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As of 2013 this nation’s second largest consumer debt market is student loans. It is predicted that student loan defaults will be the next financial tidal wave to hit the nation. Earlier this year, the Consumer Financial Protection Bureau (CFPB) announced that outstanding student debt totals approximately $1.2 trillion. The Bureau also estimates that 7 million student loan borrowers are now in default on their debt.
More than 40 million Americans with student debt depend on student loan servicers to serve as their primary point of contact about their loans. Student loan servicers’ duties typically include managing borrowers’ accounts, processing monthly payments, and communicating directly with borrowers. When facing unemployment or other financial hardship, borrowers contact student loan servicers in order to enroll in alternative repayment plans, obtain deferments or forbearances, or request a modification of loan terms.
CFPB issued a rule December 5, 2013 that allows the Bureau to supervise certain nonbank student loan servicers for the first time. Under this new rule, which was proposed in March, the Bureau estimates that it will have authority to supervise the seven largest student loan servicers. Combined, those seven service the loans of more than 49 million borrower accounts, representing most of the activity in the student loan servicing market.
Borrowers submitted complaints to the Bureau highlighting:
- Prepayment Stumbling Blocks: Since options to refinance high-rate private student loans are limited, many consumers attempt to pay off their loans in order to reduce the amount of interest owed over the life of the loan. But many consumers express confusion about how to pay off their loans early. For example, borrowers complained that servicers applied their payments in excess of the amount due across all their loans, not to the highest-interest rate loan that they would prefer to pay off first.
- Partial Payment Snags: When borrowers have multiple loans with one servicer and are unable to pay their bill in full, many servicers instruct borrowers to make whatever payment they can afford. Many complaints described how servicers often divide up the partial payment and apply it evenly across all of the loans in their account. This maximizes the late fees charged to the consumer, and it can exacerbate the negative credit impact of a single late payment.
- Servicing Transfer Surprises: When borrowers’ loans are transferred between servicers, borrowers say they experience lost paperwork, processing errors that result in late fees, and interruptions of routine communication, such as billing statements. Consumers complained that payment-processing policies can vary depending on the servicer. And, consumers said when they make decisions on the previous servicer’s practices, they can get penalized.
The post CFPB To Oversee Student Loan Servicers appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Sometimes debtors just need to face the facts when it comes to throwing in the towel on their finances. You may have been trying to make payments or find ways to make your money stretch in an effort to avoid filing because of silly misconceptions about why you should avoid it. It is possible you [...]
Across the nation property values are on the increase. Each state is seeing a different percentage of turn around, but each state is seeing some positive results. “CoreLogic …just released new analysis showing approximately 791,000 more residential properties returned to a state of positive equity during the third quarter of 2013, and the total number of mortgaged residential properties with equity currently stands at 42.6 million. The analysis indicates that nearly 6.4 million homes, or 13 percent of all residential properties with a mortgage, were still in negative equity at the end of the third quarter of 2013. This figure is down from 7.2 million homes, or 14.7 percent of all residential properties with a mortgage, at the end of the second quarter of 2013.”
Arizona has the third highest negative equity – with approximately 22% negative and 4% near negative equity.
In an effort to look at the glass as half full – I am happy that property is once again appreciating in value. My concern is that most of the HELOC (home equity lines of credit, or second loans on the home) come due starting in 2014. Most likely the maturity of these loans will result in another wave of defaults. This will result in additional foreclosures because the homeowner cannot sell their home due to the total debt.
The post Negative Equity in Home – Chart by State appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
The Broke and the BeautifulAdam Brown is a bankruptcy attorney for Dexter & Dexter, a debt relief agency helping people file for bankruptcy.
Across the State of Nebraska, you could have heard a collective groan of debtor attorneys as the Nebraska Bankruptcy Court issued a new ruling limiting the ability of debtors to avoid liens in motor vehicles. In the case of In re Cardwell, the Court ruled that a debtor may not utilize the “Tool of the Trade” exemption of Nebraska statute 25-1556 to avoid such liens unless the vehicle is actually used in the debtor’s trade.
The debtors owned a 2006 Pontiac Montana worth $1,200 and a 1992 Ford F-150 pickup truck worth $800, and they pledged both car titles to First State Bank for a new loan. After the bankruptcy case was filed, their attorney filed a motion seeking to avoid the liens since Bankruptcy Code 522(f) allows debtors to void liens.
The problem in Cardwell is that neither debtor was self-employed and although they used the vehicles to commute to and from work, they did not use the vehicles to perform their jobs. As the court noted, the vehicles were used solely for personal purposes and to commute to work. Therefore, the Court ruled that the vehicles did not qualify as “tools of the trade.”
This is a devastating ruling for debtors who have pledged their vehicle to acquire high interest rate Title Loans. For decades, Nebraska bankruptcy attorneys have used this statute to return car titles, but now they will have to limit this procedure to cases where a debtor can show the vehicle is actually used in their trade.
the Court did not state is how much a debtor must use a vehicle in their job to enable them to avoid these liens
At first glance it appeared the lien avoidance power was completely abolished for everyone but the self-employed, but a more careful reading of the opinion reveals that debtors may be able to avoid liens in many cases. It is important to note that the Court did not state is how much a debtor must use a vehicle in their job to enable them to avoid these liens. For example, paralegals in our law firm frequently use their vehicles to make trips to the Post Office or to file documents in the courthouse. Is that enough use to invoke the avoidance power? Nebraska bankruptcy attorneys will need to emphasize how a debtor utilizes their vehicle in their job to gain access to the lien avoidance power.
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for December 17, 2013 Patriot Coal says bankruptcy court OKs reorganization plan USEC Expects to File for Bankruptcy USEC, Enricher of Uranium for U.S., Seeks Bankruptcy
A California woman was sentenced to six months in prison after giving false statements in court that resulted in committing bankruptcy fraud. Patricia Bonavito, 59, pleaded guilty to charges related to making false statements under penalty of perjury, while trying to get hundreds of thousands of dollars in debt discharged by the bankruptcy court. Bonavito [...]
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I recently joined a group of business people from Clovis for lunch a couple of times per month. At the end of the lunch, each business tells the group their monthly "specials". I have joked that I was not running any specials because my clients were waiting until after buying Christmas presents before filing bankruptcy. It is a sad joke, but true. Here are some statistics:
- The average person spends just under $1,200 over the holidays – including food, gifts and travel
- At least 23% of that was paid for by credit card
- 6 million people borrow to pay for Christmas each year
- When paying by credit card, people tend to spend 112% more than if paying with cash
- One third of bankruptcies filed in March site overspending at Christmas
A lot of the tips for staying in your budget for this Christmas are too late to apply for this Christmas. However, as we head into the last week before Christmas, stay committed on not overspending for the last week. Just because you are over budget now, does not mean you can give yourself permission to continue the spending spree. Each dollar spent over than that you can afford will take twice effort and discipline to pay in January, February and March. Tell yourself you are going to start be a financially disciplined person today! You will thank yourself in January. Happy Holidays!
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Most Burlington, Wisconsin residents who file for a Chapter 7 Bankruptcy will be able to have most, if not all, of their debts discharged, or “wiped out”. This means you will not be liable for the debt. Any collection attempts from the creditor will be prevented. To many, this means peace of mind and peace and quiet from collection phone calls and letters. You will be legally free of all debts that are discharged after a successful Burlington Chapter 7 Bankruptcy.
Who Can File a Burlington Chapter 7 Bankruptcy?
Of course, first you must be eligible to file a Burlington Chapter 7 Bankruptcy. You cannot file a Chapter 7 Bankruptcy if you have already received a bankruptcy discharge in the last six to eight years (length of time varies) or if you are able to complete a Chapter 13 Repayment Plan (based on your income, expenses, debt, and more). To determine if you are eligible to complete a Burlington, Wisconsin Chapter 7 Bankruptcy, please contact my bankruptcy law firm to discuss further.
Which Debts Can Be Discharged in a Burlington, Wisconsin Chapter 7 Bankruptcy?
After you have been proven eligible to file for a Chapter 7 Bankruptcy, next comes the big question: Which debts can be wiped off your “Due and Owing” list?
To begin, only debts that occurred before your date of filing a Burlington Chapter 7 Bankruptcy can be eligible for discharge. Therefore, filing for bankruptcy at just the right time is paramount. However, do not believe you can rack up credit card debt on luxuries right before you file for Chapter 7 Bankruptcy. If you do, you can rest assured those debts Will Not be discharged. Honesty is key.
Learn which debts can be wiped out after a successful Burlington, Wisconsin Chapter 7 Bankruptcy
Scroll through the list below to learn about the most common debts discharged in a Burlington, Wisconsin Chapter 7 Bankruptcy.
• credit card charges and fees
• medical bills
• utility bills
• department store cards
• business debts
• past due rent or any other money owed under a lease agreement
• payday loans
• civil court judgments
• auto accident claims
• unpaid IRS taxes and penalties
• attorney fees
• government benefit overpayments
• personal loans from family and friends
• amounts owed to bank from “insufficient funds” checks
• repossession balances
Of course, there are special circumstances for almost each of the items listed above. To learn which of your debts can be legally discharged or “wiped out” in a Burlington, Wisconsin Chapter 7 Bankruptcy, please contact me, Shannon Wynn, by phone at 262.725.0175 or by email via my contact page.
*The content and material on this web page is for informational purposes only and does not constitute legal advice.
Some people may wonder if they need to report the amount of debt they got discharged in bankruptcy when they file their taxes. For the most part, this may not be anything to worry about although it is something you can review with your bankruptcy attorney or tax consultant for clarity purposes. There are several [...]
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