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get-rid-of-sl-in-bk
There are a ton of people who believed their student loans were discharged when they loans were simply listed in their bankruptcy.  It may have been years before the private student loan companies started to communicate with the borrowers to collect this debt which added to that impression.

As it turns out, there may be a way to argue this after all – in instances involving private loans.  Private student loan lenders have to prove their loans are in fact “qualified education loans” and meet other criteria in order to be exempt from a general discharge.  We are now filing cases where we do not believe the private lenders can meet this burden and the loans are and should have been considered discharged all along.  This opens the lender and servicer to a potential FDCPA and FCCPA case if it has tried to collect on previously discharged debt.  Moreover, it also opens up the lender to potential claims to refund monies paid toward these loans since discharge.

An easy way around this would have been for the private student loan lenders to have filed their own adversary actions in the debtor’s bankruptcy to obtain a declaratory judgment that its loans were excepted from the general discharge.  However, this was never done.

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are-you-covered
Let’s face it, many people stuck in the middle taking care of both elderly parents and their own children, are overwhelmed when the Long Term Care Insurance company denies coverage for their loved ones.  Who has the time to deal with this with our otherwise busy lives?  Who has the knowledge to go toe to toe with the insurance company and force them to grant coverage?  And does it really make a difference with Medicare picking up the pieces if coverage is denied?

American Society on Aging addresses some common misnomers about what Medicare covers when long term care is needed.  The ASA pointed out that contrary to recent surveys which show that the public believes that Medicare pays for long-term care, this is not what happens in reality.  Medicare tries to limit its availability for the provision of personal and assistive care services.  If skilled nursing or rehabilitative services are needed, that’s where Medicare kicks in.

Medicare.gov defines long-term care as a range of services and support for personal care needs.  Most long-term care isn’t medical care, but rather help with basic personal tasks called activities of daily living (bathing, eating, dressing etc.)  The site states very clearly:  “Medicare doesn’t cover long-term care (also called custodial care), if that’s the only care you need.  Most nursing home care is custodial care.”

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgIf you run into trouble paying your student loan, chances are you’ve been told to “just go on forbearance.”  Here are five reasons that is a terrible idea in many cases:

  1. The client I just finished speaking with has had a few hardships in her life (health, divorces, low pay, disabled daughter etc.).  When she called her servicer for help, she was told she could go on a forbearance.  She’s been on many forbearances over the years.  Her servicer never adequately explained her options.  She could have taken advantage of an income based plan with ten year debt forgiveness because she was a teacher.  She’s been a teacher for practically forever.  She would owe zero right now if she’d known what to do.  But instead her loan has ballooned from 23k to, wait for it, $126,000.  It’s gone up 10x!  And she has only three years until she retires, divorced with a disabled daughter.  Do.Not.Trust.Your.Servicer.to.do.the.Right.Thing.
  2. You might ask, how does a loan go up 10 times from 23k to 126k?  Easy, although this is one of the worst I’ve seen.  The interest capitalizes every time the forbearance is renewed.  This means the unpaid interest is added to the principal balance and now you owe interest on interest.
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Are you expecting a large tax refund this year?

If so, and you have had some financial difficulties this year, do NOT file your tax return if you are in default on your federal student loans OR about to file bankruptcy.

Instead, some pre-planning is in order.  For federal students loans, cure the default before you file your taxes.  File an extension if you must to gain some additional time.

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Parent Plus Loans are federal loans that a parent or grandparent takes out for their child or grandchild to go to college.  Learn more about these loans, their high default rates and avenues to reduce this type of student loan debt by listening to our interview on the Crushing Debt Podcast with Shawn Yesner.

 

 

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PAF
I’d like to thank the PAF’s Hillsborough Chapter for the invitation to speak at their luncheon today with the assistance of our long term legal assistant, Angie Glaser, now paralegal!! — about Taking Control of Your Student Loans.

There were lots of good questions by people starved for information and surprised about what they learned today.  Hopefully, they will go back to their offices and share this with their attorneys and clients – and help us to share the word that there are many ways to reduce student loan debt that are not discussed by student loan servicers.

If you know of any group who would be interested in learning more about dealing with their student loans, please contact us to arrange a speaking engagement!

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgWe’ve noticed over the past few months that some of our clients and many other borrowers have been reporting that they are having no luck getting their federal loans in forbearance after they’ve filed a Borrower Defense to Repayment (“BDTR”) application.  These forbearances are simple to request and are supposed to be automatic.  Basically, you check a box requesting the forbearance in the application.  The DOE is supposed to automatically grant the forbearance while the review is under way – a process that may take a year or even longer.

However, under Secretary DeVos’ watch, the BDTR department has basically been gutted, with only a handful of people working to process what appears to be approximately 1200 claims received per week.  So the work isn’t getting done.

So who’s responsibility is this to make sure the borrower is being placed on forbearance as they should – DOE, the servicer (such as Navient, AES, Great Lakes, FedLoan, Nelnet), or both?  That is the question we are now looking into.

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One of our PSLF class actions against the largest student loan servicer in the United States, Navient, was profiled by ABC Action News here in Tampa last week.  Our clients are finding they have to basically start all over with their ten years of Public Service Loan Forgiveness because the servicers are telling borrowers incorrectly that their payments for the last ten years qualified when in fact, they did not.  In the client interviewed for this story, Gill Cottrill, it’s all because he had the wrong loan type.  He had an older FFEL consolidation loan as opposed to a newer Direct loan.  That simple fact has cost him everything!  He has now had to move across the country to a lower cost of living area in order to try to pay down his student loan debt — debt that should have now been paid after his ten years of payments.

ABC-PSLFhttps://www.onenewspage.com/video/20180201/9604344/Student-Loan-Nightmare-Navient-accused-of-misleading-students.htm

If you believe you may be eligible for Public Service Loan Forgiveness but are worried that you somehow may also be denied, or worse yet, have actually been denied, you should seek out a qualified student loan attorney.  Our Navient case is seeking nationwide status.  We have another case pending against Great Lakes.  More may follow against other servicers who also misled their customers.

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cnn-moneyCNN Money recently featured two of our clients, Amanda Lawson-Ross and Bill Cottrill, in a story Student Loan Nightmare:  ‘I have to start all over’.  These two clients filed Complaints seeking class action status.

One observation in the story:  “They make it incredibly difficult to take advantage of [PSLF]; you have to jump through so many hoops just to qualify.”  My advice:  don’t rely on your servicer (Great Lakes, Navient, FedLoan, Nelnet, AES etc.) with $11/hour employees who are likely paid incentives to reduce call duration and work for the creditor for correct information.  Seek Help Now!

A report was issued by the Consumer Financial Protection Bureau over the summer that spotlights the lack of accurate information borrowers are receiving about the Public Service Loan Forgiveness Program even after identifying themselves as a public worker.

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgParent Plus loans continue to be a big problem.  Not only are the consumers unable to pay the loans that were taken out for their children, they are continuing to not take advantage of plans that would allow them to pay less without hurting their credit.

Case in point: (As an aside, this client found me by googling “student loan nightmare”.  Sad, but true.)

One client I met with this week received a statement from her FedLoan servicer that the amount due was now $542.88.  On an income of $35,000 with a husband unable to work, our client simply could not afford that.  When she called her servicer, she was informed that she did not qualify for income based repayment and her only option once she came off forbearance was to pay $542.88.  But we can lower her payment by more than 50%!  And once she retires, her payment can likely go to zero.

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