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stop-debt-harassmentThere are limits as to when a student loan servicer can contact someone other than the borrower.  They cannot call the borrower’s place of employment if the borrower asks them not to.  They cannot robocall the borrower’s cell phone when the borrower asks them not to.  They cannot discuss the debt with a third party.  They cannot contact the debtor when the debtor has retained legal counsel.  These are all very clear rules proscribed by the Fair Debt Collection Practices Act (“FDCPA”) and its Florida counterpart, the Florida Consumer Collection Practices Act (“FCCPA”) or the Telephone Consumer Protection Act (“TCPA”).

One quirk that I’d like to see how widespread it is, involves student loan servicer contacts with the debtor’s family members after the debtor has retained counsel.  In this particular instance, the contact involves asking for contact info for the debtor as well as their employment info.  At that time, the student loan servicer knows how to reach the debtor.  They know all contact regarding the debt is to go through legal counsel.  So why contact a reference or family member pretending they don’t know how to reach the debtor.  And ask for employment information from this relative.

There are two sub-sections of the FCCPA in play on this question:

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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpg
Are you a teacher?  A police officer?  A fire-fighter?  Work in any capacity for local, state or federal government or a non-profit?

Having doubts about whether your federal student loans are going to be forgiven after ten years of public service?  Join the club.  Here are five things you should know to make sure your loans are indeed forgiven after 10 years:

  • Make sure your loans are Direct Loans and not the older FFEL loans.
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https://www.tampabankruptcylawyerblog.com/wp-content/uploads/sites/10/2015/07/christie_d._arkovich_p.a_1_small.jpgWe’ve been spending quite of bit of time lately researching all the ins and outs of Public Service Loan Forgiveness (“PSLF”).  One of the issues that has caught our attention is the failure to communicate to FFEL borrowers the need to consolidate their loans to the newer Direct loans and THEREAFTER make 120 timely monthly payments.  Many people have never been informed of this requirement to consolidate to Direct Loans, and have wasted many years of their life making payments that do not count toward PSLF.  Many are finding this out now.  After they’ve already worked in public service for years.

I’d like to hear from student loan borrowers about how they heard of the need to consolidate to Direct for PSLF eligibility, and when they learned of this.  There appears to be a gap – the FINAL RULE implemented by the DOE on July 1, 2009 lays out a counseling requirement where this is to be discussed with students during an exit interview with the school.  But what about the ones who already graduated?  It wasn’t added to the Master FFEL Promissory Note until late 2009/early 2010.  So any borrower who graduated prior to mid 2009 would not have known of this requirement from the school, nor from the note they signed.  The PSLF was passed into law by the College Cost Reduction and Access Act of 2007 by President Bush to provide indebted professionals a way out of their federal student loans by working full-time in public service.  In 2007, many banks loaned money to borrowers under the FFEL program which provided for a federal guarantee in the event of default.  Three quarters of schools provided access to FFEL loans, while Direct loans were offered in only one-quarter of schools.  So in 2007, these banks began to inform their borrowers of this new legal path toward forgiveness.  Three quarters of these borrowers had FFEL loans which did not qualify.  At that time there were no forms to fill out, no applications to submit.  Borrowers were given a payment amount and told to make timely payments for 120 months and then apply.  The DOE doesn’t even have a final application ready yet – it is expected in September 2017.

In November 2011, FedLoan Servicing was awarded the contract to service borrowers eligible for PSLF.  But unless a borrower had somehow heard of the certification process to inquire about potential eligibility that began in January 2012, their loans would not have been serviced by FedLoan.  Loan servicing could have been provided by any of the originating banks or their servicers such as Navient, Sallie Mae, Nelnet or Great Lakes.  What steps did any of these parties take to educate their borrowers about the PSLF requirements?  What steps did the DOE take to ensure FFEL borrowers were aware of this limitation other than publication on its website for borrowers prior to the new Master Promissory Note in late 2009/2010?  Did the lenders have a financial incentive not to notify borrowers and thereby reduce their profitable loan portfolio?

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reguations
If you have a few minutes to add your comments, every little bit helps.

Education Secretary Betsy DeVos has announced that the U.S. Education Department is reconsidering rules adopted last year to protect students and to prevent fraud by for-profit schools. The rules give students a path to relief from their student loans, prevent schools from using forced arbitration clauses to deny students their day in court, and protect taxpayers from paying the cost of student loans or financial aid for schools that defraud students. Comments are due Wednesday, July 12.

Send a comment to tell Secretary DeVos: Don’t repeal or weaken rules that protect students, veterans, and taxpayers against for-profit school fraud:

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too-much-debt

I ran across a pretty helpful newsletter the other day with good tips about how to manage your debt.  It’s called The Dollar Stretcher.  At this link, there is a pretty helpful guide as to determining how much debt may be too much and what to do about it.  It’s recommended reading for any of our clients or someone who is on the brink of a credit problem.

Sometimes it may be good to sign up for a free bankruptcy consultation to determine if you can get out of debt on your own, or whether filing a bankruptcy may be a good decision to start fresh and wipe out excess debt.  For more information, please see our bankruptcy page on our website at ChristieArkovich.com.

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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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