- YouTube videos on student loan forgiveness have just been absolutely amazing. They break it down so it simple to understand. This whole thing has been so frustrating and these videos help to alleviate much of the anxiety I’ve had. Thank you!
Least Sophisticated Debtor Test and Strict Liability Under the FDCPA
Consumer complaints in Florida have a few things going for them that can make them easy to prove.
One of the things that benefits Florida consumers is our use of the “least sophisticated” debtor test.
What does this actually mean?
EIDL loan or grant — Payments Starting Soon — How to Discharge or Forgive?
First, and I must stress, EIDL loans are not forgivable. They were intended to help small businesses recover from the economic impacts of the Covid-19 pandemic.
However, EIDL Advance funds are like grants and do not have to be repaid.
More information is available on the SBA website: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/eidl
Case Study – Consolidation Tips and Traps
I had a consult recently that is a good overview of what questions our clients have and how we are able to drill down to the essentials and help determine the best path forward to ending student loan debt. This client reached out to us after viewing one of our Youtube Student Loan Sidebars where we go over the practical impact of new programs and what we see out there to help student loan borrowers.
Client: 300k SL debt, mostly Direct, 23k FFEL. Client has a pending consolidation app.
Key concern: How does IDR impact me? Did PSLF Help Tool but still confused.
What are We Seeing Out There for Private Student Loan Settlements?
All this talk about changes within the federal student loan system, I didn’t want to give the impression that nothing can be done with private student loans. Just today, we have a client who accepted an offer to save $165,000 on his private student loans! And this was not a lump sum settlement to be paid all at once. The terms are the reduced balance is to be paid out over 27 years at a very low interest rate of 1%. They payment is exceptionally low and finally affordable!
So while a full discharge or 100% forgiveness may not always be possible with a private loan, settlements are very realistic with the right facts. Contact us if you have a private student loan and need some help getting it resolved!
Why is it Not a Good Idea to Refinance a Federal Student Loan?
As we are getting closer to a repayment start date, I wanted to briefly mention that there are several things that should be considered before choosing to refinance a federal student loan:
- Income Driven Plan availability – the new Repaye program will have an incredibly low payment with ultimate forgiveness that should benefit all but the very highest of wage earners.
- The IDR Waiver program is causing a one time account adjustment to occur this year giving forgiveness credit for any long term extended forbearances as well as complete write off of loans where repayment has exceeded 20 years for undergrad and 25 years for grad loans regardless of payment plan length.
Bankruptcy is Good For Many Things: Mortgage Loan Mods, EIDL, SBA, Unforgiven PPP Loans and Finally Now Federal Student Loans!
Bankruptcy is not only for discharging credit cards!
New DOJ procedures allow us now to discharge federal student loans attesting to an undue hardship. We are co-presenting a webinar for the American Bankruptcy Institute on February 27 outlining this new program and helping our colleagues identify clients who may be eligible and learning how a bankruptcy filing can now discharge federal student loans.
Also, folks are receiving notices to begin repayments of EIDL, SBA or unforgiven PPP loans. Most of those loans are pretty sizable and can easily be discharged in a bankruptcy. We don’t recommend waiting to file. As it stands now, we don’t expect any challenges that these loans were fraudulently obtained, but that could change with a future administration.
REPAYE will be Revamped and the Changes are FANTASTIC!
New IDR Terms Announced! Sorry for the delay in getting this out, Covid has put me behind a week or so.
The new IDR Plan expected out in July before the payment pause ends will not exactly be a new plan. Instead of confusing borrowers and making yet another IDR plan, the Department of Education has decided to modify the terms of the existing Repaye plan to try and simply things. While some of us are a little worried that this process would enable a future administration to change the terms back, we do feel that the steps underway will be a huge improvement for federal student loan borrowers. Also, it would be difficult for a new administration to back date substantive negative changes so while we don’t expect this to occur, it’s in the back of our minds.
The changes are underway now and a formal 30 day comment period commenced a few days ago. If the terms do not meaningfully change before implementation this summer or fall, here’s what to expect:
Is it a Good Idea to Consolidate Student Loans Before Filing Bankruptcy, or Should You Wait?
Under the new provisions allowing a Debtor to attest to an undue hardship, a consolidation pre-filing would be viewed as evidence of good faith – this is the box that may be checked:
- engaging meaningfully with a third party they believed would assist them in managing their student loan debt.
Also, there could be problems if a consolidation is later done after filing as this would create a new post-petition debt that the Court may not be able to discharge effectively. As always, please consult with a bankruptcy and student loan attorney as this can get complicated and you are usually talking about a very large debt and don’t want to make any mistakes. Here’s the case law for the above assertions:
When Can You Expect Your Federal Loans to be Forgiven?
We are seeing forgiveness every week, more likely every day, now, but many are still waiting…
Interestingly, the huge spending bill being discussed by Congress right now does not include anything additional to Federal Student Aid.
What does this mean? Well, the FSA has to modernize its National Student Loan Database System to make it far more transparent than it currently is, provide a viewable tracking IDR payment mechanism, switch all servicer websites to its own government website, restart payments in August-ish, introduce a new IDR program in July, process the PSLF Waiver, implement and process the IDR Waiver, create and process a Joint Spousal Consolidation application to separate the loans, possibly cancel 10k or 20k pending the result of the Supreme Court, plus grant the discharges for all Borrower Defense to Repayment applications along with refunds for any monies paid to ED for over 100 schools approved by the Sweet v. Cardano class settlement. Wow.