Published on: Trump’s proposal to eliminate public service is not nearly as bad as the headlines make it appear.  Basically, 99.5% of folks are being denied for PSLF right now because they do not know how to qualify.  Their federal student loan servicers are doing a poor job of communicating to the borrowers what is necessary for forgiveness.  It’s not hard, we do this type of work for our clients all the time, but then again, we know what to do.

President Trump proposes to simplify the process and have one income driven plan for all.  Won’t matter where you work etc.  The payment would consist of 12.5% of discretionary income for 15 years.  Right now those seeking public service forgiveness pay between 10-20% discretionary income over 10 years.  So it adds five years for those in public service.  But it drops ten years for those employed in the private market who are often on a 25 year IBR plan.  That’s huge — who wouldn’t want ten years shaved off!  And if you were to ask someone in public service if they would rather pay for 15 yrs and have the certainty of forgiveness tax free, as opposed to 10 years, with only ½ of one percent getting approved, I’d say the vast majority would select the new plan.  The current program is a nightmare.

Current borrowers could stay in the 10 year plan if they wished as well.  I know, I know, that’s what they said when President Obama was pushing Obamacare, but that’s what the proposal states.

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bk-and-small-busFiling bankruptcy for small businesses just got a whole lot easier!  The Small Business Reorganization Act of 2019 takes effect on February 19, 2020.  Some of the new features are that it adds a new subchapter V to Chapter 11 of the Bankruptcy Code which is good for small business bankruptcies because:

  • There are no quarterly trustee fees;
  • There is no absolute priority rule;
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Discharge-taxesOrlando Bankruptcy Judge Jennemann’s ruling to discharge taxes was just affirmed in Mass. Dept. of Rev. v. Shek, Case #18-14922 (11th Cir. Jan. 23, 2020).  Several Circuits around the country including the 1st, 5th and 10th hold that tax debts for late filed returns can never be discharged.  The 11th Circuit joined the 4th, 6th, 7th and 10th Circuits in favor of discharging this debt.  As you can see it can make a big difference where you live, as this is a pretty even split among the country’s Circuit Courts.

The Court found this definition fit best under Section 523(a)(1)(B)(ii) which implies that a tax debt can be discharged if there is a delay of at least 2 years between the filing of the return and the filing of the bankruptcy.  This would essentially give the IRS two years to collect on this debt, before a debtor could discharge the tax in bankruptcy.

While we are not tax attorneys, we consult with tax attorneys whenever necessary, for the best results in bankruptcy for our clients.  I spoke with a potential client this week who was unaware that nearly $50,000 in past due taxes, interest and penalties could be discharged in full provided certain tests and timelines were met.  This can be a valuable tool to reset someone’s financial lives to move forward.

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Fresh Start, Not False Start: How New Bankruptcy Student Loan Programs Are Tackling Student Loan Debt

January 23 @ 1:00 PM ET

ABI’s Consumer Bankruptcy Committee will discuss how new bankruptcy student loan management programs are helping debtors solve their student loan problems. The panel discussion will cover issues affecting debtors and their student loans, as well as solutions and tools the courts are implementing.

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This year, the Swift Law Group with whom we work closely on our consumer harassment cases sent us a wonderful holiday gift — a chocolate treasure chest!  Everyone who saw it exclaimed “Oh Wow!”.  Everyone!  Then it was a free for all…  Thank you to the Swift team!


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Student Loan Solutions
See below for tips to end roadblocks faced by our older population when dealing with student loans!

In a Yahoo Finance article this week, several problems were outlined and addressed during Secretary DeVos’ testimony on Capitol Hill.  First, lengthy delays in the Borrower Defense to Repayment program for those who were fraudulently misled by their schools.  Second, public service forgiveness denials for those who believed their student loan payments have been counting for years.  And third, confusion and difficulties for those trying to obtain student loan relief due to their disabilities.  I’d like to focus on this problem because while public service and fraudulent schools have had tons of press over the past couple years, the roadblocks faced by disabled borrowers have not been discussed much at all.

Under federal law, a disabled person can apply for total and permanent disability discharge to relieve their federal student loan debt.  However, on December 4, 2019, NPR released the data and results of an investigation that showed that only 28% of eligible borrowers identified between March 2016 and September 2019 have either had their loans wiped clean or are on track for that to happen.

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e-scooterAfter having moved my parents and in laws to South Tampa’s SOHO district to be close to us, I can’t help but notice all the E-Scooters appearing there and in downtown Tampa over the past year.  Please be careful when riding these.  At least wear bright colors and a simple bike helmet if you can.  These two steps alone would drastically reduce the vehicle versus E-Scooter problem out there.  And wave if you happen to see my 78 year old mom riding around town!  Not too likely, but you never know.

Riding an e-scooter is an excellent way of getting around. They are small, fast, and flexible. They allow riders to avoid congestion and save time by not having to find a parking space. However, the benefits of using an e-scooter do not come without dangers.

E-scooter accidents are on the rise throughout the United States. The quick and agile motion of e-scooters can throw off inattentive automobile drivers. E-scooter riders are also put in danger by the reckless and irresponsible.

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Student Loan SolutionsSome of our student loan clients have asked what they can make in terms of income and still be approved for a social security disability discharge.  Normally we tell them income from employment counts, income from investments do not.  For those that fear that they have to do a little part-time work in order to meet their bills, the guidelines allow someone to earn up to the poverty guidelines for their family size (and a family of one can use a family of two).

What forms of income are used to determine if I am exceeding the Poverty Guidelines or not?
The only income used to determine if you are exceeding the Poverty Guideline amount is income from employment.

Type of Income Counts Toward Poverty Guideline Amount?
Earnings from wages, tips or other taxable employee pay Yes
Earnings from self-employment Yes
Supplemental Security Income (SSI) No
Child Support No
Federal or state assistance No
Retirement Plan Income No
Unemployment Benefits No
Your spouse’s income (from any source) No


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Student Loan SolutionsMany federal student loans placed in in-school deferment will accrue interest during school and capitalize upon graduation:

Loan types that do not require payment of interest when deferring student loans include:

  • Subsidized Federal Stafford Loans
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