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Don’t Be Fooled by These 6 Lies Told by Student Loan Servicers
Don’t Be Fooled by These 6 Lies Told by Student Loan Servicers
Don’t Be Fooled by These 6 Lies Told by Student Loan Servicers
Don’t Be Fooled by These 6 Lies Told by Student Loan Servicers
Don’t Be Fooled by These 6 Lies Told by Student Loan Servicers
Don’t Be Fooled by These 6 Lies Told by Student Loan Servicers
Don’t Be Fooled by These 6 Lies Told by Student Loan Servicers
Thousands of student loan approval letters from FedLoan Servicing are not binding and can be rescinded at any time.
According to a New York Times article “more than 550,000 people have signed up for a federal program that promises to repay their remaining student loans after they work 10 years in a public service job,” but now those letters may not be binding.
Four borrowers and the American Bar Association have filed a suit in United States District Court in Washington against the department alleging that the Education Department acted “arbitrarily and capriciously” in making its decisions about which employers qualified.
The plaintiffs held jobs that they initially were told qualified them for debt forgiveness, only to later have that decision reversed. The borrowers are suing to have their eligibility for the forgiveness program restored.
What is the forgiveness program? This program was approved by the federal government in 2007. People with federal student loans are offered incentives of having their student loans reduced or eliminated at the end of a period (normally 10 years) if they work for a public service company. That means these borrowers give up the opportunity to work in the private sector where presumably they would be paid more.
On its website, the Education Department directs borrowers who believe their employer qualifies to submit a certification form to FedLoan. If the form is approved, the Education Department transfers the borrower’s loans to FedLoan, which collects payments and tracks the borrower’s progress toward the 120 qualifying monthly payments they must make before the remaining balances will be forgiven.
Education Department’s response: the “FedLoan’s responses to borrowers’ certification forms cannot be trusted.”
A FedLoan approval letter “does not reflect a final agency action on the borrower’s qualifications” for the forgiveness program, the department wrote.
ABA said the Department’s response “illogical, untenable and bewildering”
Linda Klein, president of the American Bar Association, called the department’s response “illogical, untenable and bewildering.” An unreliable certification system “exposes those undertaking public service work — exactly what Congress intended them to do — to crippling financial risk,” she said.
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About the Author:
Diane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and Arizona foreclosure. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. Diane is a retired professor of law teaching bankruptcy for more than 20 years. As a teacher she believes in offering everyone, not just her clients, advice about the Arizona bankruptcy laws. She is also a mentor to hundreds of Arizona attorneys.
I would be flattered if you connected with me on GOOGLE+
*From Diane: This article/blog is available for educational purposes only and does not provide specific legal advice. By using this information, you agree there is no attorney client relationship between you and me, and that this information should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*
The post Student Loan Forgiveness Approval Letters May Be Invalid appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
According to a report from the Consumer Financial Protection Bureau ‘CFBP’ Experian is fined $3 Million for Deceiving Consumers
Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) today took action against Experian and its subsidiaries for deceiving consumers about the use of credit scores it sold to consumers. Experian claimed the credit scores it marketed and provided to consumers were used by lenders to make credit decisions. In fact, lenders did not use Experian’s scores to make those decisions. The CFPB ordered Experian to truthfully represent how its credit scores are used. Experian must also pay a civil penalty of $3 million.
“Experian deceived consumers over how the credit scores it marketed and sold were used by lenders,” said CFPB Director Richard Cordray. “Consumers deserve and should expect honest and accurate information about their credit scores, which are central to their financial lives.”
So what is the CFPB going to require from Experian?
Under the consent order, Experian must:
- Pay a $3 million penalty: Experian must pay a civil money penalty of $3 million to the Bureau’s Civil Penalty Fund.
- Truthfully represent the usefulness of credit scores it sells: Experian must inform consumers about the nature of the scores it sells to consumers.
- Put in place an effective compliance management system: Experian must develop and implement a plan to make sure its advertising practices relating to credit scores and on Internet webpages that consumers access through AnnualCreditReport.com comply with federal consumer laws and the terms of the CFPB’s consent order.
The CFPB’s Consent Order against Experian:
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About the Author:
Diane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and Arizona foreclosure. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. Diane is a retired professor of law teaching bankruptcy for more than 20 years. As a teacher she believes in offering everyone, not just her clients, advice about the Arizona bankruptcy laws. She is also a mentor to hundreds of Arizona attorneys.
I would be flattered if you connected with me on GOOGLE+
*From Diane: This article/blog is available for educational purposes only and does not provide specific legal advice. By using this information, you agree there is no attorney client relationship between you and me, and that this information should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*
The post Experian Fined $3 Million for Deceiving Consumers appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Bankruptcy filing – or the prospect of it – usually puts Wynn at Law LLC clients in full-out panic mode. One of the most alarming, last-ditch, hail-Mary ideas coming from this desperation is to cash out a retirement plan to avoid bankruptcy court. In some cases, people can ‘borrow’ against their company retirement plan, usually a 401(k). This is as dangerous as cashing out to cover the financial struggle.
Don’t. Touch. This. Money.
Retirement money is tax-exempt until you touch it. If you touch it too early, you’ll be subject to taxes and penalties. Here’s a primer on a few of those consequences:
- If you put the money in after paying taxes on it – like in a Roth IRA – you’ll pay tax on the earnings and a 10 percent penalty if the IRA is less than five years old and the owner is younger than age 59 ½.
- If you put the money in tax free – like in a regular IRA or a 401(k) – the entire distribution is subject to income tax at your current rate, plus the 10 percent IRS penalty if the owner is younger than age 59 ½.
A tax specialist or accountant will give you clearer instruction on your particular situation’s consequences. Wynn at Law LLC is concerned about those immediate consequences, and the long-term ones. It’s your retirement income you’re putting in jeopardy. You’re mortgaging your entire future! If you leverage this nest egg to avoid bankruptcy filing today, you may have just kicked the can down the road, facing potential bankruptcy in your retirement years.
In almost every case, your qualified retirement plan is EXEMPT from your bankruptcy filing anyway. You get to keep the plan, your creditors don’t. But this goes back to a message from an earlier Wynn at Law LLC article on honesty: You have to disclose that your own a retirement account. It’s still going to be your retirement nest egg, they can’t touch it, but you can’t hide it.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
Photo by Syda Productions, Lev Dolgachov, used with permission.
The post Don’t cash out your IRA to avoid bankruptcy appeared first on Wynn at Law, LLC.
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