Your Legal Rights
Have you been contacted by a collector? You are not powerless! You have legal rights under the Fair Debt Collection Practices Act to stop collectors and gain control of the situation.
Your Thirty-Day Window
Have you received a collection notice? Don’t ignore it! The first receipt of a collection notice contains an opportunity that you should not miss. If you dispute the debt in the thirty days after receiving notice the collector must stop all collection activities while investigating your dispute, and may not make any attempt to collect until he has provided you with verification of the debt. In addition, the debt may not be reported on your credit report during this period of time. If you do not respond within thirty days you have effectively waived your right to demand investigation under the Fair Debt Collection Practices Act (FDCPA). This is an important right and may serve you well if you have any question about the accuracy of the debt. Are you in a credit repair program? The more comprehensive credit repair programs provide debt validation as part of their service at no extra charge. Simply forward the collection notice to your credit repair company immediately so that they can respond within the time allowed.
FDCPA § 809. Validation of debts [15 USC 1692g (b) “If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.”
The Cease Communication Letter
In some cases collectors can be abusive and cause significant stress. Consumers often give in to the pressure for partial payment at the expense of their food and housing budget causing needless hardship for themselves and their family. If you are faced with a high-pressure collector it may be best to put an end to their communication. The FDCPA requires collectors to stop collection efforts upon receiving a written request to stop. If you are in a credit repair program they should be happy to prepare the cease communication letter on your behalf as well as providing competent counsel.
FDCPA § 805. Communication in connection with debt collection [15 USC 1692c] (c) “Ceasing Communication. If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except -- (1) to advise the consumer that the debt collector's further efforts are being terminated; (2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or (3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.”
In some cases, if the dollar amount is enough, and the collector believes that you have the ability to pay they may serve you with court papers. This may or may not happen. The process of filing suit is expensive and may not justify the results. Whatever a collector sounds like on the phone you can bet that the decision to pursue or not pursue your case will be rational. If you cannot afford to pay you may decide to let it take its course. As always, it is best to contact a competent credit repair professional to discuss the potential benefits and risks of any action.
Get an Attorney
The FDCPA requires collectors to stop collection efforts upon receiving notice that an attorney is representing you. Once a collector receives this notice they must direct all further communications to the attorney. This approach has several benefits. The right attorney may be able to raise useful defenses. In the credit repair business we often suggest this course of action where the dollar amount of the collection is significant or where the collector is especially aggressive.
FDCPA § 805. Communication in connection with debt collection [15 USC 1692c] (a) “Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt -- (2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer…”
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
Monday, November 19, 2007
Tuesday, November 13, 2007
Credit Repair: Resolving a Student Loan Default
The Time to Act is Now
Do you have defaulted student loans? Credit repair authority Jim Kemish discusses the many ways the government can collect, and the rights that you have to cure the problem starting right now!
There is Still Hope!
There is no statute of limitation for collection of student loans. Forget about hiding out until the collectors give up and fade away. They will hunt you down forever. And to make it worse student loan collectors have special powers that can make your life a misery. Fortunately federal law provides a variety of options that will aid your credit repair effort, help you stop collectors, and even come out ahead!
It’s Up To You
If you take action you can stop collectors, reduce your payments, and have the default status removed from your credit. But you have to initiate these efforts. If you don’t take action no one will help you and the situation will get worse. Are you are involved in a credit repair program? You have everything to gain by acting today. Let’s take a look at the powers the government has, and then explore the tools that you can use to put an end to the hassles once and for all.
Say Goodbye to Your Tax Refunds
If you are in default and have a tax refund coming you should expect it to be taken by the government. This is a virtual guarantee. If you want to avoid this action while you determine your options, you should act today to eliminate your next tax refund so that there is nothing to seize. This is easily done. Just decrease the amount of income withheld by your employer, or reduce your estimated tax payments if you are self-employed.
The Paycheck Surprise
Student loan collectors now have the right to garnish your wages without a court order. At the moment they are allowed to seize the lesser of 15% of your disposable income, or the amount of your disposable income in excess of $154 per week.
Social Security is Now Fair Game
In 1996 a law was passed allowing student loan collectors to seize the Social Security income of student loan defaulters. But there are limits to the amount that can be seized. The first $9000 per year, or $750 per month, is safe. And under all circumstances there is a limit of 15% of your total benefits that can be taken.
Cancellation of Student Loan Debt
It is theoretically possible to cancel your student loan debt if you had serious trouble with your school (such as it closing down while you were enrolled), if you became totally and permanently disabled after you took out the loan, or by convincing a judge to dismiss the debt in bankruptcy. If you pursue one of these options you should expect to be faced with extreme documentation requirements and slim odds of success. I’m sorry to say that after almost twenty years of counseling people on credit repair I have never seen anyone succeed in canceling their student loan debt. Fortunately there two easy methods of resolving your student loan problems that will help you stop collection efforts and establish a reasonable, affordable payment plan.
Student Loan Consolidation
There are two types of consolidation plans available based on the type of student loan you have. Most student loans are either FFEL loans (Federal Family Education Loans) or Direct Loans. FFEL loans are given by banks or institutions and guaranteed by the government, Direct Loans are obtained through your school, but come directly from the government. Stafford Loans, Guaranteed Student Loans, and Plus Loans may be either FFEL or Direct Loans. The FFEL plan requires that you pay at least the interest due each month. The Direct plan has no set minimum. You can qualify for the Direct plan if you have at least one Direct Loan, even if all of the others are FFEL loans. Are you in a credit repair program and considering your options, but are concerned about your budget? Both plans offer the possibility of up to three years forbearance (no payments) after consolidation.
Rehabilitation
Rehabilitation, unlike consolidation, will not allow you to combine your existing loans into a single new loan, but it does have the benefit of eliminating the default status from your credit report, which makes it attractive for those in credit repair programs. Like consolidation you have the right to request a payment plan that is affordable to you. Rehabilitation requires a trial period where you will be expected to make nine of your next ten payments on time. Once you have completed the trial period your loan will be sold to a new lender and the default status removed from your credit report.
Getting Started
Before approaching your lender or collector to discuss your choices I strongly recommend that you contact one of the resources established to provide guidance on these issues. Please contact the Student Loan Ombudsman Office at (877) 557-2575, or the Federal Student Aid Information Center at (800) 4FED-AID to discuss your rights.
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
Do you have defaulted student loans? Credit repair authority Jim Kemish discusses the many ways the government can collect, and the rights that you have to cure the problem starting right now!
There is Still Hope!
There is no statute of limitation for collection of student loans. Forget about hiding out until the collectors give up and fade away. They will hunt you down forever. And to make it worse student loan collectors have special powers that can make your life a misery. Fortunately federal law provides a variety of options that will aid your credit repair effort, help you stop collectors, and even come out ahead!
It’s Up To You
If you take action you can stop collectors, reduce your payments, and have the default status removed from your credit. But you have to initiate these efforts. If you don’t take action no one will help you and the situation will get worse. Are you are involved in a credit repair program? You have everything to gain by acting today. Let’s take a look at the powers the government has, and then explore the tools that you can use to put an end to the hassles once and for all.
Say Goodbye to Your Tax Refunds
If you are in default and have a tax refund coming you should expect it to be taken by the government. This is a virtual guarantee. If you want to avoid this action while you determine your options, you should act today to eliminate your next tax refund so that there is nothing to seize. This is easily done. Just decrease the amount of income withheld by your employer, or reduce your estimated tax payments if you are self-employed.
The Paycheck Surprise
Student loan collectors now have the right to garnish your wages without a court order. At the moment they are allowed to seize the lesser of 15% of your disposable income, or the amount of your disposable income in excess of $154 per week.
Social Security is Now Fair Game
In 1996 a law was passed allowing student loan collectors to seize the Social Security income of student loan defaulters. But there are limits to the amount that can be seized. The first $9000 per year, or $750 per month, is safe. And under all circumstances there is a limit of 15% of your total benefits that can be taken.
Cancellation of Student Loan Debt
It is theoretically possible to cancel your student loan debt if you had serious trouble with your school (such as it closing down while you were enrolled), if you became totally and permanently disabled after you took out the loan, or by convincing a judge to dismiss the debt in bankruptcy. If you pursue one of these options you should expect to be faced with extreme documentation requirements and slim odds of success. I’m sorry to say that after almost twenty years of counseling people on credit repair I have never seen anyone succeed in canceling their student loan debt. Fortunately there two easy methods of resolving your student loan problems that will help you stop collection efforts and establish a reasonable, affordable payment plan.
Student Loan Consolidation
There are two types of consolidation plans available based on the type of student loan you have. Most student loans are either FFEL loans (Federal Family Education Loans) or Direct Loans. FFEL loans are given by banks or institutions and guaranteed by the government, Direct Loans are obtained through your school, but come directly from the government. Stafford Loans, Guaranteed Student Loans, and Plus Loans may be either FFEL or Direct Loans. The FFEL plan requires that you pay at least the interest due each month. The Direct plan has no set minimum. You can qualify for the Direct plan if you have at least one Direct Loan, even if all of the others are FFEL loans. Are you in a credit repair program and considering your options, but are concerned about your budget? Both plans offer the possibility of up to three years forbearance (no payments) after consolidation.
Rehabilitation
Rehabilitation, unlike consolidation, will not allow you to combine your existing loans into a single new loan, but it does have the benefit of eliminating the default status from your credit report, which makes it attractive for those in credit repair programs. Like consolidation you have the right to request a payment plan that is affordable to you. Rehabilitation requires a trial period where you will be expected to make nine of your next ten payments on time. Once you have completed the trial period your loan will be sold to a new lender and the default status removed from your credit report.
Getting Started
Before approaching your lender or collector to discuss your choices I strongly recommend that you contact one of the resources established to provide guidance on these issues. Please contact the Student Loan Ombudsman Office at (877) 557-2575, or the Federal Student Aid Information Center at (800) 4FED-AID to discuss your rights.
Copyright © 2007 James W. Kemish. All Content. All Rights Reserved.
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