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Public Service Loan Forgiveness Program Mismanaged
CONSUMER FINANCIAL PROTECTION BUREAU SPOTLIGHTS BORROWER COMPLAINTS ABOUT STUDENT LOAN SERVICERS MISHANDLING PUBLIC SERVICE LOAN FORGIVENESS PROGRAM
Consumer Bureau Launches “Certify Your Service” Campaign to Help Teachers, First Responders, and Other Public Servants Stay on Track
June 22, 2017 – The Consumer Financial Protection Bureau (CFPB) today issued a report spotlighting complaints from borrowers about student loan servicers mishandling Public Service Loan Forgiveness.
The Public Service Loan Forgiveness program provides people in public service jobs with a path to debt forgiveness after 10 years
The Public Service Loan Forgiveness program provides people in public service jobs with a path to debt forgiveness after 10 years, with the first borrowers eligible in October 2017. Borrowers report that servicers delay or deny access to loan forgiveness through wrong information about their loans, flawed payment processing, and bungled job certifications. The CFPB also issued updated guidelines to prioritize oversight of servicers’ administration of the Public Service Loan Forgiveness program. Also, the Bureau is launching the “Certify Your Service” campaign to help public servants stay on track for federal loan forgiveness.
“Borrowers have told us about student loan industry practices that delay or deny access to expected help such as the Public Service Loan Forgiveness program,” said CFPB Director Richard Cordray. “We want those in public service jobs who give back to our communities to be able to stay on track, and not worry about unnecessary debt due to servicer errors.”
“We’ve promised our teachers, nurses, first responders, and other public servants that they have a path to a debt-free future if they make their payments on time while serving our communities for a decade,” said CFPB Student Loan Ombudsman Seth Frotman. “When the companies responsible for delivering on this promise aren’t up to the task, our dedicated public servants shouldn’t have to pay the price.”
Complete Report “Staying on Track While Giving Back
These include teachers, social workers, first responders, servicemembers, nurses, and other public health professionals.
The Public Service Loan Forgiveness program, launched in 2007, is meant to encourage people to enter public service despite increasing levels of student loan debt. For these borrowers, this program can relieve the financial stress caused by unmanageable student debt and lower-wage public service work. To be eligible, borrowers must have a qualifying loan; be enrolled in a qualifying repayment plan, such as an income-driven repayment plan; and make 120 on-time payments while working for a qualified public service employer. Student loan servicers are responsible for administering these requirements.
The report highlights complaints about servicing problems that may knock borrowers off track as they seek loan forgiveness earned through their public service and guaranteed by federal law. The report analyzes complaints from March 1, 2016 through Feb. 28, 2017. Some borrower complaints describe industry practices that delay or deny access to promised loan forgiveness, forcing some to forfeit months or years of qualifying service. This can add hundreds or thousands of dollars to the total cost of borrowers’ student debt. The report spotlights borrower complaints about:
- Incorrect or insufficient information from servicers about loan forgiveness eligibility
- Processing delays and errors that cause borrowers to miss out on qualified payments
- Job certification problems that knock borrowers off track
Click here for the updated Bureau manual for student loan servicer supervision
“Certify Your Service” Campaign
In addition to the report, the Bureau is also announcing “Certify Your Service,” a consumer education campaign to empower student loan borrowers working in public service to protect their progress toward loan forgiveness. It includes guides developed specifically for first responders and teachers about what programs are available, which ones are best for each individual’s circumstance, and how to get on the path to loan forgiveness. The Bureau is also updating its tools for employers to help their employees get started in the Public Service Loan Forgiveness program, and tips for helping employees stay on track. Public service employees aiming for Public Service Loan Forgiveness should:
- Make sure they have the right type of loans
- Enroll in the right repayment plan
- Certify that the work is in public service:
- Stay on track
Student loan borrowers experiencing problems related to repaying student loans, including the problems identified in today’s report, can also submit a complaint to the CFPB.
Click here for more information on CFPB consumer guides and tips for loan forgiveness
MUSINGS FROM DIANE:
The Public Service Loan Forgiveness program was designed to help teachers, nurses, firemen, police and other public servants find a way to reduce their student loans, while serving our communities. Do I believe that military should be included – definitely, but I was not asked :-( Many of these dedicated people planned their adult lives around this program with the expectation that their student loans will be forgiven after several years of underemployment. They put off buying a home or even raising children. Now to find that the program is mismanaged is sickening (but not surprising).
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The post Mishandling Public Service Student Loan Forgiveness appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Credit Repair Fraud – Prime Credit, Commercial Credit Consultants, Arthur Barens (Park View Law)
CFPB TAKES ACTION AGAINST CREDIT REPAIR COMPANIES FOR CHARGING ILLEGAL FEES AND MISLEADING CONSUMERS
Companies and Individuals to Pay More Than $2 Million in Penalties and Relinquished Funds
6/27/17 – The Consumer Financial Protection Bureau (CFPB) today filed two complaints and proposed final judgments in federal court against four California-based credit repair companies and three individuals for misleading consumers and charging illegal fees. The Bureau alleges that the companies not only charged illegal advance fees for credit repair services, but also misrepresented their ability to repair consumers’ credit scores. Under a proposed final judgment, Prime Credit, LLC, IMC Capital, LLC, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel would pay a civil money penalty of more than $1.5 million. Under a second proposed final judgment, Park View Law, known formerly as Prime Law Experts, Inc., and its owner Arthur Barens would pay $500,000 in relinquished funds to the U.S. Treasury.
“Today, the Bureau is taking action against companies that charged illegal fees and misled consumers about their ability to fix their credit,” said CFPB Director Richard Cordray. “We will remain vigilant about protecting consumers from companies that mislead them to turn a dishonest profit.”
Commercial Credit Consultants is a Wyoming corporation with a principal place of business in Los Angeles, Calif., that has also operated under the name Accurise. It offered and sold credit repair services to consumers from the summer of 2009 until the summer of 2012. Prime Credit, also known as Prime Marketing, LLC and Prime Credit Consultants, is a Los Angeles-based company that offered similar credit repair services from the summer of 2012 through the fall of 2014. IMC Capital is a Los Angeles-based company that provided credit repair services in 2012. Johnson was the founder and majority owner of Commercial Credit Consultants, Prime Credit, and IMC Capital, while Schlegel was the president and a minority shareholder of Commercial Credit Consultants and Prime Credit.
Arthur Barens owned Prime Credit’s business partner, Park View Law, based in Los Angeles. From March 2013 through September 2014, Prime Credit marketed and sold credit repair services to consumers using Park View Law’s name, and provided credit repair services to consumers who entered into contracts with Park View Law. Park View Law continued to offer and provide credit repair services through a similar arrangement until as late as June 2015.
In complaints filed with the proposed final judgments, the CFPB alleges that the defendants made misleading, unsubstantiated claims that they could remove virtually any negative information from consumers’ credit reports and could boost consumers’ credit scores by significant amounts. The companies attracted thousands of customers through sales calls and their websites, at times targeting consumers who had recently sought to obtain a mortgage, loan, refinancing, or other extension of credit. The CFPB alleges that the companies charged these consumers millions of dollars in illegal advance fees for their services. The Bureau alleges that these practices violated the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Telemarketing Sales Rule. Specifically, the CFPB alleges that the defendants:
Charged illegal advance fees: Federal law bars telemarketers and certain companies from requesting or collecting fees for credit repair services until certain conditions are met about the delivery of those services. The companies charged a variety of fees for their services before demonstrating that the promised results had been achieved as required by law. Specifically, the companies charged consumers fees for an initial consultation to review a consumer’s credit report. The company also charged set-up fees totaling hundreds of dollars and monthly fees that often equaled $89.99 per month.- Failed to disclose limits on “money-back guarantees”: The companies offered a money-back guarantee for certain services. However, they failed to disclose that the guarantee had significant limits, including that the consumer must pay for at least six months of the service to be eligible for the guarantee.
- Misled consumers about the benefits of their services: The companies misrepresented that their credit repair services would result in the removal of negative entries on consumers’ credit reports. The companies also misrepresented to customers that their credit repair services would, or likely would, result in a substantial increase to consumers’ credit scores. The companies lacked a reasonable basis for making these claims.
In addition to paying the amounts contained in the proposed final judgments, all defendants would be prohibited from doing business within the credit repair industry for five years and permanently prohibited from violating the Dodd-Frank Act or the Telemarketing Sales Rule. They have been filed with the U.S. District Court for the Central District of California, and they are only effective if approved by the presiding judge.
In September 2016, the CFPB filed a lawsuit alleging similar violations of federal law against Prime Marketing Holdings, a credit repair company that partnered with Park View Law from September 2014 to June 2015. That litigation is ongoing.
The Bureau also issued a consumer advisory in September 2016 to alert consumers about companies that engage in potentially misleading credit repair services.
A copy of the complaint filed in federal district court against Prime Credit, IMC Capital, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel
A copy of the proposed final judgement filed in federal district court against Prime Credit, IMC Capital, Commercial Credit Consultants, Blake Johnson, and Eric Schlegel
A copy of the complaint filed in federal district court against Park View Law and Arthur Barens
A copy of the proposed final judgement filed in federal district court against Park View Law and Arthur Barens
MUSINGS FROM DIANE:
People are very trusting. They believe the lies of these credit “repair” companies because they believe there is no other option. Are there alternatives – of course!! I refer folks to the National Foundation of Consumer Credit Counselors, a true non-profit that has been around for more than 40 years. Their business is to help people pay off credit cards over a period of time, at (perhaps) a reduced interest. There is also bankruptcy, which I know that sounds scary, but it is a great idea to educate yourself about both of the these options. NEVER use a credit repair company.
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The post Illegal Credit Repair Schemes – Prime Credit & Prime Law Experts appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Payday lender or loan shark: Is there really a difference?
Article By Eric Heisig, cleveland.com
CLEVELAND, Ohio (6/2018) — The term “loan shark” might bring to mind a scene in a movie where a gangster takes a crowbar to the kneecap of a down-on-his-luck gambler who can’t make good on repayment of a loan.
The term “payday lender” might bring to mind an image of a legitimate business, complete with a bright green sign, that offers loans at extremely high interest rates targeted at people with low incomes or who would otherwise not qualify for traditional financing.
Are LOAN SHARKS and PAYDAY LENDERS the same?
The answer: Sort of.
Historically, a “loan shark” describes a lender that charges very high rates, Anne Fleming, an associate law professor at Georgetown University, said in an email.
MUSINGS FROM DIANE:
Why do some people feel it necessary to make their money by bullying others who cannot afford to give up even one dollar? Payday lenders (now some of our larger banks have entered this world) are in the business for one reason only – to make a “killing” offering loans to desperate people. The end result is these people can rarely pay off the loan and end up filing bankruptcy or, in the case of registration or title loans, losing their vehicles. Is there room for a reasonable interest on short term loans – absolutely!! But, let’s not force people into bankruptcy or to lose their jobs just because they need a loan for a few weeks or months.
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The post Payday lender or loan shark: Is there really a difference? appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
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