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Archive for the ‘Student loan debt’ Category

Federal Rules Debt Collectors Must Follow

November 27th, 2014 at 1:00 pm

debt collectors in San Antonio, Texas bankruptcy lawyerWhen a person owes a defaulted amount on an account, such as a credit card or prior utility bill, the company who the original debt is owed to will often “charge off” that debt after a certain period of time has gone by. Someone who is struggling with overwhelming debt may have multiple accounts which have been declared charge offs by the original creditor.

There are certain guidelines a creditor must follow before they can charge off an account. If the account is an installment loan (such as an auto loan or mortgage), then the delinquency must be at least 120 days past due. If the account is a revolving credit account (such as a credit card), then the delinquency must be at least 180 days past due.

At this point, the creditor has three options for debt collection for the account. The company can continue to pursue collection themselves; they can hire a third-party collection agency to continue collection activity; or they can sell the debt to a debt buying company. Debt buying companies purchase debt portfolio from creditors and any funds then collected on the debt belong to the debt buyer.

Regardless of what option a creditor decides on, there are federal rules that have been established that a debt collector must follow. These rules were established under the Fair Debt Collection Practices Act (FDCPA) and include:

  • A debt collector must sent a written notice within five days of the first initial telephone contact which validates the amount of the debt owed;
  • Debt collection may only take place between the hours of 8:00 a.m. and 9:00 p.m.;
  • A debt collector may not contact a person at their workplace if they have been told either orally or in writing not to do so;
  • A debt collector must stop contacting a person if the person sends a certified letter to the debt collection telling them to stop all contact. The only exception to that contact would be the debt collector acknowledging the no-contact letter and/or contacting the person to let them know they will be filing a lawsuit or other activity;
  • If a person is represented by an attorney, then the debt collector must contact the attorney and not the person who owes the debt; or
  • Debt collectors may not harass, make threats, or make false statements in order to intimidate or scare a person into paying the debt.

If bankruptcy seems like a viable option for your financial situation, contact the Law Offices of Chance M. McGhee. San Antonio, Texas bankruptcy lawyer, Mr. McGhee has helped clients over the past 20 years regain control of their financial lives. Call the law firm at 210-342-3400.

Texas Ranks as a Best State for Student Debt Among the $1.12 Trillion Owed Nationwide

November 4th, 2014 at 12:59 pm

According to a recent study by WalletHub, the state of Texas ranks as number nine in the list for the “best” student loan debt. WalletHub analyzed all 50 states (including the District of Columbia) using 7 key metrics, including average student debt, unemployment rates, and students with past-due loan balances.

Though nine out of 51 may be good news for the Lone Star State, the rest of the country is not doing as well. As of June 2014, the Federal Reserve Bank of New York, total outstanding student loan debt stood at $1.12 trillion, an increase of $7 billion from 2013.

According to the WalletHub study, though the risk of joblessness declines with the more schooling you have, location also has a large effect on college debt levels. This means that if you live in a city or state where the economy is booming, you are more likely to pay off your student debt on time, without penalties.

While Texas continues on the up and up, other states in the bottom, including Massachusetts (30), Washington D.C. (41), and Rhode Island (51), continue to suffer.

In May 2014, Massachusetts Sen. Elizabeth Warren proposed a bill to allow students to refinance their loans at a lower interest rate called the “Bank on Students Emergency Loan Refinancing Act.” The Democratic senator and her party argued that the $1 trillion in student loan debt is harming the U.S. economic growth and that something must be done to alleviate it. Unfortunately, in September, Republicans opposing the bill struck it down. The Act would have allowed more than 25 million students to refinance their loans to today’s lower interest rates of less than four percent.

For now, it does not seem like student loan debt in any state will be alleviated anytime soon. With the political battle constantly stalling bills able to assist student loan debtors, the educated middle class will only continue to suffer.

If you or your college-aged son or daughter is suffering from crippling student loan debt in Texas, contact an experienced San Antonio bankruptcy lawyer. Attorney Chance M. McGhee can help you determine which bankruptcy option may be best for your individual situation. Call 203-342-3400 for a free consultation.

Debt Coping: What to Do When a Child Passes Away

March 31st, 2014 at 12:45 pm

student loan debt, San Antonio bankruptcy lawyer, San Antonio bankruptcy attorney, Texas lawyerGoing through the process of grieving a child is devastating for any parent. However it can be even more challenging to move on when private student loan debt follows that individual after the child has passed away.

While most federal student loan debt is wiped out when a person passes away, private lenders may try to go after family members. If you are trying to cope with this situation, you may have a way out: bankruptcy.

Just ask Francisco Reynoso of California. His son died in a car accident in 2008, but Reynoso was on the line for six figures of student loan debt for which he had cosigned. With an income of just $21,000 per year, Reynoso was trying to grieve the loss of his child while avoid collection calls and demands from private lenders.

Some of the debt had been transferred to private investors outside of the original lender, making it difficult to identify which company was connected with each debt. Reynoso wasn’t even sure whether it was possible to negotiate settlements because he did not know who had taken over the loans.

Ultimately, he felt backed into a corner, unable to meet the payment demands. He decided to go through bankruptcy so that he could finally wave goodbye to the loans and lenders and instead focus on grieving his son and healing.

Parents taking on co-signing responsibilities are likely not concerned about having to make these massive payments in the future because they expect the child to get a job after graduation, rather than expecting them to pass away.

A child who passes away may leave behind big private student loan debt that is impossible for parents to pay off. In these cases, bankruptcy can provide a way out and a fresh start. If you would like to know how the process can help you, contact a Texas bankruptcy attorney today.

The Link Between College and Credit Card Use

February 28th, 2014 at 12:15 pm

college, credit card card, debt, bankruptcy For many families, education is one of the biggest investments that parents will make for their children’s future. Even when some steps are taken to plan for this costly life goal, some expenses can creep up, leading parents and students to rely on credit cards to help. When credit card debt grows out of control, sometimes bankruptcy is the only option to get a fresh start.

According to Sallie Mae, between 3 and 5 percent of parents used credit cards to help pay for educational expenses for the years 2009-2013. In 2013, the average college student spent about $3,156 on their own credit cards, too. Whether it’s tuition, books, transportation, or other expenses, this credit card usage can add up.

When parents are already strapped for cash, they might get stuck only being able to make the minimum payment on their own credit cards. For students, often new to the credit card game and often with a very limited income, credit cards can add on to a massive amount of debt on graduation when coupled with student loans.

With some families, relying on that credit card for extras or emergencies is the only way to make it through an expensive venture like college. If there’s not a plan in place for repayment or if a family member loses his or her job, however, debt can spiral out of control fast.Relying more and more on credit cards can put both parents and students in a difficult financial situation, making it difficult to climb out and get a fresh start.

If your family has been affected by an increasing reliance on credit cards while one or more students was working towards a college degree, you might feel trapped by more debt than you can handle. Contact a Texas bankruptcy attorney today if you need to start over.

What is a Chapter 20 Bankruptcy?

December 13th, 2013 at 3:24 pm

piggy bankA Chapter 7 bankruptcy is a common form of bankruptcy because it excuses the filer from all eligible debts.  It is commonly referred to as a liquidation bankruptcy because debts are eliminated by the sale of property and other assets. Creditors are repaid through the proceeds of those transactions.

A Chapter 13 is also called the wage-earner’s bankruptcy.  If someone is earning an income but cannot keep up with past due payments, then a Chapter 13 bankruptcy can give them time to pay those debts. There is a repayment plan that last from three to five years and is based on each person’s income.

Occasionally there are cases when nether Chapter of bankruptcy is appropriate. While a Chapter 20 bankruptcy is not a term found in the bankruptcy code, it is a common strategy to get a fresh start.  It is the process of filing two bankruptcies right after each other to resolve difficult financial situations.  The approach is filing for Chapter 7 protection and then for Chapter 13.

The Chapter 7 bankruptcy lets you eliminate dischargeable debts which does not include child support, taxes, or student loan debts.  If your debts are too high to qualify right away for a Chapter 13 bankruptcy, the Chapter 7 bankruptcy can eliminate enough to become eligible.  That can allow you to focus the majority of your income on debts that cannot be discharged.

The disadvantages of a Chapter 20 filing is you can’t receive a discharge during the Chapter 13 part of the process.  It is also possible that a bankruptcy trustee will object to your Chapter 20 bankruptcy.  They can claim that your Chapter 13 filing is in bad faith.  If that happens, you will be responsible for providing proof that it is necessary given your situation.

If you are concerned about making your monthly credit card payments or losing your family home, then bankruptcy might be an option for you.  Talking to a legal professional can show the benefits of each Chapter based on your situation.  Contact an experienced bankruptcy attorney in San Antonio today.

Student loan debt may soon be eligible for discharge in bankruptcy.

April 9th, 2013 at 2:39 pm

student loan debt    (Kerry)The Fairness for Struggling Students Act of 2013 would forgive private student loan debt when an individual files for bankruptcy protection. The bill, cosponsored by Sens. Dick Durbin (D-Ill.), Sheldon Whitehouse (D-R.I.) and Jack Reed (D-Ill.), would reverse 2005 legislation that makes it almost impossible to have private student loan debt discharged in bankruptcy.

According to an article in the Huffington Post, student loans total $1 trillion, or nearly $25,000 per borrower, on average, nationally, each year, yet they are the only loans not eligible for bankruptcy protection. Federal student loans have been protected from bankruptcy claims since 1978. However, those loans typically have lower interest rates, income-based repayment plans and more deferment and forbearance options. Like credit cards, private student loans typically have double-digit, variable interest rates that are highest for the people who can least afford them and have no income-based repayment options.

Sen. Durbin has previously introduced the bill in 2010 and 2011. “Young Americans are being hamstrung by record debt levels,” Durbin said. “Unless we take action to protect borrowers, student loan debt will be the next mortgage crisis.”
Organizations such as the Consumer Financial Protection Bureau, the U.S. Department of Education and the Institute for College

Access have all voiced their support for the bill. Sallie Mae, a major private student loan institute, has also said they are open to bankruptcy reform for student loans.

If you are struggling with loans and are having a difficult time financially, contact Texas bankruptcy attorney today to find out what legal options you may have.

Call today for a FREE Consultation

210-342-3400

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