Financial Advice

2005 Bankruptcy Reforms “Failed Miserably” to Help Students

It’s official, bankruptcy reform in 2005 totally sucked for people with private student loans. Academic research shows lenders won and consumers lost.

Here is the abstract from a paper in the Harvard Law & Policy Review by Alexei Alexandrov and Dalie Jimenez that looks at the data of how the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act actually impacted consumers.

Lessons from Bankruptcy Reform in the Private Student Loan Market

This article explores the effects of the 2005 bankruptcy amendments in the private student loan market. Overall, our findings suggest that bankruptcy reform failed miserably at helping students.

Using a novel loan-level administrative dataset from the Consumer Financial Protection Bureau (CFPB) and econometric techniques, we quantify the (a) effect of consumers receiving lower prices as a result of the law and (b) the demand-expansion effect of lower prices leading new consumers to enter the market. Overall, our findings suggest that bankruptcy reform failed miserably at helping students.

First, we show that BAPCPA did not have a significant effect on the price of loans for the lowest credit score individuals relative to individuals with higher credit scores. In other words, students became effectively unable to discharge their loans in bankruptcy, but did not experience a compensating decrease in price. Second, we do see an increase in loan volumes, but since we do not observe a change in prices and we find that the price elasticity of demand for student loans is not significantly different from zero, we do not attribute this change in originations to a price effect. It is thus easy to argue that BAPCPA was not very helpful to students: they lost the ability to discharge their private student loans, but received no discount in return.

Given these findings, we offer some recommendations to reform how student loans are treated in bankruptcy and to regulate private student loans. First, we join with many others in calling for an amendment to the Bankruptcy Code to treat PSLs in the same way as credit cards or other types of
unsecured debt are treated. That is: PSLs should be automatically dischargeable in bankruptcy unless the bankruptcy judge finds that the bankruptcy petition has been filed in bad faith. This is, we think, the simplest and best solution to the problems we identify.

Nonetheless, we recognize that rolling back the protection PSL lenders obtained in 2005 may be a hard sell politically. A number of bills have been proposed attempting to do just that and none have gained much traction. Consequently, we propose an alternative. Given students’ inelastic demand and the fact that PSL lenders are in a better position to know the true likelihood of loan repayment, the CFPB should implement an ability-to-repay rule similar to the one they have implemented in the mortgage markets. In other words, private student loan lenders would incur liability to borrowers if they originated loans without verifying a borrower’s ability to repay that loan. Because this verification is a complex endeavor, we outline some of the features of PSLs that could be packaged as a “qualified PSL,” a safe harbor to the ability-to-repay rule.

You can read the entire paper here.

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.

The post 2005 Bankruptcy Reforms “Failed Miserably” to Help Students appeared first on Personal Finance Syndication Network.

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Financial Advice

If My Student Loan Debt Was Sold Does That Restart the Statute of Limitations?

Question:

Dear Steve,

Old BOA student loan debt sold to Student Loan Solutions. State of residency: Maryland

If a debt was written off, last payment made was in 2009, the debt was sold in 2017, does the SOL clock start ticking all over?

Mary Louise

Answer:

Dear Mary Louise,

I’m not an attorney and for all legal questions, you should consult with an attorney who is licensed in your state.

The selling of a debt to another party should not trigger an update the Statute of Limitations (SOL) date. That being said, the SOL is a bit slippery and the exact date depends on the state used and your state law if it prevails.

Keep in mind the SOL is raised as a defense and does not prevent the attempted collection of the out of SOL debt. Things that will restart the SOL clock include an admission the debt is valid and yours or a payment of any size.

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.

The post If My Student Loan Debt Was Sold Does That Restart the Statute of Limitations? appeared first on Personal Finance Syndication Network.

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Financial Advice

The Best Paying Jobs Without a Four-Year College Degree

Student loan debt is crushing the dreams and futures of so many students. People are marching towards college with an expectation it will solve everything. The reality is Maybe You Should Not Go to College. Having a college degree can be a plus but keep in mind that about 75 percent of people with student loans never graduated from college.

The Bureau of Labor Statistics publishes information on the best careers for people with only a high school diploma.

Even attending a local community college and obtaining a two-year degree which is very affordable can lead to good job prospects.

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.

The post The Best Paying Jobs Without a Four-Year College Degree appeared first on Personal Finance Syndication Network.

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Financial Advice

Defendants Who Took Part in Business Coaching Scheme Settle FTC Charges

Consumers were told they could earn income through online businesses

Five deceptive marketers and the companies they ran are banned from selling business coaching programs and investment opportunities, and from credit card laundering and telemarketing, under a settlement with the Federal Trade Commission.

The settlement order resolves the FTC’s case against key players in a work-at-home scheme that, operating as Coaching Department, Apply Knowledge, and other names, conned millions of dollars from consumers by falsely promising they could earn substantial income by purchasing business coaching services. Consumers lost thousands – sometimes tens of thousands – of dollars each.

The settling defendants are two of the scheme’s ringleaders, Phillip Edward Gannuscia II and Richard Scott Nemrow, Gannuscia’s wife, Jessica Bjarnson, Jeffrey Nicol, Thomas J. Riskas III, Dahm International LLC, Dominion of Virgo Investments Inc., Essent Media LLC, EVI LLC, Nemrow Consulting LLC, Novus North LLC, Purple Buffalo LLC, 365DailyFit LLC, and Vensure International LLC.

In addition to the banned activities, the settlement order prohibits the defendants from profiting from consumers’ personal information collected as part of the challenged practices, and failing to dispose of it properly.

The order imposes a $19,214,950.40 judgment that will be partially suspended when the defendants have surrendered certain assets, including $854,200 from Gannuscia and Bjarnson, $160,800 from Nemrow, $12,000 from Riskas, $2,000 from Nicol, and additional sums from their companies. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The Commission vote approving the stipulated final order was 2-0. It was entered by the U.S. District Court for the District of Utah on April 27, 2018.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

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

The post Defendants Who Took Part in Business Coaching Scheme Settle FTC Charges appeared first on Personal Finance Syndication Network.

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Financial Advice

What Options Does My Sister Have to Repay Her Unaffordable NJCLASS Loans With HESAA?

Question:

Dear Steve,

My sister is behind on a 27,000 NJ Class (HESAA) loan and she (along with my parents who are on a fixed income) have received court summonses. She is an EMT and works for two companies but her hours were just slashed at both jobs. She has her firefighter certification but is looking into a new career field with more stability.

What will happen to her at court? Will she have a chance to propose a manageable monthly repayment amount? I believe she was already given one deferment so is there any other way to get help?

Danni

Answer:

Dear Danni,

NJCLASS loans suck. They are among the least forgiving, least accommodating, and least friendly groups out there.

According to Higher Education Student Assistance Authority website, they will be so accommodating to allow you to put your loans in forbearance if facing a financial hardship. You can see the relief options here. – Source

Their version of forbearance means they still expect you to make the interest portion of your loan payment while experiencing a financial hardship. They also say, ” My NJCLASS loans can only be fully deferred for all payments during this relief if my original repayment option required no payments during my in‐school enrollment period and there are extenuating circumstances.” – Source

The New Jersey State Legislature had been pushing HESAA to make available loan options for those in trouble. While it was said NJCLASS loans would be eligible for some sort of temporary income-driven-repayment option but that appears to have gone nowhere for most people.

According to HESAA, only new loans in the 2017-2018 period would be available for payments based on income.

HESAA said, “HESAA’s Board approved a new Repayment Assistance Program (RAP). To better assist families who experience a financial hardship for a period of time during the term of their loans, HESAA is initiating RAP for NJCLASS borrowers effective with loans for academic year 2017-2018.

RAP is unlike other deferment and forbearance programs because it offers the borrowers true debt relief. During the RAP enrollment period, all payments received are applied 100% to the principal and interest will be paid by HESAA. The RAP monthly payments are determined based on 10% of the disposable income of all parties on the loan. At the end of the RAP period, the regular monthly payment amount is recalculated based on the remaining term and principal balance of the loan. This program will be subject to the availability of funds, which will be limited for each academic year.” – Source

The Judge can only make a decision based on the law. This means he will probably look at the loan agreement and make a decision based on the agreement and New Jersey law.

If possible, you should talk to an attorney with student loan experience in New Jersey. Here is one place to look for such an attorney.

If your parents are obligated on the loan but on a fixed income, they may want to contact the nonprofit law firm HELPS who can run interference with the lender.

According to Eric Olsen, the Executive Director of the firm, “twice the amount of social security electronically deposited into a bank account is protected from garnishment under federal banking regulations, no matter the source of the funds in the account at the time of a garnishment. So, if you receive $1000 each month in SS, then $2000 is protected automatically no matter where the money came from, including private disability, that is in the bank at the time of the garnishment. So if you keep the checking balance below that number, any garnishment would be disregarded by the bank.”

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.

The post What Options Does My Sister Have to Repay Her Unaffordable NJCLASS Loans With HESAA? appeared first on Personal Finance Syndication Network.

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Financial Advice

Mobile Phone Maker Misled People on Privacy & Security

People use their mobile devices for everything from making calls and sending emails and text messages to maintaining contact lists, taking photos, surfing the web, and finding the best travel routes. You count on your device to help with your daily routine, and you expect that your information will be private and secure.

Well, some mobile device companies deal with privacy and data security better than others. For example, today, the FTC announced a settlement with BLU Products, Inc., which sells mobile devices through online and brick-and-mortar retailers, such as Amazon and Best Buy. According to the FTC, BLU deceived consumers about their privacy policies and data security. It told consumers that it would only share data with service providers if they had a business need to get the information. But, it allowed a China-based service provider called ADUPS to collect the content of text messages, real-time location information, call and text message logs with full phone numbers, contact lists, and lists of applications installed and used from consumers’ devices, even though the Chinese company didn’t have a business need for this information.

BLU also told consumers it maintained appropriate security measures. However, according to the FTC, the transmission of consumers’ personal information from BLU devices to ADUPS happened because BLU failed to put in place appropriate security procedures to protect consumers’ devices. For example, BLU failed to oversee the security practices of its service providers.

If you’re shopping for a mobile device, or any product, do some research. Do an online search to see what others are saying about the company and the products they sell. Enter the name of the company with words like review, privacy, scam, or complaint. Look through several pages of search results.

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

The post Mobile Phone Maker Misled People on Privacy & Security appeared first on Personal Finance Syndication Network.

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Financial Advice

Tricks Supermarkets Use to Get You to Spend More Money

What is it that makes it so hard for us to stick to buying only what’s on our preplanned shopping list? Would you feel better if you knew it wasn’t all your fault? It’s not.

If you’re someone who constantly wonders how you almost always end up spending more on groceries than your current food budget allows, understanding the tricks supermarkets use to get you to spend more will help you stay within your shopping budget.

Grocery Store Atmosphere

Yes, your local supermarket has an atmosphere. It’s not just a place where people go to buy their food. It’s an experience. The big chains do their research, and that’s how they know the best way to get you to spend more is to capitalize on your senses. Thus, one of the most used tricks supermarkets use to get you to spend more money is to create and release pleasant smells, which are known to put you in a better mood. This is done because studies show people tend to spend more money when they’re in a good mood.

And why are everyday essentials located in the back of the store? Unfortunately, it’s not so you can get your 10,000 steps in for the day. They do it so you have to walk through the store, hoping you’ll see something else to buy.

Your Senses

So now we know supermarkets use smells to get you to hand over more cash. Flowers and baked goodies are the two more common smells released. These well placed happy smells activate your salivary glands.

Listening to the slower paced music they play keeps you walking at a pace just right for seeing everything in the aisles. Of course, the music chosen is easy to sing along with to help put you in a good mood.

Visually, they use bright colors to catch your eye and promote a positive atmosphere. And positivity promotes good feelings, which puts you in a better mood. You get the picture. Did you know that we’re naturally drawn to the color red, which also is an appetite stimulator? Two birds, one stone!

New rubber based floors are now being used that vibrate the shopping cart handle just enough to keep your mind from drifting away. And lastly, free food samples tempt your taste buds into buying whatever is being promoted on any particular day.

Promo Tricks

Everyone loves getting a good deal, but how good are they really? Just because the sign says “Buy 5, Get 5,” it doesn’t always mean you’re getting the best deal. Be sure to check the >expiration dates as this may be the reason why they’re offering these seemingly great deals. And please don’t trust those handwritten chalkboard signs, even though they convey an innocent country charm. Remember that profit seeking stores dictate what’s written on them.

Be aware that foods that go together are often put on display side by side. For example, need to buy chips? You’re most likely going to see a ton of dips and salsas right next them. They know most people are more likely to grab a dip or salsa if they put them right in front of the chips, making them hard to miss.

Some bigger city supermarkets have actual television screens at the checkout. I’m sorry, but it’s not so you can catch up on your favorite programs while you’re running errands. Instead, you’ll see promos for food items, people talking about a certain food, someone cooking a recipe, etc. This is all to inform you about all of the other foods available that you just haven’t bought yet.

What To Do?

Now that you understand the tricks supermarkets use, you can avoid them, which will help you stick to that oh-so-important grocery budget. You can also wear headphones and play some fast music when shopping. You’ll not only spend less because you’re walking faster down the grocery aisles, but you’ll also burn a few extra calories. Win-Win!

Eating before you go can help curb any cravings created by the smells you’re going to encounter when grocery shopping. And don’t avoid looking at the pretty flowers. Instead, take a mental snapshot and give them a good smell, which is absolutely free. Feel better? And grab a hand basket if you have a short shopping list, so you can only buy so many items.

Although much easier said than done, if at all possible, leave the little ones at home. They’ll most likely get bored quickly, especially when strapped into a cart that allows them little freedom, which will distract you from your mission of saving money. Also, most parents end up buying something for them if they promise to behave, which is why another supermarket trick to get you to spend more money is to put kids products at their eye level.

This article by Laura Foor first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.

The post Tricks Supermarkets Use to Get You to Spend More Money appeared first on Personal Finance Syndication Network.

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