Category: Student Loan Debt

bankruptcy code student loan borrowers

Should The Bankruptcy Code Be Amended To Allow A Fresh Start For Student Loan Borrowers?

At the Student Loan Law Resolution Center, we often have to tell our clients that they can’t discharge their Federal or private student loans in bankruptcy unless they can show undue hardship.

Federal Student Loan Options

Our clients with Federal student loans, have greater options for dealing with financial difficulty in repaying student loans. These options include placing our clients in income-based repayment plans based on our client’s disposable income. There is even a discharge program for public service loan forgiveness and a discharge in the event of disability. We, at Student Loan Resolution Center, believe that those are sufficient protections for Federal student loan borrowers.

Continue reading “Should The Bankruptcy Code Be Amended To Allow A Fresh Start For Student Loan Borrowers?”

president obama student loans

10 Steps That President Obama Is Taking To Help Struggling Student Loan Borrowers

President Obama has announced a 10-point Bill of Rights that will help student loan borrowers in financial distress. These include:

1. A new complaint system that will provide a “responsive and transparent complaint system” to help “restore the balance between borrower rights and the draconian collection system.” A responsive complaint system is overdue!

Continue reading “10 Steps That President Obama Is Taking To Help Struggling Student Loan Borrowers”

What’s An Income-Based Federal Student Repayment Plan?

Income-Based federal student loan repayment plans set a monthly payment based on your current income and family size. Payments under these plans are generally lower than payments under the Standard Repayment Plan. Payments can normally range from 10% – 20% of your discretionary income by, depending on the income plan. These can include Income-Contingent Plan, Income-Based Plan and the Pay As You Earn Plan.

Continue reading “What’s An Income-Based Federal Student Repayment Plan?”

student loan deferment attorney

What You Need To Know About Student Loan Deferment

Have your student loans come due? Student loans never go away and failing to pay back your student loans can make it difficult for you to rent an apartment or even get a good job.

If you’re having problems making your student loan payment, you might want to apply to your loan service for a deferment.

student loan deferment attorney

What’s a Student Loan Deferment?

Continue reading “What You Need To Know About Student Loan Deferment”

rohit chopra student loans

Student Loan Hero Rohit Chopra Is Feared By The Private Student Loan Lenders Wells Fargo & Discover

The Consumer Financial Protection Bureau (CFPB) assumed responsibility for dealing with student loan issues a number of years ago and hired Rohit Chopra as the nation’s student loan watchdog.

I had the pleasure of meeting him at the NCLC meeting in Tampa and came away impressed. Mr. Chopra’s ombudsman position allows him to track trends and problems in the student loan market, recommend policy changes to Congress, and serve as the internal CFPB expert on student loan issues.

Mr. Chopra has been focusing on how student loan companies improperly treat their borrowers and, in particular, problems in the private student loan world. Of the $1.3 trillion in outstanding Federal private student loans, Federal loans account for 92%, while the private loan market remains at 8%.

There’s no doubt that there is a high default rate in private student loans. Far too many private student loan borrowers are struggling with student loan debt. Unfortunately, the great Income-Based repayment options and public service loans, if your options are discharge options, are just not available for private student loans.

Rohit Chopra Takes on Private Student Loan Lenders Like Wells Fargo and Discover

Because of Mr. Chopra’s pressure on the private student loan industry, Wells Fargo announced that it would lower interest rates for all eligible borrowers beginning in November 2014 and extend repayment periods. Wells Fargo is the second largest private student lender and Discover Financial Services, Inc., the third-largest student lender, has begun to follow Wells Fargo’s lead.

We congratulate CFPB and Mr. Chopra for their aggressive stance in pushing private student loan companies to address the problem of struggling private student loan borrowers.

Source: Wall Street Journal

What You Must Know About Discharging Your Private And Federal Student Loans In Bankruptcy

Unfortunately, it is hard to discharge private and public student loans in bankruptcy unless you demonstrate through an adversary proceeding that paying the debt will result in “undue hardship for you and your dependents.” Depending on where you live it can be incredibly difficult to prove “undue hardship.”

The majority test is found in “Brunner v. New York State Higher Education Service Corp.” You find more information about that case herebankruptcy student loan attorney

You must establish:

1. The debtor can’t maintain, based on current income expenses, a “minimal” standard of living for themselves or their dependents, forced to repay the loan;

2. Additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of their payment period of the student loan; and

3. The debtor has made good faith efforts to repay the loan.

This test is based on your circumstances as of the date of an adversary proceeding.

Other courts use a “facts and circumstances” test in which the court considers:

1. The debtor’s past, present and reasonably reliable future and financial resources;

2. A calculation of the reasonable living expenses of the debtor and dependents; and

3. Any other “relevant facts and circumstances surrounding each particular bankruptcy case.”

Regardless of what test is used, the reality is that it can be difficult to get a private or Federal student loan discharged by the Bankruptcy Court in bankruptcy.

What’s the good news?

There are exciting Income-Based Repayment options to help you with our Federal student loans. Unfortunately, private student loans area different matter but that doesn’t mean that there aren’t answers to your private student loans.

Contact Student Loan Attorney Nancy Cavey at 727-828-9955 today to learn more about Bankruptcy and the alternatives for paying your federal or private student loan debt. Do not wait to learn about your options!

What You Need To Know About Bankruptcy And Your Student Loan Debt

Are you facing crushing student loan debt? Over 41% of student loans are delinquent or in default. While consumer Bankruptcy provides individuals in financial distress an opportunity for a fresh financial start, the Bankruptcy Code specifically prohibits the discharge of the student education loan, unless the debtor demonstrates through an adversary court proceeding that repaying the debt will result in “undue hardship” for the debtor and any dependents.

Undue Hardship and Bankruptcy

It can be very difficult to prove “undue hardship” and the chances of success vary considerably depending on the Federal district in which the Bankruptcy petition is pending.

If you’re suffering from crushing student loan debt, there are alternatives to Bankruptcy. We can help you get your loan out of default and into an Income-Based Repayment Plan that will help you have the life you have always dreamed of!

You can learn more information about Bankruptcy and affordable ways to pay your student loan by contacting Bankruptcy Student Loan attorney Nancy Cavey at 727-828-9955 today. She has written the consumer guide to student loans, that may be able to help you answer some of the tough questions you may have! Request a copy by click the book image in the siderbar to the right.

student loan default attorney tampa

What Are The Consequences Of Student Loan Default?

Paying your student loans can be stressful if you’re unemployed or underemployed. Student loans never go away and failing to pay back your student loans can destroy your financial future. If you default on your loans, the results can be severe!

Default and Consequences

Your Federal student loan is in default after 270 days (9 months of non-payment). What are the consequences of default? Four immediate consequences include:

1. An increase in the interest rate of your student loans plus collection fees which are tacked on to the bottom line;

2. Immediate reporting to the to the credit bureaus which will result in a decrease in your credit scores. This can result in difficulty in obtaining car loans or credit cards and increased interest charges. Worse yet, many employers will use your student loan default attorney tampacredit scores as a factor in choosing whether or not to hire you.

3. Withholding your Federal income tax refund from the IRS to pay your student loans.

4. Administrative garnishment of your wages up to 25% of your paycheck. Your employer will know that you’re in default and the collection agency has the right to contact the employer to determine your income and garnish your wages.

What are my options?

Getting out of a default requires you to rehabilitate your student loans. You have to make 9 voluntary on time full payments in a 10 consecutive month period. After you have completed a rehabilitation program, the default will be removed from your credit report.

What are the requirements of rehabilitation? You have to reach a satisfactory repayment arrangement with the lender and make 9 on-time voluntary full monthly payments:

• The payment amount and due date have to be approved by the lender; and

• You can’t skip or make double payments.

Are there better options?

Once you’ve defaulted on your loans, you do have to get into a rehabilitation program. Only once you’ve rehabilitated your loan can you get started on the affordable student loan repayment options.

These can include Income Based Repayment plans (IBR), Income Contingent Repayment plans (ICR) and public service loan forgiveness programs.

You can learn what’s right for you by contacting Tampa Bay student loan attorney, Nancy Cavey, who can help you with your student loan issues regardless of where you live in the United States. Contact her today at 727-828-9955.

What You Should Know About Student Loan Borrowing And Graduation Rates At Proprietary For Profit Programs And Non-Profit Schools

Did you know that borrowing graduation rates were quite different for proprietary for-profit programs and non-profit schools?

Students who attend school, like the University of Phoenix, had a median federal debt of $14,045 in 2008 while studying for an associate’s degree as compared to the median debt level of $7,125 for students of private non-profit schools.

Amazingly, students seeking bachelor’s degrees in 2008 at proprietary 4-year schools had a median debt of $22,874. That’s more than double the debt level of $11,500 from students at private non-profit schools and 5 times the debt level of $4,968 for students of public schools. United States Department of Education, Student Loans Overview: Fiscal Year 2013 Budget Request R-17.

It’s not surprising that the student loan delinquency and default rate for proprietary and non-profit schools has also exploded.

For-profit schools have the highest 2-year default rate of 15% while the rate of public schools is 7.2%, the rate of private non-profit schools is 4.68%. Institute for College Access and Success, “Sharp Uptake and Student Loan Default Rates” (September 12, 2001)

What You Should Do If You Attend a For Profit School and Have Student Loan Debt?

For Profit Schools With Student Loan Debt? Give us a call today to talk about your options! Let us help you today.

bankruptcy student loan debt attorney

Secrets You Need To Know About Bankruptcy And Student Loan Debt

Did you know that before 1976 student loans were dischargeable in Bankruptcy? However, when the Bankruptcy Code was amended the only avenue for discharging student loans is proving that paying your student loans will cause “undue hardship.”

The 3 Ways to Challenge a Loan

An individual debtor can discharge public or private student loans with a showing of the following:

1. The obligation is not considered a loan for an “educational benefit;”

2. The qualified education loan does not fund the attendance of a taxpayer, the taxpayer’s spouse or dependents at an “eligible educational institute;”

3. The qualified education loan is not a debt incurred to pay qualified higher education expenses which encompasses the terms of the cost of attendance.

This is very hard to do!

Undue Hardship

Unfortunately, it is also hard to discharge private and public student loans in Bankruptcy unless you demonstrate through an adversary proceeding that paying the debt will result in “undue hardship for you and your dependents.” Depending on where you live it can be incredibly difficult to prove “undue hardship.”

The majority test is found in “Brunner v. New York State Higher Education Service Corp.”

You must establish:

1. The debtor can’t maintain, based on current income expenses, a “minimal” standard of living for themselves or their dependents, forced to repay the loan;

2. Additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of their payment period of the student loan; and

3. The debtor has made good faith efforts to repay the loan.

This test is based on your circumstances as of the date of an adversary proceeding.

Other courts use a “facts and circumstances” test in which the court considers:

1. The debtor’s past, present and reasonably reliable future and financial resources;

2. A calculation of the reasonable living expenses of the debtor and dependents; and

3. Any other “relevant facts and circumstances surrounding each particular Bankruptcy case.”

Regardless of what test is used, the reality is that it can be difficult to get a private or Federal student loan discharged by the Bankruptcy Court.

You can learn more about whether you can discharge your student loan Bankruptcy or learn more about the affordable repayment plans available. Contact Bankruptcy attorney Nancy Cavey at 727-258-4999.  She wrote the book about Student Loans that can be yours free – request your copy today.