White House Unveils New Student Loan Initiative

White House Unveils New Student Loan InitiativePresident Barak Obama announced the signing of the “Student Aid Bill of Rights” before an enthusiastic crowd of over 9,000 supporters at Georgia Tech University. In a similar move, President Obama directed the Treasury Department, Education Department and Consumer Financial Protection Bureau to opine whether or not bankruptcy laws should be changed, or at least relaxed, in this area. President Obama gave the agencies an October 1 deadline for their report.

This Bill of Rights is designed to streamline the loan repayment process and keep delinquent borrowers out of default. The new law also requires lenders to provide clear disclosures to borrowers about repayment terms.

In terms of bankruptcy reform, the administration’s review will most likely focus on private student loans which do not have the same obligations and conditions as federally-guaranteed loans. The President promised that “we’re going to take a hard look at whether we need new laws to strengthen protections for all borrowers, wherever you get your loans from.”

According to the White House, about 40 million people owe an average of $28,400 apiece in student loan debt.

Bankruptcy Laws and Student Debt

The President’s initiative comes about six weeks after Maryland Democrat John Delaney introduced House Resolution 449, which would change Section 523 of the Bankruptcy Code to make all student loans dischargeable in bankruptcy.

Democratic lawmakers are not the only people who have recently questioned the Brunner Rule. Both the Eighth Circuit Court of Appeals in Minnesota and the Tenth Circuit Court of Appeals in Colorado expressed some preference for a totality of the circumstances analysis, which basically states that “if the debtor’s reasonable future financial resources will sufficiently cover payment of the student loan debt – while still allowing for a minimal standard of living – then the debt should not be discharged.” The First Circuit in Maine joined this chorus when it described the Brunner rule as “overkill” that was contrary to standard of a fresh start for bankruptcy debtors.

Republicans have yet to speak out on any of these measures, but by and large, this same group of GOP lawmakers pushed the cleverly-titled Bankruptcy Abuse Prevention and Consumer Protection Act through Congress in 2005. Predictably, lenders also oppose any move to make student debt dischargeable.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

When Do I Start Receiving Bankruptcy Benefits?

When Do I Start Receiving Bankruptcy Benefits?In some ways, your financial fresh start occurs the moment you file for bankruptcy, as your creditors are immediately prevented from taking actions against you or your property to collect their debts. The debts are then officially wiped out when you receive a discharge order in a Chapter 7 or Chapter 13 Bankruptcy.

When Can I Get A Home Loan?

Many of our clients ask how long they must wait before they can apply for a residential mortgage after filing for bankruptcy. Specific requirements may vary between lenders, so it is best to shop around. But, there are some general industry standards:

  • Fannie Mae: Lenders are eligible for a loan as little as two years after a Chapter 7 or Chapter 13 discharge, although some borrowers may have to wait four years after a Chapter 7. Either way, that is considerably less time than the seven year wait after a foreclosure.
  • Freddie Mac: The same general waiting periods apply, but Freddie may be a bit more rigid.
  • FHA: These loans are generally the most forgiving when it comes to past credit problems. Borrowers with a Chapter 7 must wait a maximum of two years, while Chapter 13 debtors can be eligible in only one year.
  • VA: Borrowers are eligible for a loan under $417,000 within two years after a Chapter 7 or Chapter 13 Bankruptcy.
  • USDA: The waiting period after a Chapter 7 is three years, and a borrower who is still in Chapter 13 can qualify after a year of on-time trustee payments.

These values may be changing, as Congress and the White House may consider unwinding the government’s control of Fannie Mae and Freddie Mac in the coming year.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

Dealing with an Aggressive Creditor

Protecting Yourself from Creditor Harassment

Protecting Yourself from Creditor HarassmentMost of us want to pay our bills in a timely manner, and we often try hard to work with creditors when we get behind. But some creditors are relentless, calling and writing incessantly in an attempt to collect a debt. Some will call at all hours of the day or night. Some will call your friends and neighbors. Some will badger and berate you over the phone. There are ways you can deal with overly aggressive creditors.

The Fair Debt Collection Practices Act

In recognition of the abuses of debt collectors, Congress enacted the Fair Debt Collection Practices Act, empowering the Federal Trade Commission to monitor and regulate for abusive, unfair or deceptive practices. The FDCPA prohibits a wide range of actions perceived as harassment or misrepresentation, including:

  • Calling outside of specific hours
  • Communicating information about a debt to a third party
  • Threatening actions that the creditor or collection agency cannot take
  • False statements about a debt owed

Taking Legal Action

If a creditor or collection agency violates the law, and refuses to stop doing so after a written request, you can take legal action in court. In many instances, if you can successfully show violation of the law, you can get attorney fees and court costs, in addition to statutory and other damages. However, the legal action will not necessarily make the debt go away. Even if you can demonstrate that a creditor or collector violated federal law, you will still owe the debt until you pay it or the creditor/collector discharges it.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.