How do you feel about discharging student loan debt in bankruptcy?
The American Bar Institute (ABI) Consumer Bankruptcy Committee conducted a poll on what changes would attendees like to make to student loan discharges that I found interesting:
10% Recommended no changes – leave it as it is
As the owner of a small bankruptcy law practice in Tampa, Florida, we were often thought of as the epicenter of the great recession and foreclosure crisis back in 2008-2012.
One thing that always made a big impression on me, was the number of people who genuinely believed and tried their very best to catch up with their bills once they became re-employed. These were folks who unfortunately had to run up their credit cards when not working, only to encounter high interest rates and an inability to catch up and actually pay down the balance even after they got a good paying job. Then I had to tell them that they could no longer file a Chapter 7 – the full bankruptcy. Instead, they were limited to filing a Chapter 13 – and partially or even worse, fully repaying the debt. Now this doesn’t always happen, but if you’re making 80k, are single and filing bankruptcy, it could. And often did.
Don’t be this person. Consult a bankruptcy attorney if you’ve had to run up your credit cards or incur a pile of debt whether medical expenses, unpaid rent, etc.
Due to heavy demand, the CPAAcadmy is doing a video rebroadcast today at 10:00 of a Webinar course I did for them last month for those who help others try to reduce or get rid of student loan debt.
I also have a link to this on my website available anytime (audio only unfortunately).
So if you have an hour, your might want to tune it at 10:00 for the rebroadcast today!
Wrapping up another busy week with student loan discharges in bankruptcy and forgiveness under the disability program. Hosted an excellent presentation for Tampa Bay Bankruptcy Bar Association attorneys on the new procedures for small business reorganizations by Amy Denton Harris, a shareholder with Stichter, Riedel, Blain & Postler, P.A. and Guy Van Baalen, an Assistant U.S. Trustee with the Tampa U.S. Trustee’s office.
The highlight of the week was a webinar presentation I did for CPAacademy titled “Helping Your Clients Take Their Lives Back From Their Student Loans“. I’d like to thank the 580 people who signed up even during the busy tax season with extensions expiring in just a few days.
I just have to share a few of the testimonials (all five stars except one four star who would have liked to seen a bit longer presentation!) to encourage you to watch and learn (or reach out to us to finally do something about your student loan debt):
If you have private student loan debt, do yourself a favor and listen to our latest podcast “How To Discharge Student Loans During Covid-19“. And then call me.
What are the most common errors on a credit report that lead to FCRA claims — and resulting damages?
Some creditors and loan servicers are jumping the gun in pursuing foreclosures, HOA liens, COA liens. The federal government is also taking the position that it’s okay to pursue cases already in litigation. We had to file a motion to abate arguing that the moratorium preventing involuntary collection activity includes cases already in litigation — which is well supported by case law.
None of these things should happening while the moratoriums are still in place. For mortgages and tenant evictions in Florida, that means we are in a holding pattern until July 2 when the foreclosure and eviction moratorium is set to expire. This includes actions on other liens as well. Florida Statute Section 702.09 defines mortgages to include HOA and COA liens so they have to put things in park, same as other traditional mortgages.
It also appears that certain banks are not honoring mandatory forbearance requirements — if you have received any messages, letters or phone calls re: SPECIAL FORBEARANCE options, please reach out to us asap to help make sure that this goes smoothly.
The American Prospect published an article yesterday about our Lawson-Ross Public Service Loan Forgiveness (“PSLF”) success in the 11th Circuit – which was very persuasively argued by Dan Zibel of National National Student Loan Defense Network.
Two quotes that should give student loan borrowers comfort and should give pause to servicers spewing false promises:
Yet, too often the loan servicers have every incentive to put their financial needs ahead of borrowers’ best interests. Servicers are paid a flat fee per loan in their portfolio, leading to chronic underinvestment in customer service. This dynamic leads the loan servicers to shunt students into less affordable plans or botch simple paperwork rather than take the time to get consumers into the right plans that best match their individual situations.
The CARES Act was designed to help protect consumers’ credit reports from the massive job loss and economic harm caused by COVID-19 business shutdowns. The idea is to ensure that someone’s credit is not impacted by a temporary inability to pay bills. While the CARES Act is helpful for this, there are a couple gaping holes as explained below that will not protect everyone’s credit during these times.
Basically, this Act added a new subparagraph (F) to 15 U.S.C. Section 1681s-2(a)(1) of the Fair Credit Reporting Act (“FCRA”). This applies for anything that is a credit obligation including credit cards, auto debt, medical debt, home mortgages etc.
These temporary protections are only in effect for 120 days from March 27, 2020. A couple areas of concern are in bold below:
We’ve been advocating for the Public Service Loan Forgiveness (“PSLF”) to be fixed for a few years now. Our class action lawsuit against Navient went nowhere, but the one against Great Lakes has been commended for a ruling last month by the 11th Circuit to help hold federal student loan servicers accountable when they talk to their borrowers: like how their loans would be impacted by various programs for instance. Something you’d expect a servicer to get right. So when a servicer tells someone that their payments count toward PSLF, you can rely on that.
It’s now possible that Congress may work to fix the very serious problem where not all federal loans are treated the same. Fixing this via legislation will impact a whole lot more borrowers than individual or even class action lawsuits.
Enter the proposed HEROES Act which would address problems with the Public Service Loan Forgiveness (PSLF) program, which allows qualifying public servants to get their federal student loans forgiven after 10 years of repayment. Currently, only Direct federal student loans are eligible for forgiveness under the PSLF program. Borrowers who have commercially-held FFEL-program federal student loans and Perkins loans do not qualify unless they consolidate those loans via the federal Direct consolidation program. By consolidating, however, they would erase any progress towards the 10 year repayment period and would effectively be starting over. The HEROES Act would allow payments made prior to consolidation to count towards PSLF.
Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog