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Years ago, student loans were easier to deal with.
You graduated, got a job, and paid off your loans in 10 years – sooner, if you got a good enough job.
But even for people with “normal” jobs, repaying a student loan was a short-term inconvenience that led to a better future.
Nowadays it’s not so simple. College is more expensive than ever, and we’re forced to use student loans to cover the majority of it. By the time we graduate, we’re looking at tens of thousands of dollars in debt.
This new reality requires a new way to attack the problem of student loan repayment. Without new rules, we’re never going to win the student loan wars.
Luckily, we’ve got a roadmap for you to follow.
Start Repayment Immediately
When you finish school, you get six months before the federal student loans come calling. But you can end that forbearance as soon as you part ways with the school.
When you start paying faster, you finish paying faster. Even cutting out six months of interest can mean a lot.
Don’t Go Standard
When you enter repayment, you can choose your repayment schedule. If you don’t, the servicer will put you into the standard 10-year repayment schedule.
If you’re smart, you won’t let that happen. Skip right to one of the income dependent payment plans. These plans let you adjust your monthly payments based on a percentage of your income.
Your payment is set as a percentage of your income from the previous year. When you start paying at graduation, your payment will be low because you likely didn’t make much money as a student.
As an added bonus, income dependent repayment plans come with the ability to wipe out your unpaid student loans. Depending on your loan age, that may be 20 or 25 years.
Pay Private Loans Faster
Private student loans don’t offer income dependent repayment options. There’s no forbearances, deferments, or loan discharge. Interest rates tends to be higher, too.
In other words, private student loans are a ripoff that offer no protection for you.
That’s why it’s important for you to pay those private student loans as fast as you can. Every spare dollar you have should go to the private student loan company.
If you can, consider refinancing the private student loans. Most people don’t have that option because of their credit or income, but it’s something to think about.
Keep Your Taxes Separate
The government looks at household adjusted gross income when calculating income dependent repayment amount.
If you’re married and file taxes together, adjusted gross income includes your spouse’s income. But if you file separate tax returns, only your income counts.
You may want to file taxes separate from your spouse. Depending on the difference in your annual refund, the savings on your student loans may make it worth the effort.
Consider a Job in Public Service
Federal student loans offer the option for public service loan forgiveness. If you work full-time for the government or a not-for-profit then you may qualify after 10 years of repayment.
Couple that public service job with an income dependent repayment option and you may end up wiping out a big chunk of your loans.
Public service loan forgiveness doesn’t apply to private student loans, but any savings is worth it.
Don’t Panic
If you worry about your student loans all the time then you’ll drive yourself crazy. Panic and you’ll make mistakes, losing focus on the goal of getting out of debt.
Lay the groundwork early so you can get a plan for paying off your student loans. There may be bumps in the road but if you know all your options then it will make it easier for you.
The post The Modern Rules of Student Loan Repayment appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
Sometimes dealing with debt can feel like a shell game…you make a payment on one debt at the expense of making a payment or remaining current on another debt. What are your options to resolve your debt while maintaining a balanced budget? Learn more about your various options below. At Acclaim Legal Services debt resolution […]
The post Debt Relief Blog Series: Determining Your Best Option. Part V: Impact in Your budget appeared first on Acclaim Legal Services, PLLC.
What if a bar could not serve a customer a second drink until one hour after the first drink was consumed? What if a donut shop could not sell a second serving unless they determined if the consumer would burn off all the calories by the end of the day? What if a tobacco store could not sell a second pack of cigarettes without first taking a lung x-ray? What if casino gamblers could not place successive bets until completing a session with a gambling addiction counselor?
The Consumer Financial Protection Bureau has announced that it will issue a complex set of regulations that are designed to prevent consumers from renewing high interest rate payday loans over and over again. The impact on the payday lending industry should be devastating.
Today we are taking an important step toward ending the debt traps that plague millions of consumers across the country,” said CFPB Director Richard Cordray. “Too many short-term and longer-term loans are made based on a lender’s ability to collect and not on a borrower’s ability to repay. The proposals we are considering would require lenders to take steps to make sure consumers can pay back their loans. These common sense protections are aimed at ensuring that consumers have access to credit that helps, not harms them.
The CFPB proposals target consumers loans that must be paid back in full within 45 days. Most payday and auto-title loans are due within two weeks, and CFPB research indicates that 4 out of 5 payday loans are rolled over within two weeks. According to the bureau, what starts off as a short-term loan usually turns into a long-term “debt trap.”
Lenders making high interest rate payday loans would have to comply with one of the two following regulations:
- Debt Trap Prevention:
- Lenders would have to determine if borrowers could repay the loans at the outset.
- Lenders would have to collect paycheck stubs and tax returns to determine the borrower’s income.
- Lenders would have to document borrower’s major obligations, repayment history and credit profile.
- A 60-day “cooling off” period between loans would be required.
- To make 2nd and 3rd loans the lender would have to obtain additional documentation to verify if the consumer could repay the loan.
- Debt Trap Protection:
- Lenders would be limited as to how many loans they could extend to a consumer in a one year period.
- Lenders could not keep consumers in debt on short-term loans for more than 90 days in a 12-month period.
- Rollovers would be capped at two – three loans total – followed by a mandatory 60-day cooling-off period.
- The second and third consecutive loans would be permitted only if the lender offers an affordable way out of debt.
The impact of these regulations on the payday lending industry would be immediate and substantial. The very notion of determining whether a payday borrower can repay the debt is absurd. The proposed regulations are not designed to “regulate” the industry but to destroy it. When 80% of the industry’s customers renew their loans every two weeks can no longer receive more than 3 rollovers in a year, the impact on the industry will be significant. The proposed CFPB regulations will weed out many lenders and certainly reduce industry profits in general. When these reforms roll out sometime next year, the payday lending industry will cease to exist as we know it today.
Image courtesy of Flickr and Jason Comeley.
1) Don’t Lie.
Don’t lie, don’t lie, DON’T LIE!!!! There is a reason this is listed as number one. Lying is the worst possible thing you can do in a bankruptcy. Not only can it result in your bankruptcy being denied, it can also result in massive fines and prison time. You heard that right, lying can and often will result in PRISON TIME. Don’t believe me, as one of the stars of the Real Housewives who is currently serving time for lying to the bankruptcy court. This means that you should make sure not to lie to your attorney as well, because that will lead to lying to the court.
2) Don’t leave out assets.
Failing to list assets can be catastrophic. In most bankruptcies a debtor is able to protect everything they own. However, an asset that is not listed cannot be protected. An unlisted asset will be found by your bankruptcy trustee, it will be sold and you will not see any of the proceeds from that sale. Furthermore, if it is found that you left it off on purpose, well then we fall back to number 1. NEVER LIE. Your bankruptcy will be denied and you could serve time in jail.
3) Don’t leave out creditors.
Under the bankruptcy code you are required to notify the court of the names and addresses of everyone you owe money to. This doesn’t just mean the creditors you want to include. It doesn’t just mean the creditors who are hounding you. This doesn’t even mean just the creditors with a paper trail. This means everyone who could possibly maintain a claim against you. This includes parents, siblings and girlfriends. If a creditor can prove that you intentionally left them off of your schedules we revert back to number 1. NEVER LIE. Your bankruptcy will be denied and you could serve time in jail.
4) Don’t forget to disclose potential lawsuits/claims
As stated above, an individual filing for bankruptcy is required to list all of their assets. A potential lawsuit or claim against a person or company is an asset. Failure to list it can have all of the same ramifications as any other asset listed above. However, in addition to all of the other pit falls, failure to list an asset can result in a court ruling of judicial estoppel. In essence the court is stating that because you told the bankruptcy court that the claim didn’t exist, the court in which you file suit is going to take you at your word and rule that it doesn’t exist as well. If you were expecting a multi-million dollar personal injury judgment, you can now consider that gone.
5) Don’t payback any debts to a family member, friend or business associate
Many individuals who are in over their head are forced to go to their family or friends for loans to help them get by. As they struggle to avoid bankruptcy they are taking out loans from their mother, their childhood friend or their boss. However, when those individuals start to contemplate the reality that they need to file, they want to funnel what little money they do have to pay off those close to them. The problem is that these individuals are considered insiders. Any money paid to an insider on a debt is recoverable by the Trustee. What this means is that the Trustee will file a lawsuit against your loved ones to get the money back into your bankruptcy estate. If you are considering bankruptcy you should speak with a qualified bankruptcy attorney BEFORE paying back anyone close to you.
6) Don’t transfer assets out of your name
The worst idea almost every client has prior to coming into my office is to begin transferring assets out their name to “protect them”. However, this misguided attempt to protect assets does just the opposite. While exemptions may have been able to protect those assets, once they are transferred out of the debtors name they become fraudulent transfers. The trustee can recover these assets without providing any compensation to the debtor. This counts not only for physical assets like cars or boats, but also financial assets like bank accounts. Nothing should be transferred out of your name without first discussing it with a qualified bankruptcy attorney.
7) Don’t max out your credit cards prior to filing
A question that every bankruptcy attorney hears on a regular basis is: If I am filing anyways, should I go on a shopping spree prior to filing and “maximize my benefit”. The answer is a resounding NO. When you borrow money you do so with an agreement to pay debt. Bankruptcy relieves you of the burden to repay that debt, but only if you are acting in good faith. Using your credit cards at a time that you know you cannot afford to repay the debt is considered to be an act of fraud and violates the good faith requirements of bankruptcy.
8) Don’t let bankruptcy defeat you
By the time clients make it to my office they are often years into financial crisis. They have fought tirelessly to repay their debt and they often feel that bankruptcy means defeat. Defeat in their battle to get ahead. Defeat in their battle to repay those they owe. Defeat in life. That is not the case. Bankruptcy is not an end but a beginning. Henry Ford, Walt Disney, Thomas Jefferson and Abraham Lincoln all filed bankruptcy prior to their success. They didn’t let the need for bankruptcy end their promising futures, but rather used the fresh start offered by bankruptcy to push forward with the life they had always dreamed of. Don’t ever let past debts ruin your future. Bankruptcy is not a defeat, bankruptcy is a new beginning.
According to an article in the American Banker, by Rachel Witkowski , 4/9/2015, The Consumer Financial Protection Bureau “CFPB” has filed a massive lawsuit against more than a dozen debt collectors, payment processors and related entities for failure to stop fraudulent collection tactics. The case was filed in U.S. District Court for the Northern District of Georgia, on March 26, 2015.
The article goes on to say that the “complaint accuses a handful of connected debt collectors based in Georgia and New York of harassing consumers about “phantom” debts. But the potentially groundbreaking part of the case is that the CFPB also sued several payment processors, including worldwide processor Global Payments and its contracted parties, because the agency said they “should have known” about the alleged violations.”
Why is this “ground breaking”? This is the first time that payment processors are held to the same standard of responsibility as the debt collectors. Yes, there are standards even though most us in the debtor bankruptcy world don’t see any prosecution for breaching those stands. But I get off my point – there are legal implications if someone tries to collect on a debt they know to be noncollectable (e.g. bankruptcy or statute of limitations). Those obligations are now being argued apply to the processors of the debts. In other words the processors cannot say “Mikey told me to do it” and think they are protected.
The article goes on to say “Our lawsuit asserts that consumers were harassed, threatened, and deceived as part of a reprehensible scheme to collect debt that was not even owed,” said CFPB Director Richard Cordray, in a press release. “We are taking action against the many parties that allegedly contributed to this phantom debt collection operation. The ringleaders of the scheme, the telemarketing company that broadcast millions of robo-calls, and the companies that processed the payments should all be held accountable for taking advantage of vulnerable consumers.”
The complaint said that “consumers paid millions of dollars” because of the threats made by the debt collectors, including Universal Debt & Payment Solutions, WNY Solutions Group, and Check & Credit Recovery. The debt collectors used collectors and automated telephone broadcasting services to contact consumers and their family members to threaten consumers with false allegations of check fraud and false claims of debt owed, which would result, according to the debt collectors, in service of a ‘financial restraining order,’ notification to the consumer’s employer of the alleged fraud or debt, garnishment of wages, and arrest, unless the consumers paid the alleged debt'”
Several parties were named in the complaint: Electronic Merchant Services, Global Connect LLC, Global Payments and a subsidiary, Pathfinder Payment Solution, Frontline Processing Corp., Universal Debt & Payment Solutions, WNY Solutions Group, and Check & Credit Recovery. The agency specifically cited Marcus Brown and Mohan Bagga in a press release Wednesday for leading the group of people named in the case for running some of the entities.
The post CFPB Launches Massive Lawsuit – Debt Collectors, Payment Processors and others appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Imagine the surprise of getting up in the morning and finding that your car has been repossessed. Even worse, you may have been in the process of getting a chapter 13 bankruptcy case filed or you might have been thinking about filing a chapter 13 bankruptcy case to repay the debt on the car that+ Read More
The post Car Repossessed Last Night? I Can Get It Back With Chapter 13. appeared first on David M. Siegel.
There are many reasons why a married couple may decide that only one spouse needs to file bankruptcy. The bankruptcy law allows a married person to file an individual bankruptcy but there will be some impact on the non-filing spouse. If you are a non-filing spouse, here are some concerns that you should keep in mind:1. Your credit score may be negatively impacted. You are most likely to face this problem when you have joint debts with a bankruptcy filing spouse and your spouse does not pay a joint debt on time.For example, Chapter 13 allows a bankruptcy debtor to restructure payment obligations, which may include reducing the monthly installment, or extending the term of the loan. As a non-filing spouse you will likely be in violation of the contractual terms of your loan, which will appear as a late payment on your credit report.2 Your joint bank accounts may be at risk. The bankruptcy law does allow a Chapter 7 or Chapter 13 debtor to declare a set amount of cash as exempt (sheltered) property. Depending on the particulars of the case the amount of this exemption can range from zero to around $10,000.Generally the ownership of a joint account is considered “joint and several” meaning that you and your spouse have a complete interest in the funds. You can claim as your sole property a percentage of the joint bank account but you will need to show what percentage arises from your contribution 1. This can result in tricky accounting problems, especially if there are other bank accounts or if one spouse took responsibility for making specific household payments.Often it is wise to try to separate your finances from those of your bankruptcy filing spouse but you have to be careful here too as property transfers shortly before bankruptcy can be challenged. Talk to a lawyer before making any transfers and talk to the lawyer early.3. Your bankruptcy filing spouse will need access to your employment information including your salary. This information will appear on your spouse’s bankruptcy schedules, which are public records (although one would have to know where to look to find this information).The bankruptcy law assumes that a married couple shares some or all responsibility for household expenses. This presumption can be rebutted but you will need documentation.4. If you are separated from your spouse and your estranged spouse threatens or actually files bankruptcy, you will want to get legal help. Generally support and maintenance obligations are not dischargeable in bankruptcy but you will want to make sure that your divorce lawyer understands the implications of bankruptcy law prior to signing off on a final order.5. When one spouse files bankruptcy and the other spouse does not, the bankruptcy filing will put stress on the marriage relationship. Your family lifestyle, including where you live and how you spend your money, may be questioned or impacted. Marital problems can be avoided by minimizing surprises.Your spouse’s bankruptcy lawyer can offer advice and information to a point – remember that your spouse’s lawyer is representing your spouse and his interests only. If you want a complete picture about how your interests may be impacted you may want to retain your own lawyer.
- See O.C.G.A. Section 7-1-812 and Lamb v. Thalimer Enterprises, Inc., 193 Ga. App. 70, 386 S.E.2d 912 (1989) ↩
The post Spouse Filing Bankruptcy Individually: Here’s How You will be Impacted appeared first on theBKBlog.
Paying for college has never been tougher.
When it comes to figuring out how to come up with tuition, you may be tempted to take on a private student loan.
It’s quick and easy, but it’s also a dangerous dance with the devil. With no federal programs to make repayment easier, private student loans can wreck you financially for years to come.
In this episode of The Student Loan Show we talk about the 4 things you should be doing before taking out a private student loan.
If you like the show, click here to subscribe in iTunes.
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The post Do These 4 Things Before Taking Private Student Loans appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
When you go past due on a credit card, the worst threat a creditor can make is that they will sue you.
If the creditor won’t work with you then there’s a good chance that lawsuit will show up at your doorstep one day.
Now you’ve got a real problem: instead of just getting collection calls and letters, you’re at risk of a judgment against you.
What do you do now? Is it too late to settle the credit card debt and make it go away?
If you’re organized and proactive, you can still settle the debt and avoid the judgment. Here are our best tips for making it happen.
Set Your Timer
You’ve got only a certain amount of time to file an Answer to the lawsuit. Miss that window of opportunity and the creditor will file for a default judgment.
The default judgment allows the creditor to start a wage garnishment and freeze your bank account. Once the judgment is in place, you’ve got not leverage to negotiate the debt.
Best to set your clock and keep a close watch on it. Every minute counts.
Assess Your Liability
Take a look at the lawsuit papers and take careful notes. Is the company suing you the one you borrowed money from? Does the amount of money they say you owe match up with your records?
These are a few of the questions you need to ask yourself as you try to figure out whether you have a good defense to the case.
Remember it’s no defense to just say that you can’t pay the debt – that’s a question of ability, not liability.
By reviewing the Complaint you can put together a list of defense that may be helpful when you call to negotiate the debt.
Review Your Financial Situation
You need to know what the creditor can take from you if they get a judgment against you. For example, they can’t take your home if you rent. And they can’t freeze a bank account if all you get is Social Security income.
If you’re working then you should calculate how much they can take in a wage garnishment. If that amount won’t make too much of a dent in your ability to live your life then you might not care about the judgment.
If the judgment would do too much damage to your wallet then you will need to figure out a way to offer a better deal to the creditor.
Make A Realistic Offer
In order for a creditor to accept a settlement, you’ve got to offer more than they’d get with a judgment. If you offer less, or make it more difficult for the creditor to get the settlement money, then they’ll deny the offer.
To put together a realistic settlement offer, look to everything you’ve got. Check bank balances, look around for things you may be able to sell, and decide how much money you can give for a settlement.
Your settlement offer can take the form of a lump sum or monthly installments, depending on the creditor. Some will take only a lump sum settlement, others will let you pay it out over time.
One thing’s for sure, though – cash is king. Offering a lump sum settlement will always get you a better deal than an installment plan.
Prepare To Defend The Lawsuit
Sometimes, settling a credit card lawsuit before filing the Answer just doesn’t happen. That doesn’t mean it won’t ever settle, though – it just means that the timing isn’t right.
Most creditors will give you a much better deal if you defend the lawsuit. If you defend the lawsuit, the creditor knows you’re serious.
When you fight the lawsuit, the creditor also starts to get worried about losing the case. The judge could decide that they don’t have enough proof to win, or that something else is wrong with their case. If that happens, you win and they get nothing.
No matter what you decide to do, there are always opportunities for you to settle a credit card debt.
Understanding the best time to enter into a settlement isn’t easy. If you take the time to map out a strategy then you stand a better chance of success.
The post How to Negotiate a Credit Card Debt if You Are Being Sued appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
According to Bloomberg News: Fannie Mae will begin bulk auctions of mortgages, including some sales targeted for non-profit groups and small investors, as Fannie Mae moves to reduce the number of non-performing loans on its books.
“These transactions are intended to reduce the number of seriously delinquent loans that Fannie Mae owns, to help stabilize neighborhoods and to offer borrowers access to additional foreclosure prevention options,” Fannie Mae Senior Vice President Joy Cianci said in a statement Thursday. “Our goal is to market these loans to a diverse range of buyers.”
What does that mean for Fannie Mae – it helps put their books into better balance. What Fannie Mae’s notice does not discuss is what this means for the homeowner. Fannie Mae has certain regulations dictating how to deal with default loans. The new owner of these default loans will not have that same oversight and/or regulation. What does that mean for the neighborhood? Without doubt it means foreclosures. How does that “stabilize the neighborhood”? Over a long period of time it might recycle the property into the hands of new owners. I said MIGHT. Most likely what will happen is that the foreclosures will lead to the gradual decline of the neighborhood. But, Fannie Mae’s books will look good!
The Federal Housing Finance Agency “FHFA” will require prospective investors to prove they’ve retained a loan servicer with a track record of handling delinquent debt, the agency said in a March 2 statement. Servicers also will have to offer aid to avoid foreclosures as a condition of sale.
Call me doubtful. There is a long history of investors/servicers not following guidelines when dealing with loans in default. These failures include poor accounting, fee loading, misleading “workout” programs, the list goes on and on. So why should we believe that the buyer of these loans will act any differently than they have in the past? Between you and me, I hold out little hope that they will change their ways.
“Demand for soured mortgages has been increasing as Wall Street firms compete to buy loans at a discount after a real-estate market rebound. Investment firms including Lone Star Funds, Bayview Asset Management LLC and Selene Finance LP have been some of the biggest buyers of delinquent home loans.”
I agree that the real estate market is rebounding. So, why would these Wall Street firms, who previously invested in discounted loans, buy new portfolios of delinquent loans? Call it common sense. With a better real estate market there is a greater return on the firm’s investment by way of foreclosure of these new loans. It is simple math. The loser is the homeowner who was led to believe that their home would be saved by a federal workout program. Some say the homeowner cannot afford the home, therefore it should be returned to the market place. I agree with that concept, but what makes me angry is misleading the homeowner into believing there is a solution to help them save their home, only to sell their loan to an investor who will foreclose. I call that deceitful, perhaps bordering on criminal behavior.
Just my two cents.
The post Fannie Mae to Auction “Sour” Mortgage Loans. The Beginning of a New Foreclosure Cycle? appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.