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arkovich_law-narrowI noticed today that the interest rates just hit 7% again.  They briefly touched 6% a couple weeks ago.  For anyone who has locked in a rate closer to that 6%, you might want to take advantage of that now.  Word has it that the Fed may actually increase rates once this year, and leave them unchanged the remainder of the time.  Anyone on the fence waiting for a rate reduction may as well give that up and go ahead with their plans if this outlook prevails.  Or give up on purchasing a home right now and see what next year brings.  There are forces pulling all kinds of directions now as to what the future holds.

Anyone who has bought in the past couple years is likely under water.  While Florida still has an overall increase in population, property sales and corresponding values have dropped over the past couple years.  This means that short sales may come back — if someone needs to move now, but their property is underwater, it’s best to try for a negotiated short sale where any deficiency is waived.  This has to be specifically negotiated; it doesn’t happen automatically.  No one wants to be sued for the balance owed years later after you’ve given up the home.  You also don’t want that reporting negatively on your credit.

We work with local realtors to try to get that deficiency waived, buy time to complete the sale etc.  Reach out if you are facing this kind of situation and see what options may exist for you.

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Christie_1While the payment count was removed from the studentaid.gov site, there is a back door you can use to see how many years you have left on an IDR until your student loans are forgiven — if you call your servicer, who knows what answer you’ll get.  If you use this hack, make sure to take a screen shot in case you’ll need later for some reason.  You never know.

Step 1) Log in to studentaid.gov

Step 2) Open another browser tab and go to https://studentaid.gov/app/api/nslds/payment-counter/summary

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February Consumer Lunch

February 10, 2026

Zoom link

 

Attestation Process is Game Changer for Discharging Federal Student Loans

 

Christi Arkovich, Arkovich Law

Bob Branson, Branson Law

Tammy Branson, Branson Law

 

This CLE program explores the Department of Justice and Department of Education’s 2022 guidance that loosened the three-prong test for discharging student loans in bankruptcy through the new attestation process. Attendees will learn about how to analyze loan types and borrower eligibility, how to navigate the detailed attestation form, and borrowers who have successfully used the process. The program also covers how to file and handle these uniquely streamlined adversary proceedings—often resolved without litigation—key differences between bankruptcy schedule calculations and the attestation form, drafting consent final judgments, and practical considerations on fees, billing, and getting paid.

 

Consumer Lunches are no charge and via zoom.
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arkovich_law-narrowZombie second mortgages are becoming quite a problem nowadays.  The typical story is that someone took out debt for either a home purchase or home improvement/repair prior to 2008.  They likely have not received statements, and are current on their first mortgage.  Out of the blue, they are contacted by phone or letter, and often a foreclosure is filed.  The goal of the debt buyer is to obtain a down payment, a payment stream for a debt that is often twice the value initially borrowed.  Then that debt is resold at a tremendous profit.

Because of the short notice, the homeowner frequently starts making payments on this zombie debt, fearing foreclosure – even under circumstances where the homeowner hasn’t received mortgage statements and has received a 1099-C indicating the debt was cancelled years ago.

Don’t agree to this type of forced modification.  If you hire an attorney, the debt likely can be reduced substantially or even eliminated entirely.  But if you start paying them, it is very hard to assert the legal violations that rendered the debt uncollectible.

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Christie_1Major student loan changes are coming July 1, 2026. New borrowers will only have two repayment options — Standard or the new Repayment Assistance Plan (RAP). All other income-driven repayment plans (IBR, PAYE, SAVE) are being eliminated for new loans.

The Grad PLUS program is also being eliminated, and Parent PLUS loans are getting capped at $20,000 per year.

Anyone with a Parent Plus loan now — must have consolidation completed before July 2026 in order to obtain an income driven plan.

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Christie_1The new Income Driven Plan (“IDR”) set to roll out next summer on July 1, 2026 is called the Repayment Assistance Plan (“RAP”) for federal student loans.

The administration’s goal is to eliminate the choices and complexity of the present federal student loan repayment system.  The old IBR, new IBR, ICR, PAYE and SAVE plans are all being terminated.  Those legacy plans will exist for three more years until July 1, 2028.  Thereafter, only those borrowers enrolled in non-RAP IDRs can remain in those plans.  It appears that forgiveness will only occur for those enrolled in IBR or RAP.  For instance, someone could remain in PAYE or ICR, but would need to switch to IBR or RAP for forgiveness.

What is RAP?  RAP is an income driven plan going into effect next summer based upon a borrower’s adjusted gross income (“AGI”).  It will offer a tiered payment plan:

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Christie_1Defaults Increasing:  More borrowers are entering default because they are choosing to either wait out ED and the uncertainty of SAVE, are tired of dealing with their servicers and the constant changes or they simply do not have the ability to make IDR payments.  Default on federal student loans is never a good idea however as the penalties can be quite severe including garnishment, credit impairment, tax refund seizures and debt collection.

Consolidation and Rehabilitation to Cure a Default:  While the Fresh Start Initiative has expired, borrowers can still cure a loan default by a consolidation or rehabilitation.  There are significant differences between the two options.  Borrowers should beware of consolidation without understanding exactly what will happen and why.

Consolidation is a new loan versus a rehab of an existing loan.  Consolidation is basically a new loan where prior IDR credit is invalidated. For instance, if someone has several years of IDR forgiveness credit under their belt, they may not want to lose that.  A rehab of existing loans would be better than a consolidation if someone wants to continue building off that IDR credit to eventual forgiveness.

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Christie_1Early October has many federal student loan borrowers receiving forgiveness emails for those whose backdoor trackers show 300+ qualifying payments, and enrollment in IBR.  This suggests that the Department of Education (“ED”) ran an internal audit and submitted the most straightforward cases first.  We anticipate more rounds of forgiveness emails in the future.  Getting to 300 payments and enrollment in IBR is key.

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