Easier is not the same as easy!

In the past, discharging federal student loans in bankruptcy has been very difficult. The Department of Justice fought discharges tooth and nail. Discharging student loans through bankruptcy was unrealistic because it was expensive and exhausting for borrowers (and their attorneys). The Department of Justice has released a new process to streamline student loan discharge through bankruptcy.  The borrower still has to prove undue hardship.

Factors that will be considered:

• Can the borrower currently afford to pay the student loan?
• Will the borrower be able to pay the student loan in the future?
• Has the borrower made good faith efforts to pay the student loan in the past?

This streamlined process should make bankruptcy more effective in helping older or disabled borrowers obtain relief from debt they will never be able to repay.

Nothing is worse than worrying about how much you will have to pay for medical care. Effective January 1, 2022, the new “No Surprises Medical Act” is supposed to make medical billing more certain.

Don’t have health insurance?

If you don’t have insurance, your medical provider is required to provide a “good faith” estimate of all charges before you get care. If you are billed more than $400 above the estimate, there is a process in place for disputing the charges.

Have health insurance?

This new law provides bans surprise bills for emergency medical care from an out-of-network provider without prior authorization.  Other specific out-of-network charges are also banned. Since you can sign an authorization, be careful to read that stack of papers you always have to sign when requesting medical care. The new law establishes a complaints process.

Will this new law really stop surprise medical bills? This remains to be seen. In my opinion, the enforcement procedures (complaints and disputes) will make or break the effectiveness of this new law.

 

If you are a public servant, such as first-responder, teacher, government employee, non-profit employee, nurse, etc., you have a limited window to obtain credits for payments made under the Public Servant Forgiveness Program. Under the Public Servant Forgiveness Program, a student loan borrower with qualifying loans is required to make 120 qualifying payments. Then, the balance of their student loan is forgiven. The key word is qualifying!

• Your loans must be “direct” federal loans. If you have older loans, such as FLLEP loans, you may be able to consolidate loans into a direct loan. You should not consolidate loans without consulting an attorney to be sure this is best for you.

• You must have been employed working at least 30 hours for a qualifying employer, such as the local, federal or state government; a non-profit and others.

• To get credit for payments made since 2007, you must have made a payment even if the payment was less than what was required under the PSFP. So, you are getting a pass and an easier way to get credit for one or more of the required 120 payments.

For more information, check out this limited waiver opportunity information.

Need help with your student loans? Contact Cross Stone Law today.

 

Federal Student Loan Deferment Ends

05/01/2022

Most people with federal student loans have been in deferment for 2 years now. Not all federal student loans are in deferment but most are. Beginning May 1, 2022, all federal student loan borrowers will need to restart payment. Now is the time to consider your repayment options. This can be complicated. Rights and other information are set out by the Department of Education. If you need a strategy for resolving your student loan debt, Cross Stone Law can help by providing you a student loan analysis.

Reach out today for help!

The Snowball Method

A popular method for paying down debt is known as the snowball method, introduced by Dave Ramsey. This method focuses on paying off the smallest debt to the largest. Once you’ve paid off one debt, you take the money you would have paid on that small debt and apply it to the next smallest. Keep doing that, and like a snowball, it’ll add up to paying off your debt in full. Using this method allows you to see the progress you’re making and encourage you to keep building that snowball.

Studies are showing that since the Pandemic began, consumers are paying down credit card debt. The flip side is that other types of debt are increasing. We can only speculate the reasons why credit card reduction has occurred. We know that many people are cash-strapped. However, a large percentage of workers earned more on unemployment than at their regular jobs. Plus, there were stimulus payments. Small businesses were also able to get grants and loans. Perhaps this is how this credit card reduction has occurred.

Let the Snowball Melt

The snowball method sounds great and can work for some people. But what if you have an overwhelming amount of debt and it doesn’t work for you? You may consider bankruptcy as an option to melt away the snowball instead.

If you’re burdened by overwhelming debt, I challenge you to consider your essentials. Shouldn’t debtors consider paying off things like a car or maybe even a home loan (if it’s not too large)? Perhaps these would help your family more than paying down credit card debt. You can eliminate credit card debt in bankruptcy, but not car loans.

Another consideration – just hold on to the money. Lack of savings is the leading cause of running up credit card debt in the first place. In many cases, debtors who file bankruptcy can keep up to $13,900 per debtor – in a joint case – that doubles to $27,800. Exemptions are complicated. An attorney needs to determine what exemptions apply in your particular case, but this is possible in many cases.

Certain types of money deposits have their own exemption. Examples are:

• IRA and 401k – exempt up to $1,362,800 per person (the exemption amount will update in 2022)
• Stimulus funds – totally exempt
• Health savings accounts – exempt
• Pension/retirement funds – exempt until paid
• Annuity – exempt with some limitations

I like Dave Ramsey and believe his method is good for many people. But some people are not confident about their future income. These are unstable times, and even long-time workers are being laid off. Instead of building up the snowball, it may be best to melt it down. Filing bankruptcy may be able to help you melt away overwhelming credit card debts and give you the chance to focus on the essentials that remain.

Most bankruptcy attorneys offer free consults. If your situation is unstable, you may want to consider professional advice on handling paying off debt.