Private Debt Collection and Student Loans

Earlier this year, we discussed plans within the U.S. Department of Education (DOE) to hire private debt collection firms in order to track down delinquent student loan debtors. However, according to a recent article in U.S. News & World Report, the DOE “may sever ties with private debt collection firms.” What does this mean for student loan borrowers, and will it have any impact on debt collection practices?
Potentially Good News for Federal Student Loan Borrowers
The news that the DOE may cut ties with third-party debt collection companies could be good news for federal student loan borrowers who are currently in default. According to the article, consumer advocates have emphasized that debt collection tactics for past-due federal student loans have been problematic in many ways. In perhaps the least harm—albeit harmful nonetheless—debt collection methods, collectors have not given borrowers clear information about alternatives that could be available to help them repay their debts. More problematically, some of the third-party collectors hired by the DOE, including Performant Recovery and Windham Professionals, “have been accused of predatory practices,” according to the article.
While the DOE says the plan to end its relationship with private debt collectors is part of a larger scale process designed to modernize the student loan debt system in general, some consumer advocates have concerns about the Trump administration’s ultimate treatment of student loan borrowers, and particularly those who are having difficult making payments.
What has the DOE done recently for borrowers? The article points out that it has begun increasing outreach efforts to “at-risk borrowers,” meaning those who are 90 days behind on student loans. Previously, the DOE would not begin reaching out to borrowers until they were 270 days or more in default. In addition, the DOE has put forward a plan: Next Generation Financial Services Environment, or NextGen for short. It is designed to “provide a more uniform service for repayment” and to simplify the student loan repayment process.
Knowing Your Rights as a Consumer and Managing Student Loan Debt
Many people with student loan debt know that private student loan lenders, and debt collection methods connected to those loans, can sometimes engage in harmful debt collection practices. It is important to know that anyone who has taken out student loans—whether private or federal—has protections under the Fair Debt Collection Practices Act (FDCPA). Collectors who are working on behalf of the U.S. Department of Education must abide by the FDCPA just like any other debt collector.
In addition to protections under the FDCPA for fraudulent or deceptive debt collection practices, consumers should also know that it is not impossible to discharge student loans in bankruptcy. While it can be difficult to discharge student loans—and more difficult to discharge these loans than many other types of debt—numerous debtors are in fact able to show that continuing to make student loan payments would be a hardship, and they are able to have that debt discharged in Chapter 7 bankruptcy.
Speak with a Consumer Protection Lawyer in Oak Park About Your Student Loans
If you have concerns about deceptive student loan debt collection practices, or if you have questions about discharging student loans in bankruptcy, you should speak with an experienced Oak Park consumer protection lawyer. An advocate at the Emerson Law Firm can discuss your options with you today. Contact us for more information.
See Related Blog Posts:

Comments

Post a Comment

Popular posts from this blog

Phantom Debt Collection Scams on the Rise in Illinois

Have you been contacted by a person claiming to be a debt collector who is seeking to recover a debt you allegedly owe? If so, you are not alone. According to a recent report from CBS Chicago , such parties claiming to be debt collectors are on the rise, and they are scamming Chicago-area residents. These alleged debt collectors are part of schemes known as “phantom debt collection scams,” since they involve the attempt to collect on a debt that the consumer does not actually owe. How can you avoid becoming a victim in a debt-collection scam ? What should you do if you have been targeted by a fake debt collector? How Do Phantom Debt Collection Scams Work? Now, you might be thinking to yourself: I would never agree to make payment on a debt that I did not owe. But the scam is not always that simple. Parties at the center of debt-collection scams often target consumers who do actually owe debts (to someone or to some entity), and they prey on the fact that these c...
Read more

Payday Lending and Predatory Lenders in Illinois

If you are in substantial debt in the Chicago area and are living in a paycheck-to-paycheck cycle, you may have taken out a payday loan to make ends meet. While payday lending is illegal in a number of states due to the predatory nature of these loans, it remains legal in Illinois. As a result, many debtors in the state have used payday lenders, and far too many of those borrowers cannot repay what they owe. According to a recent article from Progress Illinois , consumers have filed complaints about payday lenders in the state, illuminating a need for federal rules that address harmful lending practices . Predatory Payday Lenders and Protections for Consumers Due to the perceived predatory nature of payday loans, twelve states in the country have banned these lenders from operating completely, according to a fact sheet from loans.org . The states that currently have laws prohibiting payday lenders from operating include Arkansas, Arizona, Connecticut, Georgia, Mary...
Read more

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti...
Read more