Wednesday, May 17, 2017

Illinois Legislation Designed to Protect Student Loan Borrowers

Are there state-specific protections in place to prevent student loan borrowers from abusive debt collection practices? The Fair Debt Collection Practices Act (FDCPA) provides protections at the federal level, but according to a recent article in Consumer Affairs, Illinois Attorney General Lisa Madigan is supporting a bill that is designed to provide specific consumer protections in the state of Illinois. More specifically, the proposed legislation, Senate Bill 1351, is designed to “create a Student Loan Bill of Rights to protect borrowers from abuse.”
What protections would the bill provide on a more specific level, and what else needs to happen for it to become law?
Bill Passes in the Senate
As the article explains, SB 1351 has already passed in the Illinois Senate by a 34 to 15 vote. It is now time for the bill to be considered by the Illinois House of Representatives. Attorney General Madigan’s office drafted the bill along with Senator Daniel Biss. Representative Will Guzzardi will sponsor the bill in the House.
Why is this law so important? In other words, what does Senate Bill 1351 aim to do that federal law does not already do? As Madigan explained, the proposed legislation is largely in response to a lack of specific protections for student loan borrowers under federal law. While the FDCPA is in effect, it is not designed precisely with student lending practices in mind. Madigan clarified: “This bill is critically important now that the U.S. Department of Education has abandoned student loan borrowers by revoking reforms to prevent the abuses uncovered in my investigation . . . . These commonsense measures will prove the financial futures of student loan borrowers, their families and our economic.”
Madigan’s comments refer to the “roll back” of federal protections for student loan borrowers at a time when student lending abuses seem particularly salient, and when student loan debt now totals in the trillions of dollars. Madigan’s office has consistently received complaints from Illinois consumers about student lending practices. For instance, borrowers have complained that loan servicers have not provided affordable payment options, have not provided clear instructions concerning payments, and have not consistently answered questions about loans.
Specific Protections for Student Loan Borrowers in SB 1351
What specific protections are contained in the Student Loan Bills of Rights? Borrowers in Illinois would be able to expect the following:
  • Payments would have to be processed properly by the loan servicer;
  • Loan servicers would have to provide specialists to explains repayment options to borrowers, including information about income-driven repayment plans; and
  • Loan servicers would have to inform borrowers about whether they may be eligible for loan forgiveness due to disability or another reason;
  • Illinois Attorney General’s office would create a Student Loan Ombudsman; and
  • Loan servicers would need to obtain a license in order to operate in Illinois.
The next step, in order for the bill to move forward, requires that it pass in the House. If it passes, it will be sent to the governor for approval. If the governor approves the bill, then it can be signed into law.
Contact an Oak Park Consumer Protection Attorney
Do you have questions about your rights as a student loan borrower? Or do you have concerns about whether your rights have been violated? An experienced consumer protection attorney in Oak Park can assist you. Contact the Emerson Law Firm for more information.
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Tuesday, May 9, 2017

Affordable Care Act Reduced Personal Bankruptcy by Half

Now that the House of Representatives has passed its version of the law aimed at repealing and replacing the Affordable Care Act (ACA), it is an important time for Chicagoland residents to look closely at the ways in which the ACA has had a positive impact not only on American healthcare, but also on consumer debt. As an article in Consumer Reports makes explicit, since the adoption of the ACA, “far fewer Americans have taken the extreme step of filing for personal bankruptcy.” Since the ACA took effect in 2010, American bankruptcy filings “dropped by about 50%, from 1,536,799 in 2010 to 770,846,” according to the article.
Given that medical bills are among the leading causes of consumer bankruptcy across the U.S., some experts suggest that the decline in filings could in fact be causally related to the passage of the ACA. What else do you need to know about this connection, and how could a new law result in a surge in personal bankruptcy filings?
Previously Uninsured and Underinsured Americans Filing for Bankruptcy
According to the article, it is medical bills that so often result in consumers filing for bankruptcy because “unlike other causes of debt, medical bills are often unexpected, involuntary, and large.” In other words, most Americans are not saving money in the event of an unexpected medical bill. We may know that we have to make regular payments on our mortgages, and to other creditors with whom we have borrowed, but most of us simply are not expecting to have to pay costly medical bills. As such, when hospital bills, or surgery and treatment costs, end up in the tens of thousands (or hundreds of thousands) of dollars, most people cannot see a path forward in which they can pay off that debt. For many of those people, Chapter 7 bankruptcy—or liquidation bankruptcy—may be the best solution.
This is especially true for Americans who, prior to the passage of the ACA, were uninsured altogether or underinsured. When the ACA took effect, it allowed more than 20 million Americans to obtain health insurance who did not have it before. In addition, some of those people were able to obtain better policies that provided coverage for large, but not catastrophic, medical expenses. It is easy to understand what we mean when we refer to someone who was uninsured—she or he did not have insurance. When we talk about underinsured people, in terms of health coverage, that term typically refers to anyone who does have health insurance but the coverage is insufficient. In many cases, underinsured Americans had catastrophic coverage with very high deductibles—plans that would only pay a percentage of the medical costs in the event of a catastrophe.
Can Healthcare Coverage, and a Federal Mandate, Actually Lower the Rate of Personal Bankruptcy Filings?
The article highlights how other factors besides the ACA may have played a role in the decline in bankruptcy filings over the last 10 years. Most notably, the economy largely has been improving since 2010, making it more likely that Americans are employed and can manage their debts. In addition, the changes to bankruptcy law in 2005 resulted in a more difficult and complicated process for Chapter 7 bankruptcy, as well as higher filing costs. Yet many bankruptcy experts link the decline in filings to affordable and expanded health insurance.
Most importantly, perhaps, are those with pre-existing conditions who do not have to worry that, once their annual or lifetime caps have been reached (which are not permitted under the ACA), they will not have coverage. Now, fewer of those people are facing insurmountable medical debt.
Seek Advice from an Oak Park Bankruptcy Lawyer
With the House passing a bill designed to repeal the ACA, however, medical debt could return and lead to a spike in consumer bankruptcy. We will need to wait and see how the Senate handles the bill—it will need to pass in the Senate in order to go any farther in the process of repealing the ACA.
If you have questions, an Oak Park bankruptcy attorney can help. Contact the Emerson Law Firm today.
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Friday, May 5, 2017

How Does Bankruptcy Affect Child Support?

If you are thinking about filing for bankruptcy in Oak Park, will you still be able to keep child support payments that you are receiving from your child’s noncustodial parent? On the flip side, if you are considering bankruptcy, can filing for Chapter 7 bankruptcy ever eliminate a child support obligation? If you are a custodial parent who receives child support and the child’s noncustodial parent is filing for liquidation bankruptcy, will that bankruptcy filing be able to eliminate the child support obligation that she or he owes to you?
These are important questions to ask whenever someone with a family support obligation is filing for bankruptcy. Generally speaking, consumer bankruptcy cannot allow a person who owes child support to wipe out that obligation. However, it is important to learn more about how this works.
Priority Debt in Chapter 7 Bankruptcy Proceedings
When you file for Chapter 7 bankruptcy in the Chicago area or elsewhere in the country, there are certain types of debts that cannot be discharged. U.S. bankruptcy law lists “priority debts” that have priority in bankruptcy proceedings, meaning that these debts usually will be paid before other debts by the bankruptcy trustee, and that in most cases they are not eligible for discharge. The very first item on this list is “unsecured claims for domestic support obligations.” The law defines these domestic support obligations as debts “owed to or recoverable by a spouse, former spouse, or child of the debtor, or such child’s parent, legal guardian, or responsible relative.”
In other words, domestic support obligations include child support, but they also extend to other types of support, such as spousal maintenance. To be clear, just because a person files for personal bankruptcy, this does not mean that she or he can discharge a child support debt that is owed. On top of that, when the debtor’s estate is liquidated, child support obligations, as “priorities” under the law, typically are among the first to be paid.
What About the Automatic Stay?
Although the automatic stay does prevent most creditors from trying to collect on debts that are now part of a bankruptcy proceeding, the automatic stay typically does not impact lawsuits to collect child support that is owed. In the most immediate terms, the child support obligation continues after the debtor files for bankruptcy. The debtor likely will continue to earn wages and to acquire other property after the filing date, and as such, a lawsuit to collect on owed child support still can go after that property to pay your debt.
Filing for bankruptcy, in addition, does not mean that you can stop making payments on a child support obligation. Whether you are in good standing, or whether you owe back child support, filing for Chapter 7 bankruptcy does not affect whether you are expected to continue making payments.
What Happens to Money in Your Bank Account that Came from Child Support Payments?
Now imagine a different scenario: if you are thinking about filing for Chapter 7 bankruptcy and you have money in a bank account that came from child support payments from the noncustodial parent, what will happen to these funds? Will they have to go toward repaying your debts when your estate is liquidated?
As long as the amount you have in your account is reasonably necessary for the support of your dependents, then it is exempt under Illinois law.
Contact an Oak Park Bankruptcy Lawyer
Do you have questions about filing for Chapter 7 bankruptcy? An Oak Park bankruptcy attorney can assist you. Contact the Emerson Law Firm today.
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Wednesday, May 3, 2017

Know Your Rights Under the Fair Debt Collection Practices Act (FDCPA)

How to Keep a Debt Collector from Contacting You
Have you been receiving unwanted calls from a debt collection company? Has the contact risen to the level of harassment? Have the calls been coming at inconvenient times? Have the collection agencies been calling you at work, even after you requested that they stop? Are you receiving calls about a debt you do not owe, or calls about debts owed by a family member to whom you have no financial connection? According to a recent report from CNBC, about one third of all consumers have been contacted by a debt collector in the last year, and many of those consumers have raised complaints about the content of the phone call or the manner in which they were contacted.
What can you do to keep a debt collector “off your back,” as the report poses? The following are some tips.
The first step in keeping debt collectors “off your back,” so to speak, is by knowing your rights under the FDCPA. Who is protected by the FDCPA? It protects all consumers with debt, and with all different kinds of debt, including: medical debt, credit card debt, mortgage debt, student loan debt, automobile debt, and even personal loans. In other words, if you have consumer debt, no matter how far behind you are on payments, you have protections under the FDCPA.
What does the FDCPA prohibit? It provides many different protections to consumers, including but not limited to:
  • Threats of violence or threats of criminal arrest from debt collectors;
  • Profane language from debt collectors;
  • Lies from debt collectors about the debt you owe or the amount of money you owe;
  • Debt collectors calling at inconvenient times (such as after 9:00 p.m. and before 8:00 a.m.) once you have requested they stop; and
  • Debt collectors calling at work once you have requested they stop.
Knowing your rights is the first step to putting an end to harassing calls from debt collection companies.
Verify the Debt for Yourself
What is the next step you should take? You should verify that you owe the debt for which you are being contacted, as well as the specific amount that you have been told you owe. There are numerous debt collections scams out there. Moreover, debt collectors may be calling about a “zombie debt,” which is a debt that you owed once but the statute of limitations has passed.
Report the Contact to the Consumer Financial Protection Bureau (CFPB)
The CFPB has the ability to take action against harmful debt collection practices, but it cannot do so unless it knows about these practices. The CFPB has resources for contacting debt collection companies and requesting that they cease contact, as well as resources for submitting complaints about specific debt collectors.
Deal with the Debt You Owe (If You Owe it)
If the debt is legitimate, this does not mean that debt collectors can harass you. However, it is nonetheless a good idea to determine the best path forward for your situation. In some cases, you may be able to work out a payment plan. In others, filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy might be among the best options for moving forward and dealing with your debt.
Contact a Consumer Protection Lawyer in Oak Park
Do you have questions about handling debt collectors or filing for bankruptcy? A consumer protection attorney in Oak Park can help you. Contact the Emerson Law Firm for more information.
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Dealing with Medical Debt Collection Complaints

Wednesday, April 26, 2017

Continuing Student Loan Servicing Complaints

According to a recent press release from the Consumer Financial Protection Bureau (CFPB), millions of consumers have filed complaints about student loan servicing practices. The CFPB’s “monthly complaint snapshot” for April underscored “that both private and federal student loan borrowers nationwide report persistent servicing breakdowns that may sideline their path to repayment.” In other words, student loan borrowers have continued to file complaints with the CFPB about problems with the companies servicing their student loans. In some cases, it is possible that student borrowers are protected by the Fair Debt Collection Practices Act (FDCPA).
We often read about student loan complaints when it comes to private lenders. However, as the recent press release emphasizes, student loan borrowers are having difficulties with servicers linked to private and federal loans alike. To better understand the nature of the complaints, we would like to take a closer look at the CFPB’s monthly complaint snapshot.
Complaints About Student Loan Servicers
As the press release highlights, student loan debt is currently at around $1.4 trillion, which makes it the “U.S.’s second largest debt market behind mortgages.” There are more than 44 million student loan borrowers in the country, and each of them relies upon student loan servicers in a variety of capacities, including repayment management. More than 64% of all complaints about student loans concerned servicers and servicing practices.
What did the student loan borrowers complain about to the CFPB? Borrowers have indicated that they are not properly informed about options for repayment, especially concerning income-driven repayment options. Consumers also complained that student loan servicers suggested that go into repayment plans that “suspend repayment and cause the interest on their loans to pile up.” In addition, borrowers indicates that servicers have misapplied monthly student loan payments, which have led to additional problems such as “negative credit reporting and loss of certain loan benefits, such as cosigner release for private student loans.”
Problems with Income-Driven Repayment Plans
The CFPB also received numerous complaints from consumers about the difficulty associated with either enrolling in an income-driven repayment plan or being able to stay in one. For instance, consumers complained primarily about the following:
  • Processing delays in applications for income-driven repayment plans; and
  • Inaccurate denials for income-driven repayment applications.
Student loan borrowers indicated that servicers lost documents associated with income-driven repayment applications, that application processing times took several months, that they were told they missed payments toward loan forgiveness, and that guidance has been lacking in terms of enrollment in new income-driven repayment plans. Borrowers also complained that they received “insufficient information from their servicers to meet recertification deadlines for their income-driven repayment plan.”
Loan Forgiveness Complaints
In addition to the complaints described above, consumers also contacted the CFPB concerning public service loan forgiveness and their federal student loans, as well as other loan forgiveness programs. In short, borrowers alleged that, “after years of making payments, they learn that their loans are not enrolled in a qualifying repayment plan, despite borrowers telling their servicers that they were pursuing Public Service Loan Forgiveness.” The CFPB received other complaints about loan forgiveness options, too.
What were the companies that borrowers complained about most often? The press release cites the following:
  • Navient Solutions, LLC;
  • Fedloan Servicing/AES; and
  • Nelnet.
Seek Advice from an Oak Park Consumer Protection Lawyer
Do you have concerns about student loan management, or have you experienced problems with a student loan servicer? An experienced Oak Park consumer protection lawyer may be able to help. Contact the Emerson Law Firm today to discuss your options.
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Thursday, April 20, 2017

Dealing with Medical Debt Collection Complaints

If you owe substantial medical debt, as so many residents of the Chicago area do, you may be dealing with particularly aggressive, and in some cases illegal, debt collection practices. According to a news release from the U.S. PIRG Education Fund, the consumer group’s recent report on “Medical Debt Malpractice” suggests that many debt collection companies may be violating the Fair Debt Collection Practices Act (FDCPA) when attempting to collect on healthcare debts owed by consumers.
Incorrect Medical Debt Information
One of the major problems associated with medical debt is that the information on a consumer’s records often is inaccurate. As a result, medical debt collectors contact consumers and may even use tactics prohibited by the FDCPA to obtain debts that are not exactly owed. According to the news release, “medical debt items on credit reports are often wrong or about the wrong consumer.” A consumer will be contacted by a medical debt collector for healthcare-related debts for inaccurate amounts, or a consumer will be contacted about debts that she simply does not owe, and did not owe in the first place.
Given that medical debt “accounts for more than half of all collection items that appear on consumer credit reports,” it is extremely important to ensure that the information linked to your name is accurate.
Harassment and Other Aggressive Tactics
While the inaccuracy of information about medical debt is a serious problem, it may not be as frustrating as the harassment that consumers face from medical debt collectors, along with other aggressive debt collection tactics. The “Medical Debt Malpractice” report cites the following consumer complaints connected to aggressive medical debt collection practices:
  • Aggressive communication tactics (including calling after consumer requested communication cease, calling outside permissible hours, frequent/repeated calls, threatening calls, and the use of obscene or abusive language);
  • Continued attempts to collect medical debts that are not owed (including when the consumer never owed the debt at all, when the debt was discharged in bankruptcy, and when the debt was paid);
  • Harms related to debt verification (for instance, the collector’s failure to verify debts, or refusing to provide consumers with enough information to verify the debts);
  • Making false statements or representations (for example, attempting to collect on an inaccurate debt amount, impersonating an attorney or another official, or telling the debtor that she or he has committed a crime by not paying);
  • Improper contact with those connected to the debtor (such as contacting the debtor’s employer after being asked not to do so, contacting the debtor instead of his or her attorney, and talking to a third party about the debt owed);
  • Taking and/or threatening to take illegal action (including attempting to collect on exempt funds, seizing or attempting to seize the debtor’s property, suing the debtor without property notice, threatening to sue the debtor for an old debt, and threatening the debtor with arrest or jail time if she or he refuses to pay).
Contact a Consumer Protection Attorney in Oak Park
Have you been harassed by a medical debt collector? It is possible that the debt collector’s practices are illegal. You should speak with an experienced Oak Park consumer protection lawyer as soon as possible. Contact the Emerson Law Firm today.
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