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ch-13-bkWith the property market continuing to improve in Florida, we are seeing more lenders delay and place obstacles in front of borrowers trying to modify their home mortgage in an effort to keep their homes.  There are certain court rules and CFPB rules regarding modification that an attorney may be able to help ensure that the lender properly reviews a loan mod package.  When that fails, an appeal or online complaint to the CFPB may help.  When that fails, a very good way to make a lender accept your mortgage payments, is to file a Chapter 13.

First there is a modification process available in many bankruptcy courts, including the Middle District Tampa Division that works pretty well.  There is a good faith requirement that does not exist in state court.  So some mods that may be denied outside of court, or in the state court, may actually be approved in a Chapter 13.

A relatively foolproof way to keep a home is also to use a Chapter 13 plan to catch up on the missed payments.  This may be really good for a borrower who had a prior loan modification (with principal reduction) that they fell behind.  A Chapter 13 should be able to revive the terms of the favorable loan mod.  The catch is that the total arrearage (missed payments, and any foreclosure fees/costs) must be paid within no more than five years, while at the same time the regular monthly payment is also made.  A mortgage company cannot object to a plan like this that provides “adequate protection” to the lender.  Many people cannot afford this, but an easy way to see if you can is to check your last mortgage statement for the balance due (not the principal amount).  If it says $20,000, then divide $20,000 by 60 months which is $333.  So if your mortgage payment is $1,500, you would add $333 to catch up and another 10% for the trustee’s fee for a monthly total of $1,983.  If you can afford this, then your mortgage company must accept it — even though they may really want to foreclose.

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My friend Shawn Yesner interviewed me on his Crushing Debt Podcast that is now available Live:


iTunes . Stitcher . Google

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In my continued quest to help get the word out about things that can be done NOW to help relieve student loan debt, I was offered the opportunity to speak to about 100 bankruptcy attorneys on a panel about FDCPA violations.

We are constantly on the lookout for consumer collection law violations for our student loan clients here in Florida.  These violations of the FDCPA, FCCPA and TCPA give us much needed ammunition to settle student loan debt – particularly for our clients’ private loans.  These include letters our clients get that don’t make sense, don’t identify the debt collector etc. to phone calls to relatives, phone calls before 8:00 a.m. or after 9:00 p.m. or our personal favorite:  cell phone calls after our clients’ tell the debt collector not to call their cell phones.  At $500 – $1,500 per call, these violations tend to add up quickly.  Why not use these violations to reduce the student loan debt – while we get paid by the debt collector or student loan servicer?  Makes good sense to me.  And I hoped sharing my knowledge with other attorneys over the weekend helps them to recognize the good that come of such violations to reduce student loan debt!

For more information about potential collection law violations as they relate to student loan or credit card debt, please contact us at Christie D. Arkovich, P.A.

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Do you have Navient as your student loan servicer?  Are you happy with them, do they do a good job?  Most of our clients despise Navient, and much of what Navient does may actually be illegal.  The CFPB filed a lawsuit against them yesterday alleging consumer law violations under the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.  We file similar cases against Navient for all kinds of violations:  calling a cell phone without permission, providing incorrect information about repayment options, steering clients toward forbearance, providing erroneous information on collection letters, not providing information about discharge of federal loan program such as the new Defense to Repayment are some of the most common grounds we are seeing out there.

ABC Action News ran a story tonight about one of our client’s experiences with Navient.  Click the story link or cut and paste the following in your browser to view:  I am interviewed as well about how Navient steers people into forbearances only to leave them with more to pay later.

The short story is that this client has tried to pay her loans and has inquired repeatedly of Navient to send her information about the income based payment plan.  Despite having spent hours on hold to confirm her address (triple checked), email and fax number, she’s still not received the info – since early last Summer.  In the meantime, Navient is pushing forbearance.  Forbearance sounds great, zero payments for a while, but the loan balance quickly goes up as interest is capitalized and the compounding effect of interest takes hold.  Paying interest on interest is a quick way to bankruptcy.  Although not in the case of student loans because it remains difficult to discharge student loans in bankruptcy.  So indentured servitude is the more likely outcome.

Published on: CFPB announced in mid 2016 that it was looking more closely at student loan servicers  (companies that collect payments from borrowers) and their role in the increased student loan defaults.  It has announced this as one of their priorities for 2017.  Last fall, the CFPB issued a joint statement of principles on student loan servicing with the Department of Education and Department of the Treasury calling for greater consistency, accuracy, accountability and transparency in loan servicing. The bureau followed up with an annual report on complaints it has received about student loan servicers that could bolster the case for industry-wide standards.

Several student loan servicers have disclosed that they are responding to inquiries from the CFPB that could lead to enforcement actions. The companies include Navient Solutions Inc., Navient subsidiary Pioneer Credit Recovery Inc., The First Marblehead Corp., and Xerox Educational Services Inc.

Some companies have lost their licenses or governmental contracts to act as student loan services for federal loans.  Pioneer was one of five private collection agencies cut loose by the Department of Education in February, 2015, following a review that concluded they were providing inaccurate information to borrowers. The other companies that lost their government contracts were Coast Professional, Enterprise Recovery Systems, National Recoveries, and West Asset Management.  They may still be servicing private loans however.  In the summer of 2016, I believe Pioneer and Enterprise appealed the loss of their contracts and won – and as a result are still servicing governmental contracts.  In December 2016, the Department of Education announced the companies that received a contract to continue to service federal student loans are:

Published on: Consumer Financial Protection Bureau just released a snapshot this week on the excess financial problems that student loan debt is causing our older population.  The CFPB reports that in 2015, nearly 40% of federal student loan borrowers age 60 and older were in default.  I’d venture to say that the number is even higher if we add in private student loans for which parents or grandparents co-signed for their children.  Three quarters of these loans were taken out for their children or grandchildren.  Older Americans are the fastest growing segment of student loan borrowers per the CFPB.

The CFPB reviewed the complaints it had received by these older borrowers and noted the following which I’d like to emphasize are potential violations of our national (FDCPA) and Florida (FCCPA) consumer collection laws:

  • Delaying or prohibiting enrollment in income-driven payment plans:  Servicers are not advising some older borrowers that they may have their loan payment amounts reassessed under an income-driven plan when their income changes. Instead, some consumers on fixed or reduced incomes are being placed in plans designed for borrowers with growing incomes. Older borrowers in default report that their Social Security benefits are offset to repay a federal student loan—despite their right under federal law to cure their default and seek payment relief under an income-driven plan.
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DeVryDeVry University just agreed last week to a $100 million settlement as reported by the FTC.  We are seeing more of our Florida student loan clients start to question their education at DeVry and starting to understand why they haven’t been able to find employment that they were led to believe was likely upon graduation.

This settlement includes $50 million in debt relief—they’ve agreed to forgive all private unpaid student loans that DeVry issued to undergraduates between Sept. 2008 and Sept. 2015 ($30 million) and forgive an additional $20 million in past student debts for tuition, books and lab fees.

DeVry will pay $49 million to qualifying students who were harmed by DeVry’s deceptive ads.  That raises the question: exactly who are these “qualifying students”?  The FTC notice simply says that the $49 million will provide a partial refund to students who paid for DeVry classes.  So if you are a former student of DeVry you may start receiving correspondence relating to these partial refunds.

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We are about to file a case in the Orlando Division this week based upon the recent discharge of private student loan debt for a non-accredited school that was not listed on the Federal Codes List.  We are relying upon a decision last Spring In re Decena, 549 B.R. 11 (Bankr. E.D. N.Y. 2016), where debts owed on private loans to attend a “for-profit” university not accredited by the United States fell within the exception to discharge of § 523(a)(8). See also In re: Meyer, Case No. 15-13193 (Bankr. N.D. Ohio 2016) and In re: Swenson, Case No. 16-00022 (Bankr. W.D. Wis. 2016).

Unfortunately, I just learned today that In re Decena was just reversed on other grounds on November 29, 2016 when it came to light that the service was improper.  We noted the zip code they used in their service was incorrect last week when we were putting the finishing touches on our Complaint.  Then today I read that the decision was overturned because the bank, Citizens Bank, was served by U.S. Mail rather than certified mail on an officer of the bank as required.

Fortunately, two other jurisdictions in Ohio and Wisconsin agreed with the analysis put forth in In re Decena and are good law.  It is not likely that the New York Judge in In re Decena will materially change his position after service is properly effectuated and the saga continues, but… you never know.

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Great news! – Please read all the way to the bottom — there is now a strong probability of discharging federal loans for ITT’s former students, going back up to 12 years – provided you can show you learned of the fraud within the past 4 yrs under Florida’s discovery rule.  This may include anyone who just recently learned of the misrepresentations now that the school has officially closed for instance.

My thoughts on the new Nov 1 Regs implementing the Borrower Defense to Repayment (DBTR) program have been on their own little roller coaster.  This is the program recently announced to help former students of for-profit schools who were defrauded.  Corinthian, Everest, ITT etc.  The school doesn’t have to be closed, but it will be easier to prove a claim if they have closed.

When the Regs first came out I was very disappointed to learn that they were going to apply a statute of limitations that would vary state to state and likely be too limited to cover most of our clients.  I believed we would be limited to 4 years here in Florida for most claims.  For students attending in 2003-2012 which is practically everyone I speak with, this was devastating news.  However there was a little silver lining.  In the Regs it briefly mentions that they would apply any state discovery or equitable tolling rules.  One brief sentence on page 177 out of nearly 1000 pages.

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