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Christie_1Remember, any private or federal student loan debt that is forgiven before December 31, 2025 is not subject to federal tax.

Due to the American Rescue Plan Act of 2021 loans that are forgiven are not considered taxable income for federal income tax purposes. Since state and local tax implications will vary, we recommend you contact a tax advisor for more information.

I’m working on a new blog about 1098s that we are hearing going out to borrowers for interest that is rolled into a consolidation or forgiveness under the Borrower Defense program.  That should be out in a couple days.

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Christie_1Finally!  Relief for Joint Spousal Consolidation Federal Student Loans

Did you know that married couples were allowed to consolidate their debt under a program that existed from 1993 to 2006 which allowed a single monthly payment and often a lower interest rate.  But it meant that each spouse was 100% liable for the other spouse’s debt.  Moreover, borrowers who had these Joint Spousal Consolidation loans were often left out of most programs.  We’ve long known of the problems plaguing borrowers in this “One Way In, No Way Out” program.

Borrowers were unable to sever the loans despite divorce, an uncommunicative partner, domestic violence or financial abuse.  Borrowers also were not eligible for most of the best programs which required a Direct Loan because they were trapped in the FFEL Consolidation Loan.

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Christie_1Good news: the Administration announced last week that in February, it will begin early implementing the SAVE provisions that provide cancellation of borrowers’ remaining balance in as few as 10 years of qualifying payments depending on the total amount originally borrowed.

Borrowers enrolled in SAVE will have their remaining balance forgiven after 10 years of qualifying payments if they originally took out $12k or less in federal student loans, with one additional year of payments required for every additional $1,000 borrowed, up to a max of 20 years for those with only undergraduate loans, and 25 years for those with any federal student loans for grad school.

So if you are a little over $12k initially borrowed, no worries, they are allowing for one additional year of IDR (SAVE) for each $1,000 over.

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Lots of confusion out there regarding the three year monitoring.  The wage monitoring part of the three year monitoring went away, but NOT the three year monitoring as a whole.  What does that mean?

Well, if the borrower returns to school and takes out federal loans, that could reinstate the forgiven loans if done within the post discharge three year period.  The 1099 (which may or may not actually be sent) is supposed to be sent out AFTER the three years are over.  This could render the forgiveness taxable under federal guidelines if done after December 31, 2025.  Congress will have to allocated additional funding to the TPD program to allow for the non-taxability to continue after that date.

Also, if the borrower was approved based upon their SSA status, and that status changes, the loans may be reinstated.  Our clients are approved on a physician’s certification so that shouldn’t matter for us.

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arkovich_law-narrowI read an article today by the Ascent, that among all Americans, the average amount of time spent on financial management per day is 1.8 minutes.

That may include things like defining a goal, budgeting, saving for retirement, managing debt, planning for taxes, planning for emergencies etc.  I guess I’m not surprised.  I plan to have a few posts this month – straight from the horse’s mouth – an attorney’s view from well over 25 years of practice on How Someone Can Reboot.

If you are finding that you are making no headway on your debt, despite a good income, perhaps the time has come to talk with an attorney re: debt management, and yes, even bankruptcy.  A Chapter 13 for instance will allow you to make one payment monthly, and the trustee is responsible for divvying that out to your various creditors.  Makes your life simple.

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arkovich_law-narrowIf you’ve decided it’s time to take back your life, we can help devise a debt escape plan with you.  This may involve making decisions about what to pay, what not to pay, how to settle and create a plan to get out of debt.  This includes student loan debt as well as credit card or other debt.

There is not a one size fits all strategy.  There are many different kinds of debt.  Student loans, mortgages, car loans, personal loans, credit card debt, lines of credit and more.  It doesn’t make sense to use the same strategy on different types of debt.  Your income/health/age and other factors should play a large role.  Co-borrowers may play a role.

We have years of experience helping consumers with student loan debt and mortgage debt.  We are experienced foreclosure attorneys and bankruptcy attorneys.  The rules can be complex and they are often updated or vary jurisdiction to jurisdiction.  Why try and figure out everything on your own when there are resources and guidance available to help you make the best decisions going forward.

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FTX wants to pay customers back but based on crypto prices at the time of its bear market bankruptcy. So, not good.

In paperwork filed on December 27, FTX proposed prices for around 500 crypto assets. This includes:

  • Bitcoin at $16,871
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Christie_1Despite lots of changes in the landscape allowing the discharge of both federal and private student loan debt under the right circumstances, many people still believe that student debt survives a bankruptcy.

Private loans follow very different rules then federal as you probably know.

One thing I haven’t written much about are private loans for these vocational schools such as those for coding, helicopter, cosmetology etc.  If the school is NOT on the federal Title IV list for the years of attendance, those are dischargeable in a bankruptcy.

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Christie_1Most people I speak with about the disability discharge of federal student loans are concerned that the test is similar to the Social Security Disability analysis.  It’s not.  You don’t have to deal with a scale of whether you can feed or dress yourself.  You don’t have to be approved for SSD.

It’s a vocational test.  Something we’ve dealt with often with our ADA or FMLA work for our former plaintiffs’ employment law practice.

The TPD standard doesn’t mean the borrower can’t work at all, it just means that due to their medical condition(s), they can’t reasonably work enough to be able to sustain themselves. 

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Christie_1Are you having trouble with your federal student loan servicer who is asking for  income documentation?  You can avoid all that for now, by simply self-certifying your income.  You can self certify through February 29, 2024 and here is how:

https://studentaid.gov/help-center/answers/article/report-income-in-the-income-driven-repayment-application

https://studentaid.gov/help-center/answers/article/report-income-in-the-income-driven-repayment-application

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