Financial Advice

Consumer Files Their Own Bankruptcy Case and Eliminates Their Navient Student Loans

Thomas Lathrop filed his own bankruptcy Adversary Proceeding to get his Navient private student loans discharged in bankruptcy. Mr. Lathrop pursued a strategy I’ve been talking about for sometime. The fact he did this himself is amazing. Not an approach I generally recommend but he belted this one out of the park.

He spotted the fact the school he attended was not a Title IV eligible institution. The school was not recognized by the Department of Education and thus not protected from discharge under bankruptcy as a Qualified Education Loan.

To learn more about this issue, click here, here, here, and here.

According to public records, Mr. Lathrop attended Video Symphony for instructional classes that we funded with Navient private student loans. He was there between July 2005 and December 2006.

According to the available Federal School Code Lists for those years his school was not Title IV recognized and did not appear on the Federal School Code List.

You can read Mr. Lathrop’s complaint he filed to achieve the discharge of his private student loans.

Navient and Mr. Lathrop came to an agreement instead of letting the court issue a final ruling. In the agreement Navient agreed all of Mr. Lathrop’s private student loan debt was completely discharged in his bankruptcy filing.

Here is the good news court document.

So you see, it is actually possible to easily discharge some private student loans in bankruptcy, no matter what people say.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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Financial Advice

California Student Loan Co-Signer Statute Helps to Kill Student Loan Debt

California attorney Christine Kingston shared an interesting issue regarding National Collegiate Student Loan Trust private student loans.

Not only are the NCSLT loans suffering from a distinct lack of documentation to validate the loans but in California an attorney can raise another issue to invalidate the loan if the debtor is sued.

Christine says in her experience the vast majority of the NCSLT loans are cosigned and in California they are not complying with the co-signer statute. In addition when NCSLT sues it is almost always outside the Statute of Limitations which is another defense to raise.

Under the California co-signer statute it says:

CA CIV. Code §1799.91, (a) Unless the persons are married to each other, each creditor who obtains the signature of more than one person on a consumer credit contract shall deliver to each person who does not in fact receive any of the money, property, or services which are the subject matter of the consumer credit contract, prior to that person’s becoming obligated on the consumer credit contract, a notice in English and Spanish in at least 10-point type as follows:

NOTICE TO COSIGNER (Traducción en Inglés Se Requiere Por La Ley)
You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn’t pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.

The creditor can collect this debt from you without first trying to collect from the borrower. The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.

This notice is not on the contract that makes you liable for the debt.

CA CIV. Code §1799.92, (a) If the notice required by Section 1799.91 is included with the text of the consumer credit contract or with any other document establishing the liability of the person, the statement shall appear immediately above the space reserved for that person’s signature or above or adjacent to any other notices required by law to be placed immediately above the signature space and shall be contained in a box formed by a heavy line.
(b) If the notice required by Section 1799.91 is not included with the text of the consumer credit contract it shall be on a separate sheet which shall not contain any other text except as is necessary to identify the creditor and consumer credit contract to which the statement refers and to provide for the date and the person’s acknowledgment of receipt.

Christine adds, “National Collegiate’s contract provides no such disclosures immediately above the space where Defendant’s signature appears. Further, in violation of CA CIV. Code §1799.92(b), the copy of a “FEDERAL AND CALIFORNIA COSIGNER NOTICES” sheet attached as part of the Contract, and thus is not included with the text of the consumer credit contract. Such notice also fails to provide for the date and acknowledgment of receipt of the notice. Without Defendant’s signature and date, acknowledging that she has received any such required notices, National Collegiate cannot initiate a collections lawsuit against her because they lack standing to sue. This is a legal defect that leave to amend cannot cure.”

If you live in California and have an issue with a NCSLT loan you can contact Attorney Christine Kingston at www.attorneychristine.com or 714-533-9210.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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Financial Advice

What Percentage Will Navient Accept to Settle My Student Loan Debt?

Question:

Dear Steve,

Divorce, mortgage crash, bankruptcy, then lost house to foreclosure 2 years ago which left me holding the bag for student loan debt to the tune of $216,000 – trying to resolve for years to no avail. called Navient – they gave me the number of National Enterprise Systems who said they were collecting for Navient – the guy said he would $71,000 if we paid today – then quickly went down to $50,000 –

Does this sound legit and if the loans are charged off what percentage of this debt do you think they might accept? Also, do places like this send you a release letter with our loan information prior to paying.

Steve, I am 58, unemployed, and have 20,000 in a 401k to my name, however I would do anything to absolve my young, newly married daughter from this debt. I have been following you for a while now. Help.

Thank You

Gigi

Answer:

Dear Gigi,

It sounds as if you have private student loan debt that Navient is servicing. They will settle but every situation is a little different. A great settlement for one person may not be available to the next because of the situation leading up to it and the path followed. Settlement agreements generally conform to a pattern but that pattern changes with corporate policy, times of the year, legal representation, etc.

The bigger underlying issue here is it doesn’t really matter what deal they offer you if you have no income coming in and only $20,000 in retirement funds. It would be a mistake to drain what little money you have saved for retirement. Keep in mind that an early 401(k) withdrawal can be a taxable event.

You also mentioned you would do anything to remove your daughter from the debt so it sounds as if this might be loans you cosigned for. In that case, unless you do it right, they will settle your part of the responsibility and leave your daughter on the hook. But again it’s a moot point if you don’t have access to funds to settle.

If this is a cosigned loan and your daughter is on the loans as well then you might want to consider maybe going for a settlement with a monthly payment plan and letting her make the $250 monthly payment. Navient will accept $250 a month in some settlement offers at 0.01% interest.

Here is what I wrote previously on settling Navient student loans.

The biggest settlement offers I’ve seen are ones as the result of lawsuits. Read this article to see them.

If you do decide to pursue the settlement route you would absolutely want to get the offer in writing so you will always have proof that the reduced payments will satisfy the loan. Otherwise it is not unheard of for a creditor to resurface years later and say there was no such agreement. Keep the settlement letter with your other important papers you never lose.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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Financial Advice

Three Job Ideas for People Who Want to Work From Home

Ever walk around town and see those “Make $$$ working from home” flyers stapled to a telephone pole? While many of those “exciting opportunities” are undoubtedly scams, the truth is that the Internet and other remote work technologies are making work-at-home jobs more prevalent and easier to obtain. Take it from me — as of this month, I’ve now happily worked from home for the past three years. Meanwhile, as I’ve mentioned in the past, my wife is currently considering such options for herself, which would allow us both to travel more.

This has led me to start thinking more about different work from home career options and I am now here to discuss three particularly great ones:

Writer

Obviously this is how I’ve made my living for the past three+ years so it’s the area I know the most about. Today there are many different types of freelance writers and many different outlets you can use to find projects or full-time work. This includes everything from writing articles to website homepage copy to product taglines. Alternatively you may consider publishing your own books or eBooks as a way to generate income and make writing your full-time profession. 

When looking for writing opportunities there are many plans of attack, including simply looking for sites you’d like to work for and inquiring about any open positions. Of course this method may prove a bit far fetched and so it’s often better to start small and find one-off jobs using various platforms. In addition to popular sites like Freelancer and Upwork that aim to help connect freelancers and clients, don’t dismiss broader platforms like Craigslist that can also be helpful in finding writing gigs. Not only will using these platforms help you stay afloat income wise but will also allow you to build up a portfolio of work you can use to obtain better gigs and higher rates down the line.

Travel agent

This is one idea I hadn’t really considered until a friend of mine recently brought it to my attention. Although I’ve often joked about the sheer number of Disney fans that had parlayed their fandom into a job by starting their own Disney-specialized travel agencies, it never occurred to me that many larger agencies would need help — even from remote workers. Now you might assume that travel agencies were a dying breed given how easy it to book your own trip using the Internet these days, but you’d be wrong. As it turns out many people still enjoy having someone help them plan their vacations, giving those who want to work at home and are savvy at online travel research a marvelous opportunity.

eBay/Amazon seller

If writing or booking trips for others aren’t quite your skill sets, what about something nearly anyone can do: sell items on eBay. Sure plenty of people have made a little extra money by occasionally selling items they have no use for on the popular bidding site but others have turned it into a career by “flipping” items they know will garner attention. In fact entrepreneurial superstar Gary Vaynerhuck has often spoken about “the eBay hustle” as a way to make easy money. This could involve going to garage sales and thrift shops in hopes of finding a diamond in the rough or even buying items in bulk to resell on eBay or Amazon. Either way, when used properly and prudently, these platforms can actually be quite lucrative and allow you to create a work-at-home job for yourself.


Working from home doesn’t have to be a fantasy and not every remote work opportunity is a scam. As a work-from-home (or anywhere) person myself, I’m proof that the dream is possible. Of course the path you choose will depend on what you’re good at and what you like to do — be it write,helpg people plan, or move merchandise. Ultimately there are plenty of jobs you can do from home, but it’s up to you the find the right one.

This article by Kyle Burbank first appeared on Dyer News and was distributed by the Personal Finance Syndication Network.

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Financial Advice

Fake Publishers Clearinghouse Scams

Most of us have seen those ads with Publishers Clearing House knocking on someone’s door with balloons and a big check for millions. It’s a life-changing moment marked by joyous tears. Dreams are about to come true.

But the FTC wants to be sure your tears are not sad ones and the dream doesn’t wind up being a nightmare, because scammers are pretending to be Publishers Clearing House and tricking people into sending them money.

Publishers Clearing House and the FTC have both gotten many reports about scammers using the Publishers Clearing House name to deceive people. Scammers call, claiming you’ve won the sweepstakes – but, to collect your prize, you need to send money to pay for so-called fees and taxes.

Paying to collect a prize is a scam. Every time. And scammers like to ask you to send money by Western Union or MoneyGram, or by getting a prepaid card or gift card. Why? Because it’s nearly impossible to trace that money – and you’ll almost never get your money back.

If you think you’ve won a prize, here are a few things to know:

  • Publishers Clearing House will never ask you to pay a fee to collect a prize. In fact, no legit prize promoter will ever charge you to win.
  • If anyone calls asking you to pay for a prize, hang up and report it to the FTC.
  • Never send money to collect a prize. It’s a scam.

And here’s another insider tip: Publisher’s Clearing House doesn’t call ahead to say you’ve won.

Did you send money to a prize scammer, or know someone who has? Report the loss immediately to the company you paid through (Western Union, MoneyGram, the prepaid or gift card company). And then tell the FTC. And, if you wired money to a scammer via Western Union between January 1, 2004 and January 19, 2017, you might be eligible for a refund. Learn more.

Check out Publishers Clearing House’s fraud protection page, and learn more from the FTC about prize scams.

This article by the FTC was distributed by the Personal Finance Syndication Network.

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Financial Advice

A Crash Course in Starting and Growing Your Retirement Savings

Want to know why most younger adults don’t think much about saving for retirement? Probably because there’s a lot to think about. Furthermore, many mistakenly believe that they should wait until they’re making big bucks (whenever that will be) to begin setting money aside.

Admittedly, with so many different types of retirement accounts, IRS rules, and other options, often times the benefits of these accounts get lost in the shuffle. Moreover, knowing where to start with all of it can be overwhelming. Don’t fret — I’m here to help.

The bottom line is that you should start saving for retirement as soon as you can. So, to help get you started, let’s take a look at why starting now is so important, what the big benefits of having a retirement account are, and a few tips for successfully growing your savings.

Start Early, Start Small

Why It’s Important to Begin Saving Early

The eternal irony is that, while young people are probably the least inclined to pay any mind to their eventual retirement, starting your savings as early as possible is key to having a prosperous retirement. Beyond the added principal you’ll build by contributing for longer, what’s really lucrative is the interest. In fact, the monetary differences between beginning your savings at age 25 and age 35 are simply staggering.

My go-to example of this comes from a report by JP Morgan Asset Management and published by Business Insider. This hypothetical first compares two different investors: one who contributed $5,000 a year for 40 years (age 25 to 65) and another who did the same but for 30 years (age 35 to 65). While the difference in their principal is only $50,000 at age 65, their total returns are far different. Assuming a 7% annual return, the 40 year saver would retire with $1,142,811 compared to just $540,741 for the 30 year saver. As you can see, that 10 year head-start led to a nest egg more than twice as large. Not bad, huh?

Stacking Pennies

If there’s one thing about that example I don’t like it’s that, for many, setting aside $5,000 a year for retirement at age 25 is just not realistic. Don’t worry — you don’t need to contribute massive amounts of your income each year to maintain a retirement account. Furthermore, the majority of IRAs and Roth IRAs don’t have minimums, meaning you can start your account with just a few dollars.

When my wife was first getting started with her Roth IRA, she told me she’d set aside $10 a week to contribute to her account. This meant she was putting $520 a year toward her retirement savings  — a far cry from five grand but definitely not a bad start. Even today we keep that $10 a week tradition alive while also contributing to a 401(k) (more on that later) and occasionally making larger contributions when we can.

Be sure to check out the “Retirement Savings Tips” for more ideas on turning your small change into big dollars.

All About Retirement Accounts

What’s Different About a Retirement Account?

At this point, you may be wondering what makes retirement accounts so special. After all, couldn’t you just set aside money for retirement in a normal savings account? Well, you could, but there are a number of reasons why that’s not the best financial idea.

Topping the list of why retirement accounts are better than savings accounts is the interest you earn. If you have a traditional savings account at one of the too-big-to-fail banks, chances are you only earn about .01%. Even over the course of 30 to 40 years, that’s still not going to amount to very much. Meanwhile, there are plenty of different retirement options that typically offer much better returns – 5-10%. To be fair, there is risk involved with many of the retirement options. That said, even safer options like money markets still often boast better returns than a regular savings account.

Another major benefit of retirement accounts is their tax-sheltered status. Depending on what type of account you choose, this could mean a couple of different things. For regular IRAs and 401(k)s it means that your contributions aren’t taxed at the time you make them. So, if you make $30,000 for the year but contribute $5,000 to an IRA, your taxable income would be $25,000. Of course, when you do go to make withdrawals at retirement age, you’ll then have to pay tax on those pulls.

For Roth IRAs, the situation is reversed. While you pay taxes on your income upfront, your withdrawals (and gains!) come tax free as long as you’re over a certain age. Even though this is often a better deal overall, some young savers without much to their names may balk at needing to pay taxes upfront.

Incidentally, even Roth IRAs can help your current tax bill if you qualify for a Savers Credit — more formally known as a Retirement Savings Contributions Credit. Depending on how much you earn per year, you could qualify for a tax credit just by contributing to a retirement account. For example, in 2017, a married couple filling jointly that made less than $37,000 would be entitled to a credit equal to 50% of their contributions up to $4,000. Sound too good to be true? You can check out the IRS page dedicated to this magical program for yourself.

A Few Notes

Due to all these benefits, there are limits and downsides to retirement accounts as well. First,  IRAs and Roth IRAs put restraints on how much individuals can contribute to their accounts each year. For 2017, that limit is set at $5,500. 401(k)s also have maximum contributions, although the threshold is far higher (currently $18,000).

Perhaps the biggest downside to retirement accounts is how inaccessible your money is. Well, it’s not exactly inaccessible per se but, once you put your money into an IRA or 401(k), it’s very expensive to get it back out. That’s because, with all the tax benefits the government is giving you to save, they really don’t want you tapping your account for anything other than its intended purpose. To dissuade you, withdrawals you make before you’re 59 and half are subject to a 10% penalty on top of any taxes you’ll need to pay on the funds. As someone who’s raided their 401(k) in the past, let me tell you it’s not worth it!

There are a few exceptions to this retirement account tax nightmare. For one, since taxes for Roth IRA contributions are paid upfront, you are technically able to make withdrawals from your principal (but not your gains) without penalty. And while you can’t take money out of your 401(k) permanently without charge, many accounts do allow you to take out a loan. These loans have their own set of pros and cons — e.g. low interest rate but lost gains — so be sure to carefully considering such an option.

In the end, the best practice is to just leave your retirement savings alone until, well, retirement.

Retirement Savings Tips

Sign Up For Your Employer’s 401(k)

If you are eligible to sign up for a 401(k) at your job, do it! This is not only the hands down best way to get your retirement savings started but could also result in you getting some free money.

Let me explain: a 401(k) is a retirement account typically set up with your employer. What’s great about this is that you can decide on what percentage of our income you want to contribute and have the money automatically deducted from your paycheck. Better yet, a number of employers offer other perks such as matching funds and profit sharing.

For matching funds, typically your employer will contribute the same percentage of your income as you contribute up to a certain limit. Be aware that limit will vary greatly on the plan, but it’s not unheard of to get matching up to 4% in some cases. Additionally, some employers go one step further and gift their employees with profit sharing. Again, the amount of profit sharing you may get is dependent on a great many factors, but it is another way to build up your retirement nest egg.

So with all of those benefits be sure to check with your supervisor or human resources department to see if you are eligible to join your company’s 401(k) plan.

Try An App

As I mentioned, there’s no harm in starting small with your retirement savings and growing them overtime. One potential way of doing this is to check out an app called Acorns. This app helps you set aside money without even really thinking about it. To achieve this, you first need to link your credit and/or debit card to Acorns. Doing so will then allow it to do what they call “Round Ups.” Whenever you make a purchase, Acorns will essentially round the price off to the nearest dollar and deposit the “loose change” into your account. So, for example, if you bought a cup of coffee for $4.35, Acorns would take an extra $.65 from your bank account and add it to your balance. From there, the app actually invests your money in a mix of stocks and bonds, which you can adjust to be more aggressive or conservative. You can read more about Acorns is this review.

While Acorns won’t directly allow you to contribute to your retirement account, there are a couple of advantages to using such an app. For one, it will give you a bit on an introduction to the world of investing, which you’ll want to know a bit about before your put your IRA into a mutual fund or other investment option. Secondly, Acorns makes it easy to cash out your money and deposit it back in your bank account. In turn, you could take that money and move it to your retirement account. Of course, Acorns and other apps do charge a small monthly fee so, if you’re disciplined enough to set money aside on your own, that might be a better plan.

Leave It In Peace

Just as I recommend contributing to your retirement account and not touching the funds, it’s also not always helpful to keep too close of an eye on your funds. If your 401(k) or IRA is invested, you will have up days, down days, up months, down months, etc. etc. etc. This can be exciting or depressing depending on the results, but you shouldn’t put too much stock (pardon the pun) into these short term changes. Remember: saving and investing for retirement is a long game. In many cases, the best plan of action is to stay the course and not panic. Case in point: investors who held on through the 2008 financial crisis came out on top when all was said and done. That said, you will want to get more conservative with your investments as you get closer to retirement, but that’s a conversation for another time.

Between the different accounts, contribution limits, taxes, and more, there’s a lot of confusion that surrounds retirement savings. However, when you break things down, it’s really not all that complicated. In fact, you can start saving for retirement with just a few dollars and grow it into something much more sustainable by the time you retire. So what are you waiting for?

This article by Kyle Burbank first appeared on Money@30 and was distributed by the Personal Finance Syndication Network.

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Financial Advice

How to Respond When a Debt Collector Contacts You: 3 Easy Steps

Receiving a call from a debt collector can be stressful. Your first instinct may be to hide or ignore the situation and hope it goes away. But that can make things worse. We have resources to help you respond to debt collectors.

1. First, know your rights

There are laws that restrict what debt collection can say or do. The Fair Debt Collection Practices Act (FDCPA) prohibits debt collection companies from using abusive, unfair, or deceptive practices to collect debts from you. Under this law, a debt collector cannot:

  • Call repeatedly to harass you
  • Abuse or mistreat you
  • Contact you at a time or place they know or should know is inconvenient (including before 8 a.m. or after 9 p.m. unless they know otherwise)
  • Use obscene language
  • Make a false or misleading statement about what you owe
  • Publish your name for not paying the debt
  • Lie to you
  • Threaten to have you arrested for not paying the debt 

You should know that even if a debt collector violates the law, the debt does not go away. You do have the right to sue, and if you win, the judge can require the debt collector to pay you damages. The court can also order the debt collector to pay your attorney fees if it is determined that they did violate the law.

2. Make sure the debt is yours 

When a debt collector calls, ask questions to find out if the debt and the debt collector are legit. You should find out:

  • Who you’re talking to (get the person’s name)
  • The name of the debt collection company they work for
  • The company’s address and phone number
  • The name of the original creditor
  • The amount owed
  • How you can dispute the debt or ensure that the debt is yours

Take notes and document everything. We have sample letters and other resources that can help you request additional information from a debt collector.

3. Act quickly

Depending on your situation, there may be several different actions that you can take when you are contacted about a debt. 

If the debt is several years old, be sure to find out what your state’s statute of limitations is for a debt collector filing a lawsuit to collect the debt from you before making a payment. You may want to consult an attorney or the applicable law in your state.

If you’re not sure that the debt is yours, write the debt collector and dispute the debt or ask for more information.

If you find out that the debt does not belong to you, don’t delay! Write the debt collector and tell them that the debt is not yours and that you do not want to be contacted about the debt again in the future 

If the debt is yours, don’t worry. Decide on the total amount you are willing to pay to settle the entire debt and negotiate with the debt collector for the rest to be forgiven. This could be a lump sum or a payment plan. Be honest with yourself about how much you can pay each month.

Remember, responding to a debt collector doesn’t have to be scary. We have resources that can help

This article by was distributed by the Personal Finance Syndication Network.

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