While I don’t generally post our client reviews, there are times where I simply can’t help myself. This one in particular shows the difference between having an advocate on your side versus getting your information from the student loan servicer — who by the way represents the creditor only. They do NOT represent the borrower.
Who are all these people? People who want to put an end to the student loan crisis. Most are Bankruptcy Judges from the Middle, Southern and Northern Districts. The rest are us committee members who helped to put in place a new Student Loan Modification Program which goes into effect September 1, 2019 for the Middle District of Florida.
As I like to put it, the idea behind the Student Loan Modification program is to: 1) increase communication between bankruptcy debtors and student loan servicers; 2) increase awareness of various options available to reduce student loan debt; and 3) end the needless forbearance and accrual of yet more debt in bankruptcy by providing easier access and instructions for federal programs as well as mediation opportunities for private student loans.
I have a few trainings scheduled in the near future for other bankruptcy attorneys who have requested this:
Rogers v. Rogers, 12 So.3d 288 stands for the general proposition that student loan debt incurred during the marriage is a marital liability. See, e.g. Smith, 934 So.2d 636, at 641; Adams v. Cook, 969 So.2d 1185, 1187 (Fla. 5th DCA 2007); Banton v. Parker-Banton, 756 So.2d 155, 156 (Fla. 4th DCA 2000); see also Section 61.075(5)(a)(1). Thus, in the absence of specific findings supporting the unequal distribution of a student loan debt, such debt must be equitably distributed between the parties. See Smith, 934 So.2d at 641; Adams, 969 So.2d at 1187.
The fact that one party will not receive any benefit from the other party’s education because of the dissolution is NOT a factor to be considered when allocating a marital debt for student loans. See Smith, 934 So.2d at 641; Adams, 969 So.2d at 1187. Thus, absent some other justification for an unequal distribution, controlling case law forbids a trial court from awarding student loan debt incurred during the marriage solely to one party or the other.
If the loans were taken out before the marriage, then they would be non-marital debt.
Which is the better option?
Debt management plans have no guarantee that the creditor will accept a negotiated discount. Debt consolidators charge a fee regardless of whether a settlement is reached and often years go by with credit scores dwindling each month. It’s often better to reach a deal with the creditor directly then try to include them in a debt consolidation plan. Lump sums are needed. 1099s are sent for any forgiven amounts leading to a tax bill. Any negotiated agreement must be in writing preferably with a line item deletion with the credit reporting agencies or at least reflecting the debt as paid in full.
Bankruptcy, particularly a Chapter 7, is often much faster — only three months for a Chapter 7 discharge. While a Chapter 7 will remain on someone’s credit for 10 years, most people are able to get their credit score back up to high 600s or low 700s within six months to two years. Bankruptcy is a legal mechanism intended to let people start fresh and credit rebuilding takes much less time than most people think.
Many Floridians have moved beyond the foreclosure crisis and are now in the market to buy a home – we have some credit rebuilding tips in our free e-book “Reboot Your Life After Bankruptcy” https://www.christiearkovich.com/free-ebook-download_1.html. This e-book is not just for those in bankruptcy, but it also may help those who went through a short sale, foreclosure, deed in lieu or simply collection actions and debt settlements.
Until October 31, 2019, Bank of America is offering a new program to price match for interest rates AND will offer ZERO origination points for certain mortgages. In a study from Lending Tree, 60% of customers pay between $1,000 and $5,000 in origination fees. In high-priced markets, a lender can charge over $10,000 in origination fees.
We are developing a series of Home Buying Tips to appear on our blog and website. These will focus on those who have had financial or legal challenges to overcome. We don’t know what’s the best school district or things like that, but we do know a lot about how to easily qualify for a home purchase within your means – or even to purchase an investment home/duplex/small apartment building.
The report found about half of our households live paycheck to paycheck. 19% have zero in savings, while 31% have less than $500.
It’s no surprise that nearly half described themselves as “concerned, anxious or fearful” about their current financial well being. Keep in mind the survey was taken in the midst of a booming economy.
Yes, it’s a holiday weekend and I’m not quite sure why a local consumer group JEDTI is doing their 2nd Annual Convention today, but it is about a 100 degrees out and I think I’d melt outdoors anyway so why not?
JEDTI was originally made up of mostly foreclosure defense attorneys, and this is how I came to be a part of the group several years back. It was amazing the knowledge this group imparted and I am forever grateful to be a member.
Now that the foreclosure crisis is for the most part behind us, JEDTI has morphed into other consumer protection areas including robocalls under the TCPA, fair debt collection violations, credit repair and reporting violations under the FCRA — and now perhaps student loans if they like what I have to say.
CBS interviewed us and our class action co-counsel, Gus Centrone of Centrone & Shrader, P.A., as background for their recent three part Eye on America story focusing on the student debt crisis. Per Seth Frotman, formerly with the CFPB, there is zero plan to tackle this at the federal level and that the student debt crisis is here with no end or change in sight. Very true.
Parts I, II and III:
Today, we appeared on ParentPumpRadio as a guest discussing Breaking the Stigma of High Student Debt.
Different topics were discussed such as the old view vs the new view on picking colleges, paying for school, choosing loans etc. If you are a parent or student thinking about college, be sure to listen before making key decisions that could affect you for the rest of your lives.
- How to avoid high student loan debt when attending school
How it began (B.C. Before Chloe became our office kitty -not really, but close enough):
View video – the story of Chloe, best viewed with audio to hear the upbeat and impressive music with Barbara’s photo and editing skills — don’t worry, she makes a better lawyer…