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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgThe 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.

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgOne 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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magnify-glassIt is very important to correctly reflect the assets of your bankruptcy estate and your intentions as well as meet all the other requirements to properly file a bankruptcy.  Documents that appear thorough, accurate and complete when filed, tend to receive far less scrutiny.  When in doubt, disclose, disclose and disclose.  If the bankruptcy trustee believes a debtor, or even worse, debtor’s counsel, has not fully and truthfully disclosed all of the requested information, that trustee will question the debtor endlessly, and will also request documents from the debtor to prove the information in the petition.  It’s important to hire competent and experienced bankruptcy counsel who has a good relationship of trust with the Chapter 7 and 13 trustees for this reason.  Proper preparation of a bankruptcy petition is one of the most important things a debtor and debtor’s counsel can do:

  • It ensures a quick and smooth 341 examination;
  • The more complete the documentation is, the less questions a trustee needs to ask;
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I implore you to go to the link below and provide a brief comment – we need help from consumers to keep the cell phone laws intact to stop invasive robocalls:

CBS News ran a terrific prime-time piece last night, featuring NCLC’s Margot Saunders, on TextCaster’s request that the FCC rule that the TCPA does not apply to ringless voicemail.  It’s just a bit over two minutes long and is worth viewing:

http://www.cbsnews.com/videos/companies-want-robocalls-to-go-straight-to-your-voicemail/

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If you closed on a short sale in the last five years and did not obtain a waiver of the unpaid balance owed to the first mortgage holder, you are at risk of now being sued for the difference – called a deficiency balance.  This could be for tens or hundreds of thousands of dollars.

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Lawsuits for deficiency judgments are likely to pick up in Florida following a recent case which held that the statute of limitations is five years following the short sale rather than the one year after a foreclosure sale.  We were afraid this might happen and we advised our clients during the height of the short sales not to close without a deficiency waiver.

So any short sale that occurred before mid 2012 would be safe, those short sales that closed after mid 2012 are at risk.

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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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UT-IMG_1477Last week we were invited to speak to students at the University of Tampa regarding their student loans and what to expect.  We presented a Powerpoint on Mastering Your Student Loans and held a small workshop for students afterwards.  Fox News Channel 13 was there covering the event as well.

I think it is great that college campuses are trying to raise awareness in this area.  It really is in their students’ best interest to stay on top of their loans.  I think my feelings are fairly well known by now, the loans servicers do not represent the student borrowers.  They are debt collectors pure and simple.  They do not owe a fiduciary duty to evaluate and explain all things student loan related to the borrower.  While a borrower may believe they are the “customer”, in reality, the client is the Department of Education or whoever owns the debt.

So I’d like to say “Thank you” for this move by more reputable schools taking the reins and bringing in sources of information to help their students with the next step in their lives.

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgNormally, when we apply for an income based plan with debt forgiveness, our clients do not have be current in their student loan payments.  They cannot be in default, but up to 270 days delinquency is fine.  We request a hardship forbearance to cover the missed payments.  In many cases, the loan servicer would automatically apply any unused forbearance time.  However, I received word today from a fellow attorney that this may be changing – and for the worse.  Navient is now claiming that a borrower must be current in their payments to qualify for IDR.

Unfortunately the standard form for requesting IDR payments (despite being 12 pages long) does not have a place to request a retroactive forbearance and many people will likely be denied if such a request is not made separately.  So borrowers beware, if your request for IDR payments under IBR, Repaye, ICR or any of the other income based plans is denied, it may still be possible so please inquire further or consult a professional student loan attorney.

Navient’s position is contained in their FACT SHEET on Legal Action released March 21, 2017 in response to the recent CFBP Complaint.

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