Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney BlogWell the final regs are out now. But they are 927 pages. This is gonna take a while to read through — and looking at Halloween costumes on Facebook is winning out right now.
More to come later….
Happy Halloween everyone!!
Articles Posted in Student loans
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ABC Action News – New Hope for Many In Debt Students Who Attended for Profit Schools Like ITT and IADT
ABC Action News interviewed two of our clients who have attended ITT and IADT:
You can click on the ABC Action News above or type the above link into your browser. https://www.facebook.com/tampabaynews/videos/10154553756350409/
These students attended ITT and IADT here in Tampa several years ago and have tons of federal student loan debt for degrees that are essentially worthless. Starting Nov 1, 2016 there is a new program called Borrower Defense to Repayment that may offer them relief. Provided we can show false representations were made concerning things like job placement rates, accreditation and cost of attendance and link those to state law violations, we may be able to obtain a full discharge of federal student loans.
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Telephone Consumer Protection Act (TCPA) – Auto-Dialer Uncertainty
Were you aware that when you tell a bill collector (including a student loan collector) to stop calling your cell phone, they must do so immediately? Well usually. It depends upon the type of telephone system the collector is using. If they are manually dialing the phone, then they can continue to call you. The reason is simple: there is a human being on the other side making a conscious decision to call you at a certain time and date seeking payment.
But what if it is a machine calling you? The Telephone Consumer Protection Act (TCPA) states that calls using an auto dialer or an ATDS must stop if you ask them to stop. The reason is clear here as well: a machine is capable of calling hundreds of thousands of people incessantly following a pre-determined script or campaign. It often seems that nothing can stop it. So a law was enacted to help protect people from a barrage of calls and save valuable minutes on their cell phone plans. I had a client just last week tell us that when she spoke with someone asking the calls to stop, she was told she was on an autodialer and the calls couldn’t be stopped. Really. Well that statement certainly made it into a Complaint we prepared for filing.
In the last couple years, the industry has attempted to change its equipment to get around the TCPA. They say that this equipment is TCPA compliant. The equipment uses some parts human and some parts machinery. So how much human intervention is enough to allow for the calls to continue? The industry has taken to using entire systems that as a whole appear to be an ATDS, but each component standing on its own may not independently be an ATDS. What capacity must the equipment have in order to fall under the TCPA’s protections? The answer I’m afraid is less than certain.
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Cost of Education — Interesting Transparency Development in Response to Recent CFPB and DOE’s investigations?
We’ve been getting very interested lately in how schools, particularly for-profit schools, are representing the cost of education at their institutions. At ITT for instance, we’re learning that students were for the most part simply left in the dark about what their education would cost. By the time they learned the true cost, it was too late and they were already committed. They were also told that any shortfall in tuition that was not covered by federal financial aid would be covered by “temporary credits”. Some of our clients are reporting to us that they didn’t know these were actually loans. Others were aware they were loans but were told they were 0% loans. Then nine months later, ITT demanded payment in full of the amount representing the “temporary credits”. When most student couldn’t pay all at once (95% or more most likely) they were provided with a private loan at 13-16% with a 10% origination fee. That’s 23-26% interest folks!! None of this was fully explained up front. This will be the basis for one of our claims in our Defense to Repayment cases.
Also this week the CFPB enforced an order whereby institutional student loans held by a western school were discharged and refunds ordered when a college misrepresented the low payment plans. Apparently they promised $25 payment plans or something to that effect. I haven’t had time to find and review the allegations behind the Order.
Today in the ABA Journal, I read that the University of Tulsa College of Law is reducing its tuition by 35%. They state that the reduction is to be “really transparent about the cost of legal education.” Interesting. Transparency. Were they less than transparent last year? Now I haven’t been following the University of Tulsa since my law practice is in Florida, either they are ahead of the curve and we can expect more of the same from other schools who want to avoid scrutiny or perhaps they are already under scrutiny.
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The Real Cost of “Free” Help For Student Loan Relief
Ok, I have a bone to pick with Great Lakes. I formerly considered them one of the better student loan servicers out there. Not any more. On their website they offer free help and tell people not to pay a fee for student loan help that is free. It’s spelled out in a big bright banner. Well that sounds great, if they’d actually help.
Case in point. A couple in their early 60s came to see me last week. They were paying $1,400 for Parent Plus loans the wife took out to help her daughter who has been unable to find a job. They can barely afford the $1,400 and won’t be able to afford it much longer. The wife helps out in the husband’s business and does not earn a paycheck. The husband draws Social Security and owns a small business. They didn’t know how much they owed, so they called Great Lakes while in my office and found out it was $72,000. But despite being able to easily reach their student loan servicer, they were not given any advice as to how to lower their payments. NADA, ZILCH.
I knew immediately exactly how to help them lower their payment to zero. It took me 15 minutes of listening and asking questions. I told them how I can drop their payment in 1-2 months. And we can even get a forbearance for the two months if needed. For this particular case, we will consolidate their Parent Plus loans to Direct Loans and apply for the Income Contingent Repayment (ICR) plan right AFTER they file their tax return in Oct (they had obtained an extension already) as married filing separately. And presto, zero payment. That’s right ZERO. Did Great Lakes tell them any of this? NO.
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Defense to Repayment of Federal Student Loans – Finally Relief Expected Soon for Students of Closed Schools
The DOE is involved in a negotiated rule making process right now to expand its relief of federal student loans for misrepresentations or fraud regarding recruiting practices, marketing, and job placement at potentially fraudulent schools which may be subsequently closed or are under investigation. The DOE website briefly covers this new process called Defense to Repayment here. This the result of several Attorney Generals appealing to the DOE to do something following the Corinthian bankruptcy (including Everest) for students who do not fit the traditional closed school discharge (must have attended with 120 days of closure and non-transferrable credits). Virtually none of our clients fit that definition. While some the information for the application will likely be rudimentary such as name of school, degree, transcripts, dates of attendance and so forth, in order for a successful discharge, additional information is anticipated such as:
Any details about the conduct of the school that the borrower believes violated state law including, but not limited to:
- The state and applicable law or cause of action (if available)
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Rehabilitation of Federal Student Loans – Pros and Cons
Do you know what it means to rehabilitate federal student loans and why it is necessary? First, once a federal student loan goes into default, several consequences can occur including:
- Administrative wage garnishment;
- Income tax refund intercepts;
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ITT Technical Institute Fraud = Discharge of Student Loans?
On August 26, 2016, the U.S. Department of Education banned ITT Technical Institute from enrolling new students who use federal financial aid. This is the result of several investigations into their recruiting, marketing and job placement practices. The loss of these funds may ultimately be the demise of ITT likely in a matter of weeks. The Chicago Tribune did a story here with more details.
9/19/16 Update: Since ITT’s closure on September 7, 2016, we are now taking clients for representation to seek a discharge of their federal student loans (including Parent Plus federal loans taken by a parent for a student). New federal guidelines created following the closure of Corinthian go into effect on November 1, 2016 to allow for former students to potentially discharge debt due to fraudulent representations by the school in violation of state law.
It is too early to say whether former students of ITT will be able to assert a defense to repayment of their federal student loans. It’s possible because there are several open investigations into various ITT campuses and if they find evidence of fraud or illegal behavior, you may be eligible for relief. The DOE is expected to wrap up its final regulations regarding borrower defenses to repayment of federal student loans by the end of this year. We believe that the new regulations will expand the current environment which mostly only permit an administrative discharge when a school is closed within 120 days of your attendance and your credits are non-transferable.
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Are You Really Forever Stuck With Your Student Loans?
I just watched yet another attorney’s video from 2013 about how student loans are hardly ever discharged in a bankruptcy unless you are extremely ill. The ending quote about student loans was “you’re stuck with them”.
And that was it. No discussion about options, possible outcomes, etc. Just you’re stuck with them. Unfortunately that is still the outlook of most attorneys. I guess that’s good news for my student loan practice, but we can only serve so many clients. What about all the ones we don’t reach?
We don’t accept that. At our law firm we are finding solutions. This week one of our private student loan clients accepted a settlement that was only 8% of his nearly 100k balance. 8 percent. Really. And he’s young, perfectly healthy, with no disability. He is borrowing $8,000 from his father to pay off in full this ridiculously huge student loan that he could never make a dent in otherwise. Then we are putting him into an income driven plan with debt forgiveness for his much smaller federal loans. I think his payment will be around $250. He came to me with $140,000 in debt with an income of less than $35,000. His student loan statement from Navient showed he was $69k past due. Most attorneys including the one from the video I watched today would say tough luck, you’re stuck with them. Needless to say it was quite depressing watching this video. I’m glad this client didn’t see that video, he probably would never have picked up the phone to call me. Instead he now owes around 40k instead of $140k and he has a reasonable payment of $250 with debt forgiveness for anything not paid after 25 years. And he feels good about himself and where his life is headed now.
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When Debt Collectors Break Bad (I so miss that show)
Useful information can be obtained from the Consent Orders relating to improper debt collection activities obtained by the Consumer Financial Protection Bureau. Recent orders applicable to Fred Hanna, Encore Capital Group, Inc., Midland Funding, LLC, Midland Credit Management, Inc., Asset Acceptance Capital Corp., PRA, LLC, Porfolio Recovery Associates, Chase Bankcard Services, Santander Bank, N.A., Solomon & Solomon P.C., Westlake and Wilshire etc. can be found here on the CFPB site. (searchable filters).
Debt collectors are not permitted to provide false or deceptive information to you in their attempts to collect a debt. This may include the things they can do to you if you do not pay (such as take your home, sue you etc.). This may include who they are affiliated with. We are evaluating a case right now where the debt collector is private company. But they’ve told my client that they are the Department of Education. This is contrary to their website which we noted states no affiliation with the DOE. Basically, our marching orders are if what they say is not the whole truth and nothing but the truth, they run the risk of violating the law. This means if they try to explain your options, but leave perhaps the best one out – this would be a violation of the FDCPA, FCCPA and perhaps even unlicensed practice of law. All these consumer law violations give us excellent leverage to negotiate lower balances, better payment plans and sometimes even a write off of the entire debt.
This applies to all consumer debt. Auto finance, second mortgages, credit cards, signature loans and best of all student loan debt. When we are hired to settle any kind of debt we first take the time to educate our client on their consumer rights, what kinds of behavior can lead to violations and we have them document any phone calls they are receiving. Then we use all this to settle the debt.