Articles Posted in Student loans

The DOE is involved in a negotiated rule making process right now to expand its relief of federal student loans for misrepresentations or fraud regarding recruiting practices, marketing, and job placement at potentially fraudulent schools which may be subsequently closed or are under investigation.  The DOE website briefly covers this new process called Defense to Repayment here.  This the result of several Attorney Generals appealing to the DOE to do something following the Corinthian bankruptcy (including Everest) for students who do not fit the traditional closed school discharge (must have attended with 120 days of closure and non-transferrable credits).  Virtually none of our clients fit that definition.  While some the information for the application will likely be rudimentary such as name of school, degree, transcripts, dates of attendance and so forth, in order for a successful discharge, additional information is anticipated such as:

Any details about the conduct of the school that the borrower believes violated state law including, but not limited to:

• The state and applicable law or cause of action (if available)

I just watched yet another attorney’s video from 2013 about how student loans are hardly ever discharged in a bankruptcy unless you are extremely ill.  The ending quote about student loans was “you’re stuck with them”.

And that was it.  No discussion about options, possible outcomes, etc.  Just you’re stuck with them.  Unfortunately that is still the outlook of most attorneys.  I guess that’s good news for my student loan practice, but we can only serve so many clients.  What about all the ones we don’t reach?

We don’t accept that.  At our law firm we are finding solutions.  This week one of our private student loan clients accepted a settlement that was only 8% of his nearly 100k balance.  8 percent.  Really.  And he’s young, perfectly healthy, with no disability.  He is borrowing $8,000 from his father to pay off in full this ridiculously huge student loan that he could never make a dent in otherwise.  Then we are putting him into an income driven plan with debt forgiveness for his much smaller federal loans.  I think his payment will be around $250.  He came to me with $140,000 in debt with an income of less than $35,000.  His student loan statement from Navient showed he was $69k past due.  Most attorneys including the one from the video I watched today would say tough luck, you’re stuck with them.  Needless to say it was quite depressing watching this video.  I’m glad this client didn’t see that video, he probably would never have picked up the phone to call me.  Instead he now owes around 40k instead of $140k and he has a reasonable payment of $250 with debt forgiveness for anything not paid after 25 years.  And he feels good about himself and where his life is headed now.

Highlighting a case where we obtained full student loan forgiveness of nearly $70,000 for an elderly client who had helped her son through school, ABC Action News interviewed our client and me today.  The debt collectors wanted $700 a month in payments and were harassing her to make her payments.  Now her payment is ZERO!  The important thing to draw from this is to do your research.  There are options for 9 out of 10 people who step into my office and don’t give up!

In my continued efforts to help student loan borrowers understand why hiring a student loan attorney is a good idea, I’d like to post some of the cases we are working on this week.  Some of these are a little out of the ordinary and I’m hoping that other potential clients who have similar difficulties will contact us to help after they read this.

1.  We settled a case for a client who came to us with a private student loan default a couple months back.  He had accidentally defaulted when he tried to put two student loans into forbearance.  He was told to send a certain sum of money, and sign and return two forbearance agreements.  He did that.  Despite both agreements being placed in the same envelope, the unnamed bank claimed it had received only one.  And they argued that two payments were due, not just one.  So they put the default on his credit.  Unfortunately, this default would prevent him from applying and obtaining a federal attorney position with a security clearance.  He offered to pay them in full.  No can do.  The default would remain.   He hired us.  We tried to talk to the bank but we also hit a brick wall.  So we sued.  Within two weeks of hearing from the attorney representing the bank, we agreed to a removal of the default and a 50% settlement in exchange for a waiver of our claims.  We sued under theories of negligence, negligent misrepresentation and the FCCPA.  Our client is up for consideration for a federal job now, and we’ve asked that the default removal request be expedited so that it won’t come up in the background search.  While we will never know for certain, the litigation we filed allowed the bank to “act outside of the box” and get this rectified.
2. Another client came to us after being garnished on her federal loans for 8-9 years at $500 a month.  I could hardly believe this had gone on for so long, but she didn’t think anything could be done since it was a student loan.  She’s not alone, many people think that, including attorneys who don’t do student loan work.  She is a teacher making $30k or so a month.  She owes 82k and her loan balance despite the $500 wage garnishment is not going down and she feared having to pay it forever.  With two kids of her own about to go to college, she couldn’t afford for this to continue.  Our plan is to rehab the default to cure it, then consolidate the loans to re-characterize her FFEL loans so they are eligible for public service and then apply for a certain income based plan with debt forgiveness that would forgive the balance after 10 years under the public service program without considering her husband’s considerable income.  When the dust settles we estimate her payment will be $300 for 10 years.  She is good with that.  The amount is based on her income (not her husband’s which is over 100k), is affordable and the best thing is it’s over in 10 years with no tax forgiveness.