Dubiln Packard

New Jersey

by

Payment Options For Chapter 7 Bankruptcy

 

We have the best payment options in the business.  We know payment is an important consideration in choosing bankruptcy as an option and in choosing the best bankruptcy lawyer.  Big banks and credit card companies have had laws passed that makes it difficult or impossible for many people to file bankruptcy and to get out of debt.  We believe having payment options is an important part of helping our clients get out of debt with bankruptcy.

Click the button below to find out of you qualify for one of our convenient payment plans.

 

 

We’re here to help so find out now if you qualify for our payment plan right now.

 

 

by

New Rules on Payday Loans – Lenders Must Determine Borrower Ability To Repay

cfpb time for changeLenders Must Determine If Consumers Have the Ability to Repay Payday Loans That Require All or Most of the Debt to be Paid Back at Once

“The CFPB’s new rule puts a stop to the payday loans debt traps that have plagued communities across the country,” said CFPB Director Richard Cordray. “Too often, borrowers who need quick cash end up trapped in loans they can’t afford. The rule’s common sense ability-to-repay protections prevent lenders from succeeding by setting up borrowers to fail.”

Payday loans are typically for small-dollar amounts and are due in full by the borrower’s next paycheck, usually two or four weeks. They are expensive, with annual percentage rates of over 300 percent or even higher. As a condition of the loan, the borrower writes a post-dated check for the full balance, including fees, or allows the lender to electronically debit funds from their checking account. Single-payment auto title loans also have expensive charges and short terms usually of 30 days or less. But for these loans, borrowers are required to put up their car or truck title for collateral. Some lenders also offer longer-term loans of more than 45 days where the borrower makes a series of smaller payments before the remaining balance comes due. These longer-term loans – often referred to as balloon-payment loans – often require access to the borrower’s bank account or auto title.

These loans are heavily marketed to financially vulnerable consumers who often cannot afford to pay back the full balance when it is due. Faced with unaffordable payments, cash-strapped consumers must choose between defaulting, re-borrowing, or skipping other financial obligations like rent or basic living expenses such as buying food or obtaining medical care. Many borrowers end up repeatedly rolling over or refinancing their loans, each time racking up expensive new charges. More than four out of five payday loans are re-borrowed within a month, usually right when the loan is due or shortly thereafter. And nearly one-in-four initial payday loans are re-borrowed nine times or more, with the borrower paying far more in fees than they received in credit. As with payday loans, the CFPB found that the vast majority of auto title loans are re-borrowed on their due date or shortly thereafter.

The cycle of taking on new debt to pay back old debt can turn a single, unaffordable loan into a long-term debt trap. The consequences of a debt trap can be severe. Even when the loan is repeatedly re-borrowed, many borrowers wind up in default and getting chased by a debt collector or having their car or truck seized by their lender. Lenders’ repeated attempts to debit payments can add significant penalties, as overdue borrowers get hit with insufficient funds fees and may even have their bank account closed.

Rule to Stop Debt Traps

The CFPB rule aims to stop debt traps by putting in place strong ability-to-repay protections. These protections apply to loans that require consumers to repay all or most of the debt at once. Under the new rule, lenders must conduct a “full-payment test” to determine upfront that borrowers can afford to repay their loans without re-borrowing. For certain short-term loans, lenders can skip the full-payment test if they offer a “principal-payoff option” that allows borrowers to pay off the debt more gradually. The rule requires lenders to use credit reporting systems registered by the Bureau to report and obtain information on certain loans covered by the proposal. The rule allows less risky loan options, including certain loans typically offered by community banks and credit unions, to forgo the full-payment test. The new rule also includes a “debit attempt cutoff” for any short-term loan, balloon-payment loan, or longer-term loan with an annual percentage rate higher than 36 percent that includes authorization for the lender to access the borrower’s checking or prepaid account. The specific protections under the rule include:

  • Full-payment test: Lenders are required to determine whether the borrower can afford the loan payments and still meet basic living expenses and major financial obligations. For payday and auto title loans that are due in one lump sum, full payment means being able to afford to pay the total loan amount, plus fees and finance charges within two weeks or a month. For longer-term loans with a balloon payment, full payment means being able to afford the payments in the month with the highest total payments on the loan. The rule also caps the number of loans that can be made in quick succession at three.
  • Principal-payoff option for certain short-term loans: Consumers may take out a short-term loan of up to $500 without the full-payment test if it is structured to allow the borrower to get out of debt more gradually. Under this option, consumers may take out one loan that meets the restrictions and pay it off in full. For those needing more time to repay, lenders may offer up to two extensions, but only if the borrower pays off at least one-third of the original principal each time. To prevent debt traps, these loans cannot be offered to borrowers with recent or outstanding short-term or balloon-payment loans. Further, lenders cannot make more than three such loans in quick succession, and they cannot make loans under this option if the consumer has already had more than six short-term loans or been in debt on short-term loans for more than 90 days over a rolling 12-month period. The principal-payoff option is not available for loans for which the lender takes an auto title as collateral.
  • Less risky loan options: Loans that pose less risk to consumers do not require the full-payment test or the principal-payoff option. This includes loans made by a lender who makes 2,500 or fewer covered short-term or balloon-payment loans per year and derives no more than 10 percent of its revenue from such loans. These are usually small personal loans made by community banks or credit unions to existing customers or members. In addition, the rule does not cover loans that generally meet the parameters of “payday alternative loans” authorized by the National Credit Union Administration. These are low-cost loans which cannot have a balloon payment with strict limitations on the number of loans that can be made over six months. The rule also excludes from coverage certain no-cost advances and advances of earned wages made under wage-advance programs offered by employers or their business partners.
  • Debit attempt cutoff: The rule also includes a debit attempt cutoff that applies to short-term loans, balloon-payment loans, and longer-term loans with an annual percentage rate over 36 percent that includes authorization for the lender to access the borrower’s checking or prepaid account. After two straight unsuccessful attempts, the lender cannot debit the account again unless the lender gets a new authorization from the borrower. The lender must give consumers written notice before making a debit attempt at an irregular interval or amount. These protections will give consumers a chance to dispute any unauthorized or erroneous debit attempts, and to arrange to cover unanticipated payments that are due. This should mean fewer consumers being debited for payments they did not authorize or anticipate, or charged multiplying fees for returned payments and insufficient funds.

The CFPB developed the payday rule over five years of research, outreach, and a review of more than one million comments on the proposed rule from payday borrowers, consumer advocates, faith leaders,  payday and auto title lenders, tribal leaders, state regulators and attorneys general, and others. The final rule does not apply ability-to-repay protections to all of the longer-term loans that would have been covered under the proposal. The CFPB is conducting further study to consider how the market for longer-term loans is evolving and the best ways to address concerns about existing and potential practices. The CFPB also made other changes in the rule in response to the comments received. These changes include adding the new provisions for the less risky options. The Bureau also streamlined components of the full-payment test and refined the approach to the principal-payoff option.

The rule takes effect 21 months after it is published in the Federal Register, although the provisions that allow for registration of information systems take effect earlier. All lenders who regularly extend credit are subject to the CFPB’s requirements for any loan they make that is covered by the rule. This includes banks, credit unions, nonbanks, and their service providers. Lenders are required to comply regardless of whether they operate online or out of storefronts and regardless of the types of state licenses they may hold. These protections are in addition to existing requirements under state or tribal law.

For more info on Payday loans see: https://toddmurphylaw.com/payday-loans-the-most-despicable-loans/

 

A factsheet summarizing the CFPB rule on payday loans is available at: http://files.consumerfinance.gov/f/documents/201710_cfpb_fact-sheet_payday-loans.pdf

 

Text of the CFPB rule on payday loans is available at:  http://files.consumerfinance.gov/f/documents/201710_cfpb_final-rule_payday-loans-rule.pdf

by

Student Loan Forgiveness Programs – are you eligible?

Student Loan Forgiveness ProgramsEverybody wants to know about Student Loan Forgiveness.

In 2010, President Barak Obama signed into law a policy of Student Loan Forgiveness.  Formerly known as the Health Care and Education Reconciliation Act. The purpose of this law was to help certain indebted students recover from the burden of high education loans. Properly called the William D. Ford Direct Loan program, most people know it as Obama Student Loan Forgiveness. Who qualifies for the student loan forgiveness program and what are the eligibility requirements?

The Eligibility Requirements and Qualifications for Federal Student Loan Forgiveness.

To be clear, the Education Reconciliation Act provided a variety of relief processes for students overburdened by student debt.

One is the Public Service Loan Forgiveness program (PSLF). It was developed for students who enter public service and remain for a certain time. Because the program offered benefits retroactive to 2007, the first loans to be forgiven could start as early as 2017. Provided Congress does not scrap the program as suggested by the President in 2017, following are the eligibility requirements:

  • Employment with any federal, state, local, or tribal government organization
  • Ten years on the job
  • 120 qualified monthly payments to service the debt
  • Only direct federal loans made under the William D. Ford Federal Direct Loan Program qualify (private loans do not)
  • Be on a repayment plan

How Certain is Student Loan Forgiveness Under the Ford Direct Program?

As mentioned, Congress may nullify the program at the behest of President Trump. If that happens, there will be no forgiveness. Outside of that, the wise former student would have their employer check with the loan servicing company periodically to ensure their organization still qualifies. If not, it may be wise to seek employment immediately with an agency which does. Of course, remaining in the position could allow someone to advance such that the increased income would offset the loss of this benefit. Consider both options.

A student can make payments directly to the loan servicer, but in many cases the loan rates are substantial. The most important element of the program is the 120 consecutive qualified payments. These, however, do not have to be the full payment as required by the lender. Many students opt for a loan repayment program which can arrange payments based on income. For many entering government service, this will reduce the payments considerably.

For example. One student went to work for a state corrections agency upon graduation. On checking with a loan repayment organization, the student learned that his wages were such that he was not required to make full payments. In fact, his payments were reduced 95%. In addition, the program consolidated the 11 student loans which had been taken out over the course of his education into two loans. This had an immediate positive impact on his credit score. Most importantly, these reduced payments are qualified payments which are low enough he can manage them on the wages he receives from his qualified state employment. Assuming the program is not stopped, in ten years he will qualify to have the balance forgiven.

Beware of Student Loan Schemes.

The student loan crisis has spawned an enormous segment of businesses promising forgiveness and protection from collections. Do not be duped. There are five things to watch for if a student debt relief company comes calling:

  • Upfront payments required for services
  • Promise of immediate forgiveness
  • High-pressure sales tactics
  • Asked to provide Private information like Federal Student ID access
  • Your contact info came from an ad on search engines or social media

Companies which advertise must find a way to recoup their costs. They are in business to turn a profit. But the government does not charge to consolidate student loans or arrange payment plans, so a company seeking your business using advertising is looking for a way to profit from you, perhaps to your ruin. Just be aware of these and take the necessary steps to protect yourself. If you ever have a question about your student loans or have already signed up with a loan servicing company, you can visit studentloans.gov to find out if there are problems of which you should be aware.

Resources

https://www.studentdebtrelief.us/forgiveness/obama-student-loan-forgiveness/

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/public-service

https://www.nerdwallet.com/blog/loans/student-loans/how-to-spot-student-loan-scam/

by

Borrower Based Academic Year and Scheduled Academic Year

student loanWhat is a Borrower Based Academic Year and How Does BBAY Differ from SAY?

Huh?  All of these letters.  How is anyone supposed to understand student loan applications?

Obtaining and maintaining student loans can be confusing. Students will often hear references to BBAY and SAY or, Borrower Based Academic Year and Scheduled Academic Year when loans are discussed. Because student loans comprise part of a student’s future economic standing, understanding these terms plays a role in loan disbursements. In this post, we provide a clearer understanding of the difference between BBAY and SAY. To best understand, let us start with loans based on the Scheduled Academic Year (SAY).

What is a Scheduled Academic Year (SAY)?    

The academic year calendar is published by each university or college, usually in the school catalogue or other materials. The calendar shows when classes begin for each standard academic year, traditionally in the fall.

A Scheduled Academic Year (SAY) is a fixed period that begins and ends at the same time each year; it is based on this school academic calendar and is used to measure annual loan limit progression. Annual student loan limits are based on a standard two-semester period marking one academic year. Because the school year runs as fall and spring semesters, student loans under SAY are provided for the fall and spring semester. The next loan period under SAY would begin the following fall.

However, students do not always want to attend school in tidy fall/spring schedules. Because of how loans are disbursed, this creates a lending problem. The solution is the Borrower Based Academic Year or BBAY.

What is a Borrower Based Academic Year (BBAY)?

The Borrower Based Academic Year (BBAY) is a standard that may be used to measure annual loan limit progression when a student does not attend school according to the traditional calendar. Rather than having to wait until the fall semester to qualify for loans, the borrower of a Title IV education loan becomes eligible for disbursement when the next semester begins, regardless of the traditional academic calendar.

Consider the following examples:

  • John wants to start attending college in the spring. Because the SAY provides loans only for Fall/Spring semesters, he would have to wait several months to begin classes. If he chooses instead to use BBAY to account for his student loans, he can begin in the spring.
  • Mary entered school in the fall, is nearing completion of spring classes, and wants to attend school in the summer. Because SAY funding ends with the spring semester and does not replenish until the following fall semester, she must apply instead to use the BBAY loan period.
  • Tom only wants to attend an online school which offers classes in five-week increments. Because of the non-traditional approach, his loans will be based on the BBAY.
  • Jerry wants to attend a vocational college. The next class starts in March. Using the BBAY, he can begin as soon as his loans are approved.
  • Steve is planning to get his Master’s in Education. Grad school classes often do not follow the traditional calendar.

As these examples show, the Borrower Based Academic Year is very different from the Scheduled Academic Year. The BBAY is a tool which the Department of Education uses to account for loans provided. Under U.S. law, limits are placed on the amounts which may be loaned for student aid each year (based on two semesters). To satisfy this requirement while allowing students the flexibility needed to attend as they see fit, the BBAY was developed. Understandably, students using the SAY will require more time to graduate while those using BBAY will graduate sooner. Too, those using BBAY will accumulate student debt quicker, but ideally, they will be able to pay on it sooner as well.

 

by

Academic Attendance: How Does It Affect My Student Loans

Student loan form with dollars and books.

Academic attendance is just one of the the many things to keep in mind when applying for student loans and is one of the basic application requirements. While it may seem obvious, Academic Attendance is the first requirement to applying for a student loan.  In some cases, this is so but some universities and even colleges within the university may have different academic attendance requirements that can affect student loans. It is the responsibility of the student to know what the attendance requirements are and the best way to find out is to ask the university student loan office.

With the cost of college tuition steadily increasing each year, most university students seek loans. The most common student loans are handled through FAFSA (Free Application for Federal Student Aid). The information included here relates to such federally-backed student loans. To be clear, the United States government does not do the lending. Rather, the loans are backed by and administered by the U.S. Department of Education. As with any government backed program, there are requirements for approval and requirements which must be maintained throughout the term of the loans. One of these is academic attendance.

What Are the Academic Attendance Requirements for Federal Student Loans?

The basic requirements for Federal Student Aid is that the requester must be accepted for enrollment or currently be enrolled as a “regular student” in an approved degree program. This means that the loan enrollee must be at minimum a half-time student. However, each university may have its own academic requirements which must be met to maintain approval of the student loan. This can create some confusion, especially given the vague terms ‘regular’ and ‘half-time.’

For purposes of the student loan application, a regular student can be enrolled half-time but most universities distinguish between the two such that a regular student is one thing and a half-time student is another. Generally, most colleges consider a regular student to be a full-time student, one who is taking between 12 and 14 credit hours per semester. A half-time student is anything under 12 hours.

Under federal guidelines, a student taking less than 12 credit hours per month is eligible for student loans but only if the academic requirements of the attended university permits the reduced workload. Some do not.

For instance, one student took out loans for a semester at a University and enrolled in 14 hours of classes. After a few weeks, he decided that he needed to drop a class. The class he dropped comprised three credit hours. This lowered his academic attendance to 11 hours for the semester and he was removed from regular student status at the university. At that point, he became responsible for the loans. He contacted the lender and made payment arrangements so that he remained eligible for student aid. The following semester, he enrolled for 12 hours and the payments were deferred. This shows that although federal guidelines allow for less than full-time status to be considered a regular student, the university may have stricter guidelines.

This being the case, each university also has requirements related to the total days present in classes. Such attendance requirements vary from college to college so students should check with their student advisor or financial aid office to learn more. Failing to attend classes can also result in the loss of federal student aid.

University Academic Attendance Requirements Can Hinder or Halt Student Financial Aid

The bottom line is that most students enter college with the understanding that Federal Student Aid guidelines are the requirements which they must meet. In some cases, this is so but some universities and even colleges within the university may have different academic attendance requirements that can affect student loans. It is the responsibility of the student to know what the attendance requirements are and the best way to find out is to ask the university student loan office.

 

 

 

 

 

 

Sources

https://studentaid.ed.gov/sa/glossary

https://nces.ed.gov/pubs2009/attendancedata/chapter1a.asp

https://studentaid.ed.gov/sa/eligibility/staying-eligible