The Department of Education has recently released a guidance letter on how it will handle bankruptcy discharge requests for government backed student loan debt. Although any guidance is helpful, it's more or less another “kick the can down the road” as it places the burden on students who believed what schools and colleges sold them as a smart financial move.
The Department of Education desires to find a balance between collecting debts and allowing debt to be discharged. What this formula misses is the inequity of the indebtedness to begin with by schools, for-profit and nonprofit, pushing loans on consumers. It's almost like a game of ...
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NYS Takes Bold Step To Regulate Collection Lawsuits
On September 16, 2014, the New York State Unified Court System announced new rules to stop debt collection agencies from using underhanded tactics to win judgments against poor or elderly credit card holders.
In the recent past, debt collection agencies frequently score court judgments for the wrong amount of money or even from the wrong person by using incomplete proof or by pressing cases where the statute of limitations has expired. The collection agencies also frequently fail to provide proper notice that a lawsuit was filed – a tactic known as "sewer service."
"While creditors have every right to collect what is legally owed to them, ...
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Bill Proposes To Shorten Reporting Periods For Derogatory Credit
A new bill in Congress seeks to overhaul the consumer credit-reporting system by lessening the period that loan defaults and bankruptcies are included in credit reports.
The Fair Credit Reporting Improvement Act of 2014, introduced Wednesday by Rep. Maxine Waters (D., Calif.) calls for large-scale revisions to the information in consumers’ credit reports, including the removal of certain foreclosures and short sales. A short sale is when a home is sold for less than the borrower owes on the mortgage and any other loans on the house.
The bill’s introduction comes a month after Fair Isaac Corp. announced it would tweak its widely used FICO ...
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FHA MORTGAGE AFTER BANKRUPTCY? THE ANSWER IS YES!
Over the past five years, many of my bankruptcy clients have surrendered underwater primary residences to their lenders instead of modifying their mortgages. In a majority of the cases, the numbers simply did not make any sense financially - even if they tried to keep the property, they would never be able to build any equity within a reasonable time frame.
The single most asked question in these cases has been "Will I ever be able to buy another home?" The answer is YES!
After the issuance of a discharge in Chapter 7 bankruptcy, an FHA applicant must wait out the FHA's minimum "seasoning" period. At the time of this writing, that period is ...
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The New York Fed and Mortgage Industry Wake Up to Student Loan Impact on Housing
As I have been touting on this blog for two years sometime it takes longer to acknowledge the elephant in the room.
In April 2013, the New York Fed finally reported found that student loans were preventing many recent graduates from buying their first home. More recently, another study that reaches a similar conclusion, and it doesn't come from the federal government, but from the home loan industry itself.
MainSt.com reported that an analysis by the Mortgage Bankers Association found that loan applications for home purchases have slipped nearly 20% in the last four months of 2013 compared with the same period a year earlier. This is ...
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FOUR TIPS ABOUT CREDIT AFTER BANKRUPTCY
No matter how many clients I have worked with over the past 25 years, the greatest concern of the vast majority of them is “How long will it take me to re-establish credit after I file Chapter 7 Bankruptcy?”
While there is no hard and fast rules of thumb, it is much easier than you think. Here are four tips to consider:
1. Keep any manageable debts you can after you file. In most cases, student loans can’t be discharged by bankruptcy. Other times, clients may choose to continue making payments on a car loan. Assuming that you can afford the monthly payments, it makes sense to maintain your student loan and/or auto payments after your ...
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SIX QUESTIONS TO DETERMINE IF FINANCIAL TROUBLE COULD BE BREWING
Whether you consider yourself to be financially responsible, or you always seem to come up short on cash, there are a few key indicators that may indicate you are living beyond your means—and being aware of them can save you loads of money woes in times of a cash emergency.
1. Do you have an emergency fund?
Need some motivation to start saving? Sit down and add up how much money you make each month. Then, multiply that amount by six. That is the amount that most financial advisers recommend as an emergency fund.
Most individuals underestimate life’s uncertainties and discount the need to have cash available for unexpected events like ...
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TAX RELIEF ON SHORT SALES ENDS – FILE BANKRUPTCY TO AVOID TAX CONSEQUENCES
In 2007, Congress enacted the Mortgage Forgiveness Debt Relief Act in 2007 — legislation that exempted from personal income taxes the portion of mortgage-related debts that were forgiven by lenders in the aftermath of the financial crisis.
Under the Internal Revenue Code, when the repayment of some or all of a loan obligation is waived — such as in the case of a mortgage cancellation, short sale or some other type of modification that reduces the unpaid balance of a loan — the IRS views the forgone amount the same as if it were paid as ordinary income, and it is fully taxable to the recipient. Congress saw fit to shield borrowers against ...
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Seniors Struggling With Debt Likely To File For Bankruptcy
Older Americans are being squeezed in many ways. Healthcare and other basic expenses are rising. Fewer have pensions to supplement their Social Security income in retirement. Low interest rates mean what savings they do have isn’t growing quickly — unless they are willing to invest in higher-risk financial products.
And then there’s the other side of the equation: Credit and Debt. Many seniors have not properly planned for retirement financially. Many have used credit cards freely in the earlier stages of retirement to maintain their pre-retirement lifestyle without a plan on how to repay it.
Older Americans are increasingly struggling ...
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Mortgage Crises Far From Over – Time to Re-Address First Mortgage Modifications in Bankruptcy
Today’s New York Times Op-Ed Lead reminds us that the mortgage crises is far from over, but it still neglects to address what has always been the fairest and most viable option - permitting Federal Bankruptcy Judges to restructure first mortgages, including rate and principal reductions, in Chapter 13 bankruptcy proceedings.
Early in the financial crises, a few members of Congress were brave enough to draft bills to modify the bankruptcy laws to permit modifications. Their efforts were shot down by the bank lobby and quickly died - never to be brought back to life in any viable form. Now is the time to put this option back on the table on a ...
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