Federal student loan borrowers facing financial hardship severe enough to not be able to make their loan payments have some options available to them. Rehabilitation or Consolidation Borrowers who default on payments can either “rehabilitate” their loan or “consolidate” into a new loan. After rehabilitation or consolidation, a borrower can get into an income based or income contingent repayment program. Rehabilitation requires borrowers to make nine monthly payments over a ten-month period. Payments must not be more than what isRead more
Bankruptcy: Your New Years Resolution?
One of the more common questions we’re asked is: “Should I file bankruptcy?” Ultimately, the choice is yours, but perhaps we can help make the decision easier. Let’s address this fact first: No one wants to file bankruptcy. You do it because you need to, and it will improve your life in the long run. So, how do you know when you need to? Below are some factors we’ve identified that may help: You’re being garnished or receiving correspondence fromRead more
A Debtor’s Christmas Carol
St. Louis bankruptcy attorney Wendell Sherk has published a riff on a popular Christmas song – Do You Owe What I Owe? We thought it worthy of sharing it with you this holiday season. (To the tune of “Do You Hear What I Hear?”) Said the neighbor to the young man, “Do you owe what I owe? Bills up to the sky, young man, Do you see what I see? A choice, a choice, waiting in the night A newRead more
Discharging Student Loans in Bankruptcy
The high cost of a college education forces many people to take out federal and private student loans. Federal loans offer several repayment options, including some tied to a borrower’s income with forgiveness of the remaining loan balance after 20 to 25 years. Private loans can sometimes be obtained at lower interest rates than those available on federal loans. But even with flexible repayment options and favorable interest rates, the number of borrowers defaulting on student loans is high. TheRead more
Private Student Loan Borrowers Facing Lawsuits
To pay for college many students borrow money from the federal government or a private lender. Student loans made or guaranteed by the federal government usually offer the best terms. Some payment plans for federal student loans are tied to a borrower’s income and offer forgiveness of the remaining debt after 20-25 years. Federal student loans also offer subsidized interest rates and more options to borrowers who default on their loans. The problem with federal loans is that there isRead more
Credit Scores and Bankruptcy
One of the common concerns people have about filing bankruptcy is what impact it will have on their credit score. Although I think people worry too much about credit scores, there is some legitimate concern about making sure credit reports and credit scores don’t hinder the purchase of a new home. In a 2007 SmartMoney.com article, the author says: “In many cases, the damage done isn’t nearly as bad as expected. Over the long run, obtaining a score high enoughRead more
Iowa Bank of Mom & Dad: Are your kids leaving you broke?
Every day we discuss financial problems with our clients. Usually we start the conversation by asking our clients to give us a brief history—how did they get to the point of needing to discuss a bankruptcy? Most of the time the answers wouldn’t surprise you; job loss, divorce, medical bills, lay-off/mandatory furlough. BUT, it might surprise you to hear how frequently we hear a story that involves financial aid to adult children…ultimately leaving dear ole’ mom & dad flat broke.Read more
Don’t Make Bankruptcy Your Last Resort
The old adage is that consumers in financial stress should look to filing bankruptcy as their last resort. I’m sure the saying was created by lenders and others hoping to keep people from eliminating debt. But waiting to file bankruptcy can be dangerous. That’s why I think people in financial trouble should consider bankruptcy as a first resort instead. Figuring out how bankruptcy might help right from the onset of financial problems will make people better informed. It may helpRead more
What debt collectors CAN’T Do!
What practices are off limits for debt collectors? Harassment They may not harass, oppress, or abuse you or any third parties they contact. For example, they may not: use threats of violence or harm; publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies); use obscene or profane language; or repeatedly use the phone to annoy someone. False statements Collectors may not lie when they areRead more
Paying Off Credit Card Debt
When trying to decide between filing bankruptcy or paying off credit cards outside of bankruptcy, it’s important to consider how difficult it can be to pay off credit card debt where the balance owed has grown significantly. For example, if you owe $10,000 on credit cards with an interest rate of 15% and pay only a minimum payment of 4% of the balance each month, it will take nearly twenty (20) years to have the debt repaid. And that’s assuming you’reRead more
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