion in student loan debt relief.

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, 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, Student Loans, Timothy Kingcade Posts

Student Debt in America: Extend with a Smile, Collect with a Fist

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The student loan debt crisis is nothing new, but the interest accruing on these loans represents a new threat.  Of the 43.3 million borrowers with outstanding federal student loans, 1.8 percent, or 779,000 people, owes $150,000 or more.  And 346,000 owe more than $200,000.  A Missouri high school teacher and mother of four owes the federal government a staggering $410,000!  She took out loans for her undergraduate education, but also for law school, which she was unable to complete after becoming ill with a life-threatening autoimmune disease that required a lengthy hospitalization.  Today, the interest has accumulated to twice the original principal.  The monthly loan payments of $2,750 will stretch for 30 years.

With her forbearance options exhausted, the loan servicer has threatened to “come after her,” garnishing her wages and eventually her social security.   This woman’s story reveals the deep contradictions in the federal government’s approach to student loans.  People have always struggled with debt and access to capital is what fuels the modern economy.  Borrowing for college is often seen as a good idea because it represents an investment in a person’s future potential.  However, borrowing is risky and people often do a poor job- particularly young people- of properly weighing the interests of their present and future selves.

The private enterprise system is built to limit over-borrowing by sharing risk between lenders and borrowers.  Lenders examine credit and income histories and ask for collateral that can be repossessed in case of default.  Because most loans can be discharged in bankruptcy, lenders share on the cost of default.   But federal student loans do not work that way.   “No Cash? No Credit? No Problem!” is essentially the Department of Education’s policy on student loans.

The number of active borrowers enrolled in college has declined roughly nine million today from about 12 million in 2010, according to the Federal Reserve Bank of New York.  But the total amount of outstanding student loan debt continues to increase, because many borrowers are struggling to pay back their older loans.

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, 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

How the Government Polices what Student Debtors Spend

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A social worker at Sacramento County’s department of children’s protective services who filed for bankruptcy, asked the court to forgive the $137,000 she owed in student loans because paying them, she said, would make it impossible to provide for her five family members, which include her elderly mother, disabled husband, and three children.

According to lawyers for the Department of Education, her $700-per-month food budget was too high and “she cannot purposely choose to live a lifestyle that prevents her from repaying her student loans.”

The government’s scrutiny of her cash flow is not surprising. For more than a decade, the Education Department has closely examined debtors’ basic expenses in its fight to prevent student borrowers from discharging their student loans in bankruptcy- often disqualifying those who need it the most.

In some bankruptcy proceedings, courts will consider how much someone is spending, to determine how much they can reasonably pay back to their creditors in the future. However, when it comes to student loan debt, the government has additional leverage. The Education Department can deny people bankruptcy altogether if its lawyers can show that debtors are spending too much on basic items like fast food, cable television, or even their pension plans.

Government lawyers are given license to do such meticulous accounting because of a provision in the bankruptcy code. Congress passed rules in the 1970s making it nearly impossible to get rid of student loan debt in bankruptcy unless they can prove “undue hardship,” without defining the term. Instead, it is left to the courts to interpret the law. Most courts require debtors prove they cannot maintain a “minimal” standard of living while paying the debt back.  Lawyers for the Education Department generally view any sign of excessive spending as an argument that debtors don’t qualify.

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

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

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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.

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.