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For anyone who has an interest in Public Service Loan Forgiveness, or other forgiveness programs for federal student loans, we were interviewed by attorney Kenneth Landau on his radio show that will be broadcast at 3:00 p.m. today and available as a podcast thereafter at www.NCCradio.org.

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divorce-debtsRogers v. Rogers, 12 So.3d 288 stands for the general proposition that student loan debt incurred during the marriage is a marital liability.  See, e.g. Smith, 934 So.2d 636, at 641; Adams v. Cook, 969 So.2d 1185, 1187 (Fla. 5th DCA 2007); Banton v. Parker-Banton, 756 So.2d 155, 156 (Fla. 4th DCA 2000); see also Section 61.075(5)(a)(1).  Thus, in the absence of specific findings supporting the unequal distribution of a student loan debt, such debt must be equitably distributed between the parties.  See Smith, 934 So.2d at 641; Adams, 969 So.2d at 1187.

The fact that one party will not receive any benefit from the other party’s education because of the dissolution is NOT a factor to be considered when allocating a marital debt for student loans.  See Smith, 934 So.2d at 641; Adams, 969 So.2d at 1187.  Thus, absent some other justification for an unequal distribution, controlling case law forbids a trial court from awarding student loan debt incurred during the marriage solely to one party or the other.

If the loans were taken out before the marriage, then they would be non-marital debt.

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In the Seventh Circuit, which includes Illinois, Indiana and Wisconsin – the answer is “YES” in a ground breaking ruling against Great Lakes this week.    Servicers must tell the truth when a student loan borrower asks questions about their options to repay student loans.  Servicers who steer borrowers into plans that benefit lenders,forcing borrowers struggling to keep up with their loans, can be held liable.  Halleluja!! (yes, I had to look up how to spell that 🙂

In Florida, we still don’t know.  We have a pending class action on appeal with our co-counsel against the very same defendant, Great Lakes, making the same arguments in the context of the Public Service Loan Forgiveness program.

This borrower, Nicole Nelson, says she was never informed about income-based repayment plans, which federal law requires loan servicers to offer. Income-based plans set monthly loan payments as a percentage of a borrower’s discretionary income, but, according to Nelson, these plans are less lucrative for lenders and the enrollment process is time-consuming for the loan servicer.  Instead, the servicer pushed forbearance.  We tell clients that forbearances are the drug of choice for servicers because it is easy to grant, and runs the loan balance up.  Forbearances do have their place, but they should be considered as a bandaid for a temporary reprieve, not a long-term solution.

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Which is the better option?

Debt management plans have no guarantee that the creditor will accept a negotiated discount.  Debt consolidators charge a fee regardless of whether a settlement is reached and often years go by with credit scores dwindling each month.  It’s often better to reach a deal with the creditor directly then try to include them in a debt consolidation plan.  Lump sums are needed.  1099s are sent for any forgiven amounts leading to a tax bill.  Any negotiated agreement must be in writing preferably with a line item deletion with the credit reporting agencies or at least reflecting the debt as paid in full.

Bankruptcy, particularly a Chapter 7, is often much faster — only three months for a Chapter 7 discharge.  While a Chapter 7 will remain on someone’s credit for 10 years, most people are able to get their credit score back up to high 600s or low 700s within six months to two years.  Bankruptcy is a legal mechanism intended to let people start fresh and credit rebuilding takes much less time than most people think.

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home-buying-tipsMany Floridians have moved beyond the foreclosure crisis and are now in the market to buy a home – we have some credit rebuilding tips in our free e-book “Reboot Your Life After Bankruptcy” https://www.christiearkovich.com/free-ebook-download_1.html.  This e-book is not just for those in bankruptcy, but it also may help those who went through a short sale, foreclosure, deed in lieu or simply collection actions and debt settlements.

Until October 31, 2019, Bank of America is offering a new program to price match for interest rates AND will offer ZERO origination points for certain mortgages.  In a study from Lending Tree, 60% of customers pay between $1,000 and $5,000 in origination fees.  In high-priced markets, a lender can charge over $10,000 in origination fees.

We are developing a series of Home Buying Tips to appear on our blog and website.  These will focus on those who have had financial or legal challenges to overcome.  We don’t know what’s the best school district or things like that, but we do know a lot about how to easily qualify for a home purchase within your means – or even to purchase an investment home/duplex/small apartment building.

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financial-coachThe financial website “Marketwatch” released a study of the American people’s money situations. It was disturbing at best.

The report found about half of our households live paycheck to paycheck. 19% have zero in savings, while 31% have less than $500.

It’s no surprise that nearly half described themselves as “concerned, anxious or fearful” about their current financial well being. Keep in mind the survey was taken in the midst of a booming economy.

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reverse-mortgageReverse mortgages are a great way to provide retirement funding but they do come with traps for the unwary.  In a recent Forbes article, “Additional Risks of Reverse Mortgages,” complaints to the Consumer Financial Protection Bureau remain high.  Areas of concern include servicers that:

  • make it difficult to coordinate payment;
  • act as if property taxes and other homeowner obligations are not met;
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check-your-credit-reportIt’s very easy to file an online or even phone dispute with a credit bureau.  It’s fine to start a dispute in this manner.  However, to ensure that all parties are required to investigate the dispute and update the consumer’s credit report, it is important to provide notice to the furnisher as well.  A furnisher is the party who reports to the credit reporting agencies (“CRAs”).

In an April 2019 decision, Hunt v. JP Morgan Chase Bank, Nat’l Ass’n, the 11th Circuit, the appellate court governing the State of Florida, held that a class action could not go forward against the furnisher of consumer information because it (JP Morgan Chase) was not notified of the dispute.  When JP Morgan Chase initially provided information to the CRAs about a consumer’s account being past due, this was an accurate statement.

The Court did not address whether JP Morgan Chase had an obligation to “refresh” information it had previously provided — had it received notice of the dispute.  Finding that the furnisher did not receive notice of the dispute, the Court stopped its analysis there.

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgYes, it’s a holiday weekend and I’m not quite sure why a local consumer group JEDTI is doing their 2nd Annual Convention today, but it is about a 100 degrees out and I think I’d melt outdoors anyway so why not?

JEDTI was originally made up of mostly foreclosure defense attorneys, and this is how I came to be a part of the group several years back.  It was amazing the knowledge this group imparted and I am forever grateful to be a member.

Now that the foreclosure crisis is for the most part behind us, JEDTI has morphed into other consumer protection areas including robocalls under the TCPA, fair debt collection violations, credit repair and reporting violations under the FCRA  — and now perhaps student loans if they like what I have to say.

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CBS interviewed us and our class action co-counsel, Gus Centrone of Centrone & Shrader, P.A., as background for their recent three part Eye on America story focusing on the student debt crisis.  Per Seth Frotman, formerly with the CFPB, there is zero plan to tackle this at the federal level and that the student debt crisis is here with no end or change in sight.  Very true.

Parts I, II and III:

https://www.cbsnews.com/news/student-loan-debt-i-had-a-panic-attack-millennials-struggle-under-the-burden-of-student-loan-debt/

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