Banks; predatory Tactics vs Students and Former Students

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School Closure Form

http://www.ed.gov/offices/OSFAP/DCS/...ol.closure.pdf



School Fraud


Little has been done about school fraud given some pretty poor performance on the part of some schools in complying with their obligations under the Higher Education Act.3

Total Permanent Disability
Review Total Permanent Disability
http://lsnv.org/Student_Loan_Disability_Discharge.pdf


Fax numbers are: (319) 665-7646 or 665-7647 and the telephone number is 1-888-869-4169.


How Can I get out of Default
and
Repay My Government Student Loan?


There are a number of repayment options (choices), but for most poor debtors, the best will be a Direct Loan Consolidation with an Income Contingent Repayment Plan.


Even though a part of it’s name – Income Contingent Repayment Plan – suggests that you have to have an income, this is not always the case.4 Under the income contingent plan, what has not been paid at the end of 25 years, is written off.


3 See generally http://www.higher-ed.org/resources/HEA.htm.


4 34 CFR 685.209 defines the payment as:


(2) The annual amount payable under the income contingent repayment plan by a borrower is the lesser of-- (i) The amount the borrower would repay annually over 12 years using standard amortization multiplied by an income percentage factor that corresponds to the borrower's adjusted gross income (AGI) as shown in the income percentage factor table in Appendix A to this part; or (ii) 20 percent of discretionary income.

To qualify for this plan you must first make three monthly payments on your defaulted loan.

If the debtor has enough income to pay going forward, then a graduated or level plan with an extended term may be appropriate. But most of these options are lost after the loan has been in default for a year...that's about when the Department of Education refers the loans out to collection agencies.

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The first step in getting a direct loan consolidation is to call the Department of Education at 800-557-7392 or go to http://www.loanconsolidation.ed.gov/...borrower.shtml


Conditions for Deferment of a Government Student Loan

When can a borrower have a temporary (short term) excuse not to pay? This is called a deferment. During deferments, interest is paid by the government if the borrower has subsidized loans, so it gives the borrower breathing room. Also, deferments can be applied retroactively for a year or two.

How to Deal with Collections Efforts by a Collection Agency

A collection agency gets paid more for collecting $$ than for getting a borrower to consolidate the loan, so they may not tell the borrower about that option. There is a split of opinion in the courts whether federal student loans are subject to Fair Debt Collection Practices Acts. Most collectors follow the rules where they can, but collection activities are highly regulated, so asking them to stop calling may not be fruitful.

Collection agencies do not have much discretion to compromise principal or interest, but they may compromise the post-default collection charge (which can be huge).

They are supposed to require payments sufficient to retire the debt in 3 years.

Other Information

Minority Status/Truth-in-Lending Act

Minority status and Truth-in-Lending Act violations are not defenses to repayment.

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Primary Author
The primary author of this treatise on The Defaulted Government Sudent Loan is Catherine Mayes, Esquire.

Her private law practice is primarily devoted to student-loan matters. Ms. Mayes is a retired Associate General Counsel at Sallie Mae and has extensive experience in this area of the law.

She can be reached at t
mayescd@aol.com. Assisting Ms. Mayes with this treatise was Larry Fann, Esquire, Forms Master, LSNV.

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Options available only before default or after default has been cured: Deferments & Forbearances

Borrowers facing financial difficulty in meeting repayment obligations can switch to another repayment plan available for their kind of loan, or suspend or modify that repayment schedule by means of deferments or forbearances.


• Deferment is a suspension for specific causes of the obligation to repay; the borrower is entitled to a deferment upon demonstrating that qualifications are met.

• Forbearance is a temporary modification of an established repayment schedule either for inability to meet the existing repayment obligations or other specified grounds. Forbearances can suspend all repayment, or can temporarily reduce the required installment amount. Generally, forbearances are within the discretion of the lender and are not a right of the borrower.

A. General comments on deferments and forbearances
• Deferments and forbearances are available prior to default and after rehabilitation, (which cures default – see below), but not while the loan is in default.

• Deferments: for those FFEL and Direct loans based on financial need, government will pay the interest accruing during deferments. Other FFEL and Direct, borrower is liable for accruing interest (can be paid as accrued or capitalized).
Options for Borrowers October 2004
Page 10
Options for Borrowers October 2004
Page 11

• Forbearances: debtor must pay the interest prior to end of forbearance or it is capitalized (added to principal balance)

• Whether particular type of deferment or forbearance is available depends upon many factors, including when the loan was taken out and if borrower had prior loans

• In general, borrower is limited to up to maximum of three years per type of deferment. Forbearances may be granted for up to one year at a time, but FFELP regulations do not limit the cumulative amount of forbearance periods.


Deferments. Regulations:


Authority: FFELP - 34 C.F.R. § 682.210; Direct - 34 C.F.R. § 685.204; Perkins/NDSLP – 34 C.F.R. § 674.34 et seq. Each program has a variety of deferment grounds; several are focused on financial hardship, including unemployment deferment and economic hardship deferment.


1. Economic Hardship Deferment: available under all Title IV Loan Programs; 34 C.F.R. § 682.210(s)(6) (FFEL); 34 C.F.R. §685.204(b)(3) (Direct); 34 C.F.R. § 674.34(e)(Perkins).

Borrower must be --
a. receiving public assistance, or

b. working full-time (30 hrs/wk or more) with low income - at or below the HHS Poverty Guideline amount for family of two [for 2004, $1040.80 per month]1, or

c. working full-time, with high debt/income ration: (monthly income - student loan debt is less than $2289 (220% of amount in (b), or

d. not working full-time, with low income [less than $2020 (2004)] and monthly income net of student loan payments lower than $1040.80 [amount in (b)].
[Note: (b), (c), and (d) formally require the qualifying income to be below the greater of the HHS Guideline amount or the minimum wage; the HHS Guideline amount now produces a larger amount than the minimum wage.]
2. Unemployment deferment available to borrower who is registered with unemployment agency if within 50-mile radius and has made at least 6 attempts during preceding 6 month period to secure full time work. 34 C.F.R. § 682.210(h)(FFEL); 34 C.F.R. §685.204(b)(2) (Direct); 34 C.F.R. § 674.34(d)(Perkins).

Forbearances:

FFELP 34 C.F.R. § 682.211; Direct Loan: 34 C.F.R. § 685.205; Perkins 34 C.F.R. § 674.33(d) --

a. Generally available where lender believes borrower intends to repay, but is unable to make scheduled payments because of poor health or other acceptable reasons.

b. Loan Debt Burden Forbearance Required where student loan debt burden equals at least 20% of monthly income; limited to total of 3 years. 34 C.F.R. §682.211(h)(2); 34 C.F.R. § 685.205(a)(6).

1 Regulations state either minimum wage or poverty guideline amount; since minimum wage is lower (currently $892 @ $5.15/hr) the regulation defaults to the larger poverty guideline amount).

c. Military mobilization or national emergency: Required where Education Department determines that military mobilization or national emergency affects borrower.
Service-based cancellation:

Partial cancellation for teaching and other public service work: Perkins, National Direct, and National Defense Loans may be partially or wholly canceled in return for qualifying teaching or other specific kinds of public service work. See 34 C.F.R. §§ 674.

Cancellation rates and types of qualifying employment vary considerably depending on the type of loan and the period during which the loan was made.

Borrowers whose loans are in default and have been accelerated may still qualify for cancellation, but only for service performed prior to acceleration of the loan. 34 C.F.R. § 674.52(c)(2). A borrower may obtain a cancellation only by written request to the holder of the loan together with documentation supporting the claim, typically a certification from the employer of the borrower.

34 C.F.R. § 674.52(a).

FFELP and Direct Loan borrowers may obtain limited cancellation for loans obtained no earlier than 1998, after five consecutive years of full-time teaching performed at least in part after 1997-98 school year.
20 U.S.C. §1078-10; 34 C.F.R. § 682.215 (FFELP); 34 C.F.R. § 685.215 (Direct).

Borrowers who claim this relief should be referred to ED Service Center staff.

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http://www.lsnv.org/Student_Loan_Com...ion_Agency.pdf

LETTER OF COMPLAINT REGARDING A COLLECTION AGENCY
FEDERAL STUDENT LOAN

_________________
Date

U.S. Department of Education Certified Mail Return Receipt
Deputy Director of Debt Collection Services
400 Maryland Avenue, SW Washington, DC 20202
Re: __________________________________________________ _______

Your Name:
.................................................. ....

Address:
.................................................. ....
.................................................. ....
.................................................. ....


Social Security Number:

...................................

Dear Sir/Madam:

This is a complaint regarding __________________________________________
Name of the Person You Talked with at the Collection

Agency


at the __________________________________________________ ________________

Name and Address of the Collection Agency






On ____________________ I was contacted by [or] I contacted the above

Date
collection agency regarding my student loan __________________________________.
Describe Student Loan




My complaint is:








Sincerely,
_________________________
Your Signature

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http://www.suijuris.net/forum/banks-...ction-225.html

Counter-attack on mutants of debt collections.

Post #2247 - the guillotine series 1-6.

A semi-mild approach without Refusal for Cause for now.

Stressing production of Admissible Evidence and
proving facts [demanded of debt collectors.]

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http://www.suijuris.net/forum/banks-...ction-226.html

http://www.suijuris.net/forum/banks-...ction-220.html

Student Loans and Fraud

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http://www.access.gpo.gov/uscode/title11a/title11a.html

http://www.access.gpo.gov/uscode/title11a/11a_1_4_.html



Contains some useful data on bankruptcy.

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http://www.naca.net/student-loans/

Student Loans

As the cost of financing our children’s higher education increases, the amount of student loan debt continues to rise at alarming rates. Students, upon graduating from college are often left with a mountain of debt and employment options that are simply insufficient to help make a real dent in the money they owe. Because of these loan payments, students are often prevented from becoming homeowners, saving money and building assets. Further contributing to this problem is the growing problem of aggressive and abusive student loan debt collectors.

Unfortunately, today our country’s student loan programs have become a substitute for rather than a complement to adequate public funding of higher education, including grants. Congress has essentially transferred much of the burden from the public to individual students. While it is generally acceptable for students to shoulder some financial responsibility, the problem is that the balance is now skewed so heavily toward students that it is crushing their futures. While schools may fail and even lenders may fail, borrowers are allowed very little margin for error.

In order for students to survive and thrive, a Student Borrower Bill of Rights can and must be passed by Congress. This Bill of Rights should:

Limit the total monthly student loan payment amounts.
Give borrowers greater flexibility to consolidate loans by repealing the single holder rule, ensuring that lenders allow borrowers to consolidate with the Direct Loan program in order to repay through income-contingent repayment plans, and to reconsolidate their loans in certain circumstances.
Expand required disclosures about student loan repayment and other rights.
Expand eligibility for disability discharges to borrowers who are unable to work because of medically determinable impairments that have lasted or are expected to last for a continuous five-year period.
Restore the right of borrowers to discharge private student loans in bankruptcy.
Restore borrower rights to discharge government loans in bankruptcy seven years after incurring the loans.
Limit student loan collection fees.
Require a study of private student loan interest rates and fees.
Require expanded publication and recordkeeping regarding job placement data by schools that make claims relating to the employment of graduates.
Ensure that borrowers who suffered economic losses as a result of violations of their student loan-related rights have administrative remedies and judicial review rights, regardless of whether the decisionmaker is a lender, guaranty agency, or government agency.
Provide increased protection for consumers from the growing abusive debt collection industry

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Student loans are not dischargeable in bankruptcy unless you can show that your loan payment imposes an "undue hardship" on you, your family, and your dependents.

Non-dischargeable debts are those debts that you cannot totally eliminate when you file for bankruptcy and will have to be paid by you.

It is almost impossible to show an undue hardship unless you are physically unable to work and the chances of your obtaining any type of gainful employment in the future are non-existent.

Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, privately funded student loans are treated the same way that loans funded and guaranteed by the federal government or nonprofit institutions. Prior to the new law, if you had a loan from a private-sector lender that was not guaranteed, it could be discharged under chapter 7. The new law gives these loans the same protection as the guaranteed loans.

If you would like to discharge your student loans under the "undue hardship" exception, you must file a separate motion with the bankruptcy court and then appear before the judge to explain your hardship. This is not an easy task, so if your student loans are the main part of your debt, you would be better off not facing the harshness of bankruptcy as courts are extremely reluctant to discharge student loans.

Consolidating Your Loans Under Chapter 13
Although you may not totally eliminate student loans in bankruptcy, you can consolidate them, with your other bills, in a Chapter 13 proceeding. Under this chapter, you can propose a repayment plan in which to pay your creditors over three to five years. For a Chapter 13 bankruptcy, you'll need a stable income with disposable income and must have no more than $1,010,650 in secured debt (debt involving property that your creditor might take if you don't make your payments) and $336,900 in unsecured debt. These amounts are adjusted periodically to reflect changes in the consumer price index. Chapter 13 will also stop collection action against you.
If you include your student loans in a Chapter 13 repayment plan, depending on certain factors such as the size of the loan, the number and amount of your other debts, and the amount of your disposable income, you might be able to make a dent in the loan balance over the life of your plan. However, you will still owe whatever student loan debt remains when you complete your plan.

Challenging the Loan Balance
Often, a student loan has been transferred between lenders many times, and it's not clear just how much is owed or whether any charges in addition to the principal amount of the loan are in accordance with law.

In a Chapter 13 bankruptcy, you can use an objection to the claim of the holder of a student loan to get a court's determination of your rights. Once a judge decides what is properly owed, the bankruptcy court decision is binding on the lender even if the repayment period on the loan stretches beyond the end of the bankruptcy plan.

Government Collection Procedures on Defaulted Student Loans
The Higher Education Technical Amendments of 1991 (HEA) eliminated all statutes of limitations for any collection action by a school, guaranty agency, or the United States under a federal loan program. The amendments also eliminated all limitation periods for tax intercepts, wage garnishments, and other collection efforts.
If you're not able to discharge your student loans in bankruptcy or establish a repayment plan in a Chapter 13 proceeding, the federal Department of Education has the right to:

Tack collection fees of 25% and collection agency "commission" fees of approximately 28% onto the principal, interest and penalties you already owe
Take your federal income tax refund until all your defaulted student loans have been paid
Garnish up to 15 percent of your wages, without suing you first
Take as much as $750 per month (up to 15 percent of your income) in federal benefits to which you might be entitled, including social security retirement and social security disability income, and apply that amount toward your outstanding defaulted student loan debt
Sue you for your outstanding student loan debt and place liens on your property
Repayment Alternatives
Depending on how far in default you are on your student loan payments, you may be able to:

Work out a repayment plan with the student loan lender that stretches payments out over a longer period or calls for graduated payments that increase as your earning potential increases
Get the lender to agree to defer repayment until your career and financial circumstances have improved
Consolidate all your student loans into one loan that spreads the payments over a longer period of time, often at lower interest rates
However you decide to deal with your mounting student loans, it's best to tackle the problem as soon as possible to avoid paying more in the long run.

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http://www.usdoj.gov/ust/eo/bapcpa/index.htm

Means Testing Information
Census Bureau Data
IRS Data
Administrative Expenses Multiplier

Credit Counseling & Debtor Education Information
Debtor Audit Information
State Domestic Support Enforcement Agencies
Data Enabled Form Standard
USTP Position Concerning Chapter 13 Disposable Income Test [PDF - 50 KB]
Frequently Asked Questions for Trustees

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which opens a new era in the history of bankruptcy law and practice, was passed by Congress and signed into law by President Bush on April 20, 2005. The United States Trustee Program is the component of the Department of Justice that protects the integrity of the nation’s bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The Act gives the U.S. Trustee Program new responsibilities in a number of areas, including:

Over the past few years, the U.S. Trustee Program’s civil and criminal enforcement efforts have strengthened the integrity of the bankruptcy system by providing consumer protection and combating fraud and abuse. The Program’s Annual Report of Significant Accomplishments [PDF - 3.3 MB] explains many of its duties and activities. The additional tools provided under the Act will give the Program further opportunities to improve the bankruptcy system.

The U.S. Trustee Program has begun its planning and implementation efforts in preparation for assuming its new responsibilities on October 17, 2005, when most provisions of the Act take effect. Working groups of employees from the Program’s Executive Office and its regional and field offices are assisting in the process. Please consult the Program’s web site for updated information as implementation proceeds.

The U.S. Trustee Program welcomes this opportunity to further enhance the integrity, effectiveness, and efficiency of the nation’s bankruptcy system. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 represents an important new development in the Program’s continuing efforts to improve bankruptcy processes and procedures.