Articles Posted in Student loans

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“Ten Years of Garnishment Down the Drain”:

In this series of Real Life Examples, I would like to highlight a potential client who came to us after ten years of wage garnishment at $400 a month.  They were upset that the loan balance had not gone down at all, but rather actually went up.  To top if off this client works for the local school system and would be eligible for Public Service Loan Forgiveness (PSLF) had they not been in garnishment.

We put together a plan to cure the default, put them on the best income based plan for their family with an estimated payment of $167-$324 depending upon how they file their taxes and how many children the borrower claims on his tax return as dependents.  And they will be enrolled in the PSLF program which will allow for a full discharge of any loan balance including unpaid and accruing interest after ten years.

Published on: Wall Street Journal reported today that the current administration intends to roll back some of the protections put into place by the Obama administration such as the gainful employment rule.  This will enable hundreds of for-profit schools to remain open that were at risk of closing.  Not sure if that is such a good thing.  If the employment rate is so low following graduation from some of these schools, perhaps these schools should be put down – rather than allowing their marketing machines to pull in more vulnerable students to waste years of their lives obtaining a worthless degree.  But I digress.

The important thing is Ms. DeVos indicated that the Department of Education fully intends on discharging applications pursuant to the Borrower Defense to Repayment under the rules established by former President Obama.  The Obama administration used the borrower defense regulation to cancel the debt burdens of former students at schools found to have committed fraud.  In early 2017, the DOE had approved claims from thousands of borrowers to erase $655 million owed by former ITT and Corinthian students.

It is unknown whether Mrs. DeVos will set too high a threshold for students to prove they were defrauded and get reimbursed.  However, it is good news that the current rule will be followed rather than dismantled.  “Promises made to students under the current rule will be promises kept,” Mrs. DeVos.

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“The Lost Ten Years”:

Sometimes I get a little focused on the more unique and “outside the box” solutions that I tend to blog about, and I forget that little things are just as important to obtaining the right result.  So I hope to publish a series of Real Life Examples of how people have inadvertently screwed up their student loans – mostly due to the non-transparency of the student loan system – and this has cost them dearly.  The point is that maybe our readers will catch something they haven’t done or checked into, or at least help encourage them to email or call a student loan attorney to get a checkup and make sure everything is going according to plan — or make a plan if none exists now.

In this example, someone who consulted with me had recently submitted their Public Service Loan Forgiveness (PSLF) Discharge Application and it was denied.  He had worked ten years for the federal government in public safety.  He then came to me.  I wish he had come to me earlier.  After I researched the matter, it turned out that while he had consolidated his loans, the consolidation was done too early in 2005 and well before the Direct loan program even existed.  Only Direct loans, and not FFEL loans, are eligible for PSLF.  So in order the obtain a discharge of his federal loans, he has to consolidate to the newer loan type, and then wait another ten years (while working full time for the government entity) to apply again.  This gentleman is turning 60 this year.  It’s extremely unlikely he will still be working in the same position when he is 70.

Published on: of our most successful cases this month was the discharge of private student loans for our client who attended a Caribbean medical school.  The key was that the foreign medical school was not listed on the Federal Schools Codes List as being eligible for federal funding.  That particular fact allowed us to obtain a full discharge of several hundred thousand dollars in private student loans.  The loans were not “qualified educational loans” as that term is defined by the Internal Revenue Code and therefore were dischargeable under Section 523(a)(8) in an adversary proceeding.

This case, In re Lysiuk, Case No. 6:16-ap-00124-CCJ is available here.  It was decided by Bankruptcy Judge Cynthia Jackson out of Orlando, Florida.

This case was not brought as a typical undue hardship.  I felt it would be exceedingly difficult to prove under the existing Bruner Standard that our client met the burden to discharge his loans based upon hardship.  While he was only making $10/hour when we filed the case, he was potentially capable of much more (despite being unable to pass the medical boards) and was young and healthy.  So instead we chose to go the route of a more technical argument that was gaining ground in the United States but was still an issue of first impression in Florida.

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What should you do if you are sued by NCSLT for student loans?

In recent years, lawsuits brought by the National Collegiate Student Loan Trusts (NCSLT) has become an epidemic. Defending these cases can be fun and rewarding. Often, consumers are faced with a lawsuit for tens of thousands of dollars on a loan they barely remember, from a trust they have never heard from.  They are often sued in multiple cases.  The deficiencies in the collectors’ proof have been well documented.  We raise many evidentiary and standing issues and conduct discovery to prevent a judgment.   Some clients are simply not collectible.  Between the legal problems with the cases and often times the financial condition of our clients, we can often obtain dismissals with prejudice – meaning they forgive the debt in full and agree not to come after our clients in a future case.

We had nine dismissals today.  This is life changing for our clients.  It can change your life too for the better.  These cases can be defended and can be settled for reasonable amounts.  If you haven’t been sued yet, please consult with an attorney about your rights – you’ll likely be sued in the next year as we are seeing more and more of these cases be filed.  For more information, we offer a free consultation and have tons of information on our blog and website at Christie D. Arkovich, P.A.

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In examining the typical debt that a person lives with nowadays, Sorboni Banerjee, Fox News Consumer Reporter, interviewed Tampa, Florida Student Loan Attorney Christie Arkovich for a news story on Monday.  The portion dealing with student loan debt is copied below:

Christie Arkovich specializes in helping people negotiate their student loans down.  She says when students first graduate it’s usually not that bad, but as they push back payments, the problem balloons.  “When grads first graduate, it’s mid 30’s and that’s actually sustainable if you have a job that pays $30,000 to $35,000.  That’s a one-to-one ratio that’s usually OK.  But people run into trouble, they do forbearances where the balance keeps increasing, so most of what we see are 50 or 100 or beyond 100.”

That’s 100k people.  That’s a house for many people.  And many of these people received only two year degrees or may have even dropped out.  Sorbani goes on to point to a recent study that found 70 percent of people said the reason they were delaying buying a house was because they’re swamped by their student loans.  Americans owe more than $1.4 trillion in student loans which is about $620 billion more than the total U.S. credit card debt.

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Fannie Mae introduced new programs on April 25, 2017 allowing student loan borrowers to refinance their student loans into their home mortgage.  Fannie Mae explained that this would open home ownership to more candidates and reduce interest rates from what is often 6-8% to a more manageable 4% under present 30 year fixed rates.  The headline reads:  Innovations Help Borrowers Pay Down Student Debt and Overcome Debt Related Obstacles When Buying a Home – See more at this link.

While this will help many young borrowers I’m sure, I’m also cautious in that borrowers are giving up important federal rights in doing so.  For instance, if older Americans elect to refinance their Parent Plus loans into their mortgage as they downsize to a more affordable smaller home, they are giving up the right to an income based plan (often 0-$100 a month) and trading that in for a sizable chunk of their home equity.  Home equity that could have been used to help fund their retirement.

Even a younger person should be careful as they too are giving up important rights in the event they lose their job, have a drop in income or become disabled.  The present income based/debt forgiveness plans allow for a re-calculation of a student loan payment for all of these events.  A federal loan can also be discharged in its entirety under the Total and Permanent Disability Discharge program.  A refinance of a student loan, while it may sound inviting due to a lower interest rate, will result in the loss of these federal benefits.  It will also cause the student loans to now be collateralized by their home and the loss of a down payment or equity in that home should a calamity occur.

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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.

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