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People are often confused about how attorney’s fees work – when do you have to pay your own, and when does the losing party have to pay?  This question is very important when you are faced with a decision of whether to “take someone to court”.  In the United States, each party pays their own attorney’s fees unless a contract or statute states otherwise.  Often a person is denied justice unless a contract or statute allows recovery of attorney’s fees because it simply does not make financial sense to right all wrongs.

Many consumer protection or debt harassment protection statutes such as the FCCPA, FDCPA, and the FCRA provides for the recovery of attorney’s fees.  Attorneys act essentially like mini attorney generals in that regard.  We can sue for someone under a statute that provides payment from an offending creditor for instance.

Contracts are another way in which attorney’s fees are recoverable.  You might read in a mortgage or debt related contract that the creditor is permitted to obtain its attorney’s fees and court costs if it has to pursue legal action to collect a debt.  While these contracts don’t clarify this, an attorney’s fee provision in a contract goes both ways, at least in Florida.  If the consumer is the prevailing party, the consumer can obtain their attorney’s fees and court costs as well.

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgAs a student loan advocate for many years, and a practicing attorney in Tampa Bay, I fear that many people may interpret this advice in a way that will hurt their chances for forgiveness.  The PSLF application is only one-half of the equation.  A very important part is to make sure that you consolidate your federal loans before 10/31 to get this relief.  A consolidation will allow the required ten years to run from the date of the first loan, as well as make sure that older loans and Perkins loans are included for PSFL forgiveness.

If you simply send in the PSFL application by itself, by the time you realize you have the wrong loan type, it will be too late to correct this.  Also, you won’t have the benefit of the ten years running from the date of first loan, which could add years of unnecessary payments.

A key requirement to take advantage of the new PSLF Waiver is to make sure you have Direct federal loans.  Prior to 2010, an estimated 80% of federal loans were under a different and now out-dated program called Federal Family Education Loans (“FFEL”).  An easy way to check, is to go onto studentaid.gov and view details of your loans.  You have until October 31, to consolidate any of these older FFEL loans, or even Perkins loans, to a newer Direct loan.  Only Direct loans are eligible for the PSLF Waiver which is intended to ensure that past payments actually count toward forgiveness, as well as the IDR Waiver which allows past lengthy forbearances also to count.  Even the recent $10,000 – $20,000 forgiveness will only apply to those loans held by the government.  While some FFEL loans are held by the government, most remain with private firms and are excluded from all of this.

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As the deadline to consolidate FFEL loans to Direct loans in order to receive PSLF forgiveness (OCT 31, 2022), we recommend that borrowers use Nelnet to consolidate rather than Aidvantage or Mohela as Nelnet is currently processing these quicker.  The account would then be transferred to Mohela, as the PSLF servicer, once the PSLF certification is filed.

It’s also quicker to do so online if possible.

The language used by the Department of Education makes it appear as though you must have a Direct loan to be considered for the limited PSLF waiver, not that an application has been filed.

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While the current pause for federal student loan repayments is expected to end August 31, 2022, it is widely thought that this date may actually be extended again until the end of the year (which is past the mid-term elections).

The Department of Education furthered this thought process by telling its servicers NOT to send bills saying student loans are coming due in September.

It’s now August 19.  Less than two weeks left to the end of the month.  In the past, decisions to extend the payment pause were made approximately 40 days before the expiration of the deadline.

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Register Now: A Guide to Submit the Public Service Loan Forgiveness (PSLF) Form

Webinar: A Guide to Submit the Public Service Loan Forgiveness (PSLF) Form

Wednesday, August 24, 2022; 8–9 p.m. Eastern time

This webinar is intended for students, parents, and federal student loan borrowers and will include information about

the PSLF program,
the limited PSLF waiver,
the PSLF Help Tool, and
additional resources to help navigate the process.

There will be an opportunity to ask questions.

Register Here

 

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I just finished reading Eleni Schirmer’s article in the New Yorker today about aging student loan debtors.  This is something I regularly see as well in our law practice.  Folks with crazy high balances nearing or actually in retirement, with absolutely no way to even think of paying the off the student loans.  Loans that were once $20k – $30k which have ballooned to sometimes hundreds of thousands of dollars.

I was a bit disappointed that the article didn’t allude to some of the recent efforts by the Department of Education to fix some of the long standing problems facing student loan borrowers.  We have been using these enhancements to existing programs to obtain much needed relief for our clients.  Things like the PSLF Waiver and the IDR Waiver are much bigger than many thought, and can be used to circumvent one of the largest problems plaguing our federal system where the faulty relief methods mentioned in Ms. Schirmer’s article previously didn’t work.

No mention was made of the Total and Permanent Disability program also.  I have just written about this process in a chapter to be included in a book Eldercare 101 that will be out in a few months.  We love this program and our prior work with the ADA and employment law, as well as our retention of physicians with an occupational medicine specialty, have helped us to obtain tax free 100% discharges of student loan debt in a matter of months.

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgProviding a sign that the federal student loan repayment pause will be extended once again – perhaps from August 31, 2022 to December 31, 2022, the Wall Street Journal reported today that servicers are being requested NOT to send bills to borrowers.

Even if the pause is extended, there can be repercussions in that the PSLF Waiver deadline is Oct. 31 and the IDR Waiver is 12/31.  If the pause is extended until the end of the year, I imagine there will still be folks who are blindsided by those deadlines and will be devastated to learn that they are no longer eligible for the waiver programs when they finally look into their student loan situation.

The moral of the story:  tell your friends!!  Now.  Please. 

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgI expect many of you are wondering: Should defaulted borrowers do the fast-tracked rehab or wait for “fresh start”?

Here is what we are hearing:

  • The Fresh Start process is intended to be easier and more accessible than the rehab process, and hopefully will be, so many borrowers/advocates will reasonably wait for that.  Additionally, at least some aspects of default removal will be automatic, though temporary, such as the recent removal of all defaults from CAIVRS for mortgage underwriting, so borrowers should get some temporary relief from default consequences without doing anything.
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We are hearing from folks that they believe there is a 7/28 deadline to file a BDTR application for auto approval.

The case Preliminary Settlement Approval hearing in Sweet v Cardona is 7/28/22.  It is NOT a deadline, but we should know more after that hearing.  Hopefully, they will set  FINAL Settlement Approval hearing date for this fall sometime.

However, any new applications submitted after June 22, 2022 will be evaluated on their merits — not the same as auto approval.  If you ran into the same sorts of issues that have been investigated in the past for a particular school, I believe that ED has telegraphed its intention to include that within its guidelines for approval.  The timeframe for forgiveness may not be all that different either as it will take up to a year for the auto approvals and any new application will have to be reviewed within 36 months.  It’s highly unlikely that the Biden administration will leave any undecided strays after the 2024 election – so you’re likely looking at up to 2.5 yrs of waiting during which the payments would remain on forbearance.  It’s likely most of the new applications would be reviewed within 18 months to allow adequate time for the actual forgiveness to occur before the 2024 election.  All this is a guess of course.

 

 

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