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Christie_1Lots of fighting over student loan forgiveness right now.

One of the big things we were (and still are) looking forward to is a change of law allowing bankruptcy debtors to obtain IDR credit for their plan payments.  Previously, many debtors did not receive such credit because the Department of Education automatically placed student loans in forbearance.  We called that the “False Start” instead of Fresh Start because while a bankruptcy could offer solutions for car loans, foreclosures, and credit card debt, there was not much available for those with student loans.  Instead the balance owed was often much larger after the bankruptcy was over.  That has now changed!!

A new bankruptcy forbearance provision was included as part of a set of regulations that were to implement the SAVE plan.  On June 24, judges in two separate cases involving the SAVE IDR plan, entered preliminary injunctions enjoining some of the regulations from going into effect.

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Christie_1The 10th Circuit came out with a ruling a couple days after the Missouri and Kansas rulings modifying the stay/injunction on the SAVE plan and student loan forgiveness.  It will allow the Department of Education to implement SAVE’s 5% payment calculation for undergraduate loans starting July 1.  The rest of SAVE – the ability to file separate tax returns, the 100% interest subsidy, the lower payment overall will still apply as well.  You can also get into SAVE if you weren’t already in before July 1.  Anyone in bankruptcy, will now receive IDR credit for their plan payments.  Thankfully, the 10th Circuit clarified where things stand with this injunction while the underlying litigation takes months to resolve.

What remains blocked is forgiveness under SAVE.  So anyone who reaches the 20/25 year mark, you can switch into another IDR such as IBR and obtain forgiveness while the litigation is pending.  Switching IDR plans does NOT restart forgiveness timelines.  While we don’t expect litigation to last until December 2025, any forgiveness before that date will not be taxed federally.  So no tax bomb if before December 31, 2025.

If you are working public service, the forgiveness would be under the Public Service Loan Forgiveness (“PSLF”) program and should not be halted.  There are no challenges to PSLF presently or being discussed.  Once the IDR audit/recount occurs in September, we expect to see large numbers of people qualify for forgiveness who did not qualify previously due to having the wrong type of federal loans, being on the wrong payment plan, and most extended forbearances and deferments will be credited with PSLF time.  That IDR audit is now expected to occur in September for anyone who has Direct loans or consolidated non-Direct loans such as FFEL, Perkins or HEAL loans, prior to June 30, 2024.

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Christie_1Just when we thought all things student loan related couldn’t get more complicated.  The Department of Education (“ED”) has been trucking along with its plans to get everyone on SAVE, correct prior problems with PSLF and the heavily used forbearance option that only caused balances to increase dramatically.

Now, on June 24, 2024, federal judges in Kansas and Missouri issued rulings that partially blocked key elements of President Biden’s SAVE plan nationwide.

What exactly has been blocked?  Two federal judges have issued preliminary injunctions that prevent ED from proceeding with certain aspects of the SAVE income driven forgiveness plan.

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arkovich_law-narrowDo you see a debt on your credit report that is not yours?

Did a relative (mother, child etc.) sign your name to obtain a loan?

This is a typical fact pattern we see for our Fair Credit Reporting Act cases.  Some unauthorized person signed for a debt and now our client is the one whose credit is being dinged or worse.

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arkovich_law-narrowThe debt limits of a Chapter 13 bankruptcy are dropping considerably tomorrow, June 21, 2024.  The Bankruptcy Courts are reverting back to a two part test that limits eligibility to a maximum of $465,275 for unsecured debt and $1,395,875 for secured debt.  Importantly, there is no talk of an extension for this federal mandate.

What will this mean?  Well, many with high debt will be forced into a much more expensive Chapter 11 bankruptcy if they cannot swing a Chapter 7.  Also, there will be a few who are presently in a Chapter 13 bankruptcy who do not want to dismiss because their high debt would prevent them from re-filing.  And having too high of debt is not an automatic qualifier for a Chapter 7.  Instead, in Florida like elsewhere, we look at someone’s actual income and expenses and determine if they are eligible.  Filing a Chapter 7 is most beneficial as there is no plan payment but it can be risky in that there is no automatic stay for co-borrowers, no automatic right to dismiss and you can lose non-exempt assets to the bankruptcy trustee.  Many other differences also exist.

It’s important to have an experienced bankruptcy attorney on your side.  We’ve been filing cases for years.  If you’d like to know what your particular situation would look like, please reach out to us.  We have a free consultation – we charge for those with student loans as those are much more difficult cases – but it’s still free for others.

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Christie_1The Biden administration’s overhaul of the Department of Education has put a lot of things on hold during the pandemic, but has created a number of good programs and fixed existing programs that should be taken advantage of now.

If your student loans are in default for instance, while rehabs basically weren’t available during Covid, there is a new program ending September 30 called Fresh Start.  Enrolling your federal loans in Fresh Start will both cure the default and give you credit during the pandemic for Income Driven Plans.  If you’ve been waiting to cure a default – that time is now until September 30.

If you had a garnishment that you are waiting to restart before taking action or contacting us, the On Ramp expires September 30.  That was the government’s decision to halt negative reporting and collection actions for anyone who hasn’t made payments since the pause ended last fall.  That means garnishment and other collection action will restart in early October.  It’s best to utilize Fresh Start now to bring the loans out of default and get the most credit possible during the pandemic.  Fresh Start didn’t used to exist and it has made rehab unnecessary to get out of default.  That means no need to catch up payments or make 9 on time payments to cure a default.

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We will be speaking at the Orlando Student Loan and Bankruptcy Workshop on June 7, 2024 along with Laurie K. Weatherford, Chapter 13 Trustee, Orlando Division, and Robert and Tammy Branson.  For our fellow attorneys who practice bankruptcy, this is not one to miss.  The cost to attend is only $350 for an attorney and will offer 6.0 CLE credits.

  • The 2022 guidelines from the Department of Justice on federal student loan adversaries are working. Don’t be left behind!
  • Debtors are receiving discharges.
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Christie_1We’ve confirmed through the NCLC that the new regulation allowing credit for IDR for anyone in bankruptcy will NOT apply to FFEL loans.  Or Perkins loans, or unconsolidated Parent Plus loans.  So it’s best to consolidate to Direct Loans before filing, but now that the 4/30 deadline has passed, it’s best to wait until 7/1 to obtain the IDR credit through the IDR Audit which will average the credit between all of your loans.  If you consolidate in the next two months – 5/1 through 7/1, you may not receive any former IDR credit that you’ve built up, nor any through forbearances and deferments that may count via the IDR audit.  Also, keep in mind the double consolidation window remains open for those with Parent Plus loans through July 2025.  And before you say it, it’s a lot to know – our heads are swimming too!  .

Also, you will NOT receive credit for plan payments made before July 2024.  But if your case is pending, you will receive IDR credit for any plan payments made thereafter.

It’s important to know these rules to get the most student loan debt discharged in bankruptcy.  If your bankruptcy attorney isn’t able to help you with this, make sure to talk with student loan counsel — before filing!!

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Christie_1While we try to get the most information out there through our blogs, monthly newsletters and You Tube Channel Student Loan Sidebar please remember that the information in our videos and this blog does not and is not intended to constitute legal advice.  Instead, all information and content are for general informational purposes – and may not be the most up to date – see the date we produce the video for example.

Please contact us for a strategy session where we review your particular loans and how best to position yourself to create the life that you want with as little debt as possible.



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Christie_1Bankruptcy is finally working for people with student loans — I expect to have a series up shortly about all the ways a bankruptcy can help now with both federal and private student loans.  This didn’t used to be true, and you may find people out there who follow those old rules and say that bankruptcy cannot help with student loans.  I’m afraid that after the IDR audit expires (deadline next Tues – 4/30), bankruptcy will in fact be one of the best – and often overlooked options to reduce crazy student loan debt.

Total and Permanent Disability discharges are also going strong — and never mentioned by loan servicers in our experience!  I just ran our numbers for 2023 and we had 28 TPD matters last year.  Discharges in as little as three months start to finish.  Something else that shouldn’t be overlooked if you find that you cannot work a full time job doing what you used to do.  That’s not exactly the wording that the TPD application uses, but it’s a way that we describe the process which we have found is more accurate than can you dress and feed yourself.  Remember, this is not an SSD review, it’s a vocational review of your ability to work.  We look at a lot of employment related factors, and our doctor can review your medical records and see you by Zoom or in person here in Tampa.  You can be anywhere though – even outside of Florida, even outside of the U.S. for us to help.

Double consolidation for those with Parent Plus loans is working to get people into the lower SAVE payment rather than getting stuck in a multi thousand dollar ICR payment.  There are rules and recommended procedures to do this though – see our videos or set a strategy session with us before you try that on your own.

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