It is our view that the student loan problem faced by so many Americans is one of the great injustices of our system and will sow the seeds of major political turmoil. See my article: Occupy Wall Street and Debt Jubilee. There are a few things that might help.
Programs that Might Help You with Student Loans
There is unfortunately little you can do in talking to student loan collectors. Most of the time, the debt collectors themselves really have little right to negotiate with you. The law behind student loans is that they are not dischargeable in bankruptcy absent “extraordinary” circumstances and “undue hardship,” and the cases discussing the issue have been extremely unpromising, to say the very least, about what circumstances must be in order for them to be “extraordinary.” “Undue hardship” has been interpreted to mean “no likelihood of ever being able to pay the debt,” an almost unprovable burden. On the bright side, there are increasing numbers of organizations and programs out there to help, and the lending institutions have not seemed eager to sue anybody.
One of the programs that might help you deal with student loans (not a negotiation) is an “income-based” payment (IBR) program. The plans call for a payment “cap” of a certain percentage of discretionary income and provide for loan “forgiveness” after a certain period of time. The program seems, at first sight, to be very reasonable, with a limit on payments and amount of time that will be required. They are for federal loans.
Another sort of help is available if you are doing some sorts of public or nonprofit service as your job, you may be able to get help from the federal government. Click here for the link that will take you to the government site discussing that help. This program is designed for only certain kinds of loans. Here’s what the government says about it:
Only loans you received under the William D. Ford Federal Direct Loan (Direct Loan) Program are eligible for PSLF. Loans you received under the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins Loan) Program, or any other student loan program are not eligible for PSLF.
If you have FFEL Program or Perkins Loan Program loans, you may consolidate them into a Direct Consolidation Loan to take advantage of PSLF. However, only payments you make on the new Direct Consolidation Loan will count toward the required 120 qualifying payments for PSLF. Payments made on your FFEL Program or Perkins Loan Program loans before you consolidated them, even if they were made under a qualifying repayment plan, do not count as qualifying PSLF payments.
There are serious limits to the kind of help this offers, but for some people this will be a way out of difficulty. Click here for more information.
Another, similar program, the “Pay as You Earn” program, is, like the IBR program above, based on a type of financial hardship. The program provides for payment caps and loan forgiveness if your payments would be too much for you to be able to afford under the standards established by the program. You can find out about that here: Pay as You Earn.
For more help on student loans, you should check out the Project on Student Debt. If you aren’t sure what kind of loans you have, check out the National Student Loan Database System for Students and select “Financial Aid Review” for a list of all the federal loans to you. Click each individual loan to see who the servicer is for that loan (this is the company that collects payments from you). Remember that system shows only your federal student loans, however, and not your private or state student loans. Contact your school to see whether you have non-federal loans if you are in doubt about that, as they keep a record of them.
For more information on student loans and repayment, check out consumer finance. If you are active-duty military, there may be benefits helpful to you under the Service Members Civil Relief Act. If you’re not in the military and have private loans, you have fewer options, but take a look at: Paying for College. For an article on reducing student debt without paying for it or click here for a free ebook on ways to get rid of student loans without paying for them.
For a resource on student loan forgiveness, refinancing and more, see The Best Student Loan Calculator for Forgiveness, Refinancing and More.
One of the options we found interesting was the public service type loan forgiveness program that also helps with state or private loans
Negotiating Student Loans with Debt Collectors
Unfortunately, there’s really very little or even no negotiating with debt collectors on student loans, as we said above. There seem to be no market pressures on them to settle at all – they aren’t worried about the debt expiring, the companies that issue the debt are large and government-subsidized, and “educational loans” are one of the last great sacred cows in our country.
The positive side of dealing with student loans, however, is that while the collectors will call and bug you, somebody in the collection department usually does seem to take notice of the actual financial reality you are facing. If you tell them that you do not have the money to pay, they will often – usually even, it seems, refuse to agree to partial payments – but then they usually don’t take any type of collection action, either, and they only very rarely sue anybody. The downside here is still significant, however, as the information might very well end up on your credit report and cost you that way. And eventually the lender might get around to suing you after all if they find out you have property, so they may create problems if you own your home.
If they do sue you, the Debt Defense System can help you defend yourself and probe for any weaknesses they may have in the lawsuit as well as help you negotiate a better settlement if necessary. Although bankruptcy is a limited threat and bargaining chip, the lenders still hope to get their money back, and if you can persuade them that they have a better chance of getting more back by working with you than if they do not, they will probably negotiate with you at least a little bit.
Ending Debt Nightmare 3
End the Debt Nightmare
This is the third video in this series. Click here for video 2. And here for video 1.
Ending Debt Nightmare 1
Ending the Debt Nightmare
This is the first of a series of videos and reports designed to teach you about the debt collection process and litigation. You can find the second video of this series here.
Ending the Debt Nightmare 1-2
FDCPA and Bankruptcy
There was an issue regarding whether the FDCPA would apply to bankruptcy proceedings. In particular, this was fueled by the fact that the debt buyers are flooding the bankruptcy proceedings with debts beyond the statute of limitations. They are uncollectible (if objected to) in bankruptcy, but is making such a frivolous claim a violation of the FDCPA?
I thought so and argued so in various materials. The Supreme Court found otherwise, signaling the current court’s hostility to real people and tendency to bootlick the powerful.
Testimonial from Cheryl
Testimonial from a User of the Litigation Materials
The following is an email from a user of the Litigation materials. This customer used our materials to file a response, discovery. She was ready for trial, but the debt collector gave up rather than fight at that point. Note the way Cheryl’s view of herself has changed – and she deserves every bit of her success.
Testimonial by T
This testimonial from TD is elegant in its simplicity. To add a little background, T was being sued in two cases on two different debts. She won one by a motion to dismiss that really amounted to a summary judgment after argument in court. And she won the other after trial. The court commended her on her efforts and success.
T was a regular participant in the teleconferences, and In conversation she told everyone how it went. Here’s what she wrote in July 2018.
Good morning Ken,
Testimonial MS
Notes from a User of the Litigation Materials
The following is an email from a user of the Litigation materials. At the time of the letter, it was still relatively early in her litigation, but she has already won two motions and the respect of the lawyer on the other side – and the judge. That’s a lot to accomplish so quickly!
And she went on to win the case.
Hi Kenneth,
Thank you so much for all of the valuable information in your litigation package. I went to court this morning for a second hearing on Discover Banks MSJ. The first hearing was continued because judge granted me leave to file my opposition. Because of your material, I was able to draw up a pretty strong opposition, and consequently their attorney withdrew the motion.
The attorney said that he has evidence that at one point I paid off the account which would indicate that this was my account and that he would need time to investigate and would file another MSJ. Status hearing set for November. Now I will need to study your lessons to see what step I should take to move the case forward. Although I was hoping the attorney would dismiss the case today, I’m glad it was at least withdrawn. I’m hoping this is an opportunity to plan my strategies better.
Also, The attorney tried to get me to admit it was my account after the hearing by first complimenting me on how well I wrote my opposition and how I defended myself in court and then telling me that he had evidence of a cancelled check from my husband that at one point he paid the account off so why keep denying that it was my card? I was a little nervous at that point and caught off guard so I fumbled on some words, but made sure I didn’t admit to anything. In the end, I told him I feel I have valid arguments and that I have to defend myself and will go as far as I need to. He actually said that I do have valid arguments, but it just complicates things and makes it more costly, but complimented me again and a job well done.
I took his compliments lightly, but at the same time I knew my opposition was strong. I was also complimented in a MTD hearing in federal court a couple weeks ago for my MTD opposition, the Defendant’s attorney stated in court that he was impressed with the opposition. Judge granted leave to amend in that case. I mention the compliments only because it is because of your program I was able to file strong oppositions. Thank you so much!
Much Aloha,
Maryanne
Verification under FDCPA
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How the FDCPA Helps as Shield and Sword
How the FDCPA Protects Consumers
I have sometimes spoken of the Fair Debt Collection Practices Act (FDCPA) as both a “shield” and a “sword” – a fairly common legal metaphor for a law which has both offensive and defensive capabilities. Let’s consider a few of those capabilities in this article.
FDCPA as a shield
The FDCPA prevents debt collectors from taking advantage of you in various ways. When you are first contacted by a debt collector, for example, it is supposed to notify you of two important rights: you have the right to dispute the debt and seek “verification” of it; and you must know that anything you tell the debt collector will be used in further attempts to collect the debt from you. (We call this right the “mini-Miranda,” after the right you have, in a criminal context, not to incriminate yourself.) If you dispute and seek verification, the debt collector is required not to take further collection activities against you until after verifying the debt. If it does take further actions, it is in violation of the FDCPA (giving you the right to sue it). If the debt collector sues you before providing verification, you may seek to dismiss the case pursuant to the FDCPA. It is this ability to stop the lawsuit that I consider the true “shield” of the FDCPA. For more information on your right to verification, see Requiring Debt Collectors to Validate – Your Secret Weapon.
The FDCPA also requires a debt collector to bring suit against you either where the contract it is seeking to enforce against you was signed or where you reside. This means it cannot sue you in a place which is inconvenient or expensive for you to reach. If it sues you in the wrong jurisdiction, it is again both a violation that gives you the right to sue it and a legal tool you can use to seek dismissal of the case.
FDCPA as a Sword
There are many other rights provided by the FDCPA which prevent or require the debt collector to stop doing certain things. That’s the essence of any law – that it requires or prevents certain actions. Speaking very broadly, the FDCPA prohibits any sort of unfair methods or deceptive communications on the part of the debt collector. We will discuss these prohibited actions in greater detail in other articles, but in this article we will discuss the ways you can use debt collector violations to your benefit.
FDCPA as Counterclaim
If a debt collector violates the FDCPA and then sues you, as is quite often the case, or if it violates the FDCPA in the process of suing you, you can file a counterclaim against it. Basically this means that when you answer the petition (also sometimes called a “complaint”) against you, you will add a claim against the debt collector to your denials that you owe them money. And you will ask for money to penalize them for breaking the law and an order of the court that they should stop. I have often advocated the use of a counterclaim as an important way to keep the debt collector from simply dropping the case just before trial without eliminating the debt. For more information on the values and advantages of counterclaims, see The Importance of Counterclaims.
FDCPA as Lawsuit
If a debt collector violates the FDCPA and then does not sue you, or if you defend the suit without bringing a counterclaim and later want to sue the debt collector, you can do so with the FDCPA. You can bring an original lawsuit against the debt collector in either state or federal court, and again, you will be asking for the “statutory penalty” of “up to $1,000,” an order of the court to make them stop doing whatever they were doing, and – if justified – “damages,” which could include money for emotional distress. We will discuss possible “remedies” – what you can get – of the FDCPA in future articles.
Possible Help for Student Loans
It is our view that the student loan problem faced by so many Americans is one of the great injustices of our system and will sow the seeds of major political turmoil. See my article: Occupy Wall Street and Debt Jubilee. There are a few things that might help.
Programs that Might Help You with Student Loans
There is unfortunately little you can do in talking to student loan collectors. Most of the time, the debt collectors themselves really have little right to negotiate with you. The law behind student loans is that they are not dischargeable in bankruptcy absent “extraordinary” circumstances and “undue hardship,” and the cases discussing the issue have been extremely unpromising, to say the very least, about what circumstances must be in order for them to be “extraordinary.” “Undue hardship” has been interpreted to mean “no likelihood of ever being able to pay the debt,” an almost unprovable burden. On the bright side, there are increasing numbers of organizations and programs out there to help, and the lending institutions have not seemed eager to sue anybody.
One of the programs that might help you deal with student loans (not a negotiation) is an “income-based” payment (IBR) program. The plans call for a payment “cap” of a certain percentage of discretionary income and provide for loan “forgiveness” after a certain period of time. The program seems, at first sight, to be very reasonable, with a limit on payments and amount of time that will be required. They are for federal loans.
Another sort of help is available if you are doing some sorts of public or nonprofit service as your job, you may be able to get help from the federal government. Click here for the link that will take you to the government site discussing that help. This program is designed for only certain kinds of loans. Here’s what the government says about it:
Only loans you received under the William D. Ford Federal Direct Loan (Direct Loan) Program are eligible for PSLF. Loans you received under the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins Loan) Program, or any other student loan program are not eligible for PSLF.
If you have FFEL Program or Perkins Loan Program loans, you may consolidate them into a Direct Consolidation Loan to take advantage of PSLF. However, only payments you make on the new Direct Consolidation Loan will count toward the required 120 qualifying payments for PSLF. Payments made on your FFEL Program or Perkins Loan Program loans before you consolidated them, even if they were made under a qualifying repayment plan, do not count as qualifying PSLF payments.
There are serious limits to the kind of help this offers, but for some people this will be a way out of difficulty. Click here for more information.
Another, similar program, the “Pay as You Earn” program, is, like the IBR program above, based on a type of financial hardship. The program provides for payment caps and loan forgiveness if your payments would be too much for you to be able to afford under the standards established by the program. You can find out about that here: Pay as You Earn.
For more help on student loans, you should check out the Project on Student Debt. If you aren’t sure what kind of loans you have, check out the National Student Loan Database System for Students and select “Financial Aid Review” for a list of all the federal loans to you. Click each individual loan to see who the servicer is for that loan (this is the company that collects payments from you). Remember that system shows only your federal student loans, however, and not your private or state student loans. Contact your school to see whether you have non-federal loans if you are in doubt about that, as they keep a record of them.
For more information on student loans and repayment, check out consumer finance. If you are active-duty military, there may be benefits helpful to you under the Service Members Civil Relief Act. If you’re not in the military and have private loans, you have fewer options, but take a look at: Paying for College. For an article on reducing student debt without paying for it or click here for a free ebook on ways to get rid of student loans without paying for them.
For a resource on student loan forgiveness, refinancing and more, see The Best Student Loan Calculator for Forgiveness, Refinancing and More.
One of the options we found interesting was the public service type loan forgiveness program that also helps with state or private loans
Negotiating Student Loans with Debt Collectors
Unfortunately, there’s really very little or even no negotiating with debt collectors on student loans, as we said above. There seem to be no market pressures on them to settle at all – they aren’t worried about the debt expiring, the companies that issue the debt are large and government-subsidized, and “educational loans” are one of the last great sacred cows in our country.
The positive side of dealing with student loans, however, is that while the collectors will call and bug you, somebody in the collection department usually does seem to take notice of the actual financial reality you are facing. If you tell them that you do not have the money to pay, they will often – usually even, it seems, refuse to agree to partial payments – but then they usually don’t take any type of collection action, either, and they only very rarely sue anybody. The downside here is still significant, however, as the information might very well end up on your credit report and cost you that way. And eventually the lender might get around to suing you after all if they find out you have property, so they may create problems if you own your home.
If they do sue you, the Debt Defense System can help you defend yourself and probe for any weaknesses they may have in the lawsuit as well as help you negotiate a better settlement if necessary. Although bankruptcy is a limited threat and bargaining chip, the lenders still hope to get their money back, and if you can persuade them that they have a better chance of getting more back by working with you than if they do not, they will probably negotiate with you at least a little bit.