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arkovich_law-narrowBuy now, pay later options are on the rise.  The most popular players in this space – Klarna, Afterpay, Affirm, and Zip – are everywhere. They’re not just options. They’re default features, embedded into the checkout flow of almost every major retailer.  Even Door Dash now has options which allow you to pay for your burrito later.

Most offer 0% interest and when used responsibly, they can help as a cash flow tool to carry someone until their next paycheck for instance.

It’s easy access, no real credit checks, frictionless credit with a few mouse clicks or phone taps.

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Christie_1Those with federal student loans have had a five year reprieve for collections on federal student debt.  We are seeing more delinquencies as people do not not realize they were due to make a payment and for those borrowers who cannot afford to make a payment now.

There may be relief (talk to us about your specific circumstances) but settlement is likely not an option for most.  The Department of Education has very strict limits on settlement of federal student loans:

  1. 100% of current principal and interest (better credit reporting)
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Christie_1The IDR payment tracker was removed from many if not all borrower’s studentaid.gov sites today.

You can still find your payment count however.  Write your servicer directly for it or use this direct  link after you’ve logged onto StudentAid.gov:  https://studentaid.gov/app/api/nslds/payment-counter/summary​.

This link shows in a computer code format called JSON which you can’t read.  But if you copy it into an AI tool such as ChatGPT, Claude or any of the others, it can be translated into regular English.

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We are hearing from multiple sources that federal student loan borrowers IDR progress will be removed from the government site next week.  It’s imperative that you screenshot your IDR progress in case you need it down the road.  This is on studentaid.gov and looks like this:

student-aid-IDR-count

Go ahead and view your IDR progress and screenshot every screen with info.  Don’t wait – do it now please!

Screenshot Your IDR Progress Today

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Christie_1We’re hearing a lot of people are finding out their student loans are delinquent – another today that received a 90 day late and had no idea they were out of deferment.

The dings to your credit are not small — we had a client recently who had four student loan accounts (not unusual at all) and the hit to his credit was 200 points.

You can imagine what a 200 point hit will do especially when it’s unexpected!

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Christie_1The IDR online application is back up, though a demo revealed there are some big new restrictions on enrollments:

  • No enrollment in SAVE
  • No opportunity to request enrollment in the plan with the lowest monthly payment
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arkovich_law-narrowCredit reports and credit scores are used widely in this country.  Practically every financial activity somehow involves your credit score.  If it’s wrong or lower than it should be, you can be charged additional fees and/or thousands more in interest.

Right now, there are considerable disruptions in the financial world.  We are seeing drastic changes involving student loans as you likely know.  Duplication of accounts, erroneous reports of missed or late payments are frequent and can be very damaging.

Just yesterday, we heard from a potential client who had been making his payments on time, but due to an addressing error, his loan servicer had changed and he did not receive notice of the change.  So his payments have been going to the old servicer.  Meantime, the new servicer has dinged his credit for 90 days for missed payments.  You can bet something like that can cause a score to decline precipitously.  People are regularly denied a mortgage, car, apartment, or new credit for this.  At the very least, existing costs will likely go up as other creditors perceive a risky borrower.

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Christie_1While the Income Driven Payment application process is shut down  (paper applications were being processed, but now they too are reportedly on hold), to be first in line when it restarts, we suggest a paper application be sent to your loan servicer so it’s in the queue, and be sure to use the latest IDR application form.  (Form #1845-0102 with an expiration date of 4/30/2027).  Attached documentation of your income (latest tax return filed or a recent pay stub).  You can try to upload it to your servicer, but with most of the online systems halted, it may be best to send via paper certified mail with a return receipt.

An Income Driven Payment is one way a borrower can remain current on their federal student loans who cannot afford their normal Standard payment.  Please don’t ignore a student loan bill – it not only will incur late fees, but you will also have damage to your credit and the possibility of default which is not good for a federal student loan.  Please read back through our blogs for some of the reasons why.

You may have some forbearance left.  A couple days ago I blogged about forbearance options.  This will not accrue credit toward forgiveness but it will keep your credit in good standing and avoid default.

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arkovich_law-narrowSo the Consumer Financial Protection Bureau is in the process of being shut down.  I expect that private consumer claims will increase thereafter when consumers realize that the government will not be taking action to protect them through the CFPB, FTC or other entity.

Many collection attorneys send out communications to a consumer’s past attorney as required by the Florida Bar.  We review them and send to our former client.  Here in the 11th Circuit which includes Florida, collection letters that are made from a collection attorney to a consumer’s attorney are actionable under the Fair Debt Collection Practices Act (“FDCPA”) per  Bishop v. Ross Earle & Bonan, P.A., 817 F.3d 1268 (11th Cir. 2016).  To defeat a standing issue, it’s important that the consumer attorney relay the letter or communication to the client though.  Sometimes charging a small fee to review the matter can also defeat a standing challenge.

So what is a communication?  We use email a lot (who doesn’t right?) and there was just a case out under the Florida Consumer Collection Practices Act, Quinn-Davis v. TrueAccord Corp, No. 1:23-cv-23590-LEIBOWITZ/REID (S.D. Fla. Nov. 20, 2024) which held that merely sending an email does not constitute a “communication” unless it is actually opened and read.  This will reduce the viability of class actions based solely on information sitting in someone’s inbox.

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arkovich_law-narrowMore and more signs are pointing toward bankruptcy being the best platform going forward to address student loans.  Why?

  • We can often discharge private and even federal student loans (if either an undue hardship exists or it’s an unqualified education loan);
  • We can cure a default of a federal student loan (where consolidation or rehab opportunities no longer available);
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