May 2011

Student Loan Default Hits the Mainstream

Christina Latta Henry |  | Student Loans

kip_online_logoStudent loan default is prevalent among new college graduates, because the amont of student loan debt of the average twenty year old is often comparable to the amount of a small home mortgage. Today, the struggle to make student loan payments while starting work at a new low paying job or while unemployed is different for new graduates.  With the rise of private student loans and large federal loans, students may have fewer options for deferral, forbearance or graduated repayment options. For some students, options to start in their career of choice may not be an option if the entry level pay does not allow for minimum student loan payments.  If the minimum student loan payment exceeds 50% of your net monthly paycheck, default is inevitable.

In the June issue of Kiplinger’s Personal Finance magazine, “The Dark Side of Student Debt,” Christina Latta Henry is interviewed for her advice to young people facing imminent default of their student loans, offering several ideas to help young people avoid default or get back on track if their student loans are already in default.

We can help evaluate whether a bankruptcy discharge of your student loans is possible or whether rehabilitation of a defaulted student loan is a better option if repayment options are then once again available. In some instances, we may suggest a Chapter 13 bankruptcy filing to force a student loan lender to accept a smaller minimum payment and/or to avoid collection against a co-signer on a private student loan.  We do not relish filing recent college graduates in bankruptcy, but in some instances it may be the best option while we wait for Congress to ease the bankruptcy code regarding the dischargeability of student loans.

If you are stuggling with student loan debt and unable to find a way to pay the minimum payment and maintain your sanity, we can help you explore your options so that you regain hope and ambition in your budding career after graduation.

The Credit Bureau VIP List

Christina Latta Henry |  | Credit, Current Events

A lot of our business these days involves disputing credit bureau errors, so we were very interested to read this rather appalling story:

The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list — and they may not even realize they are on it — get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said.

For everyone else, disputes are herded into a largely automated system. Their complaints are often electronically ferried to a subcontractor overseas, where a worker spends, on average, about two minutes figuring out the gist of the matter, boiling it down to a one-to-three-digit computer code that signifies the problem — “account not his/hers,” for example — and sending a dispute form to the creditor to investigate. Many times, consumer advocates say, the investigation translates to a perfunctory check of its records.

We’re old-fashioned enough to believe that anyone who’s been unfairly denied credit or otherwise penalized deserves the VIP treatment from credit reporting agencies.

(Obligatory pitch: Contact us for help straightening out inaccurate or obsolete information on your credit report. We’ve made credit bureaus wish they’d put our clients on the VIP list!)