Beware of Student Loan Debt Schemes

If you have student loan debt and are struggling to make your payments, it is critical to know that you could be targeted by a student loan debt relief scam. Receiving a call or another form of contact from an alleged student loan debt relief organization can feel particularly welcome for many Americans, especially if you have recently read or heard that student loans can be difficult to discharge in a consumer bankruptcy case. Yet student loan debt relief companies may not be able to keep the promises they make to consumers, and they can ultimately cost you more money and stress in the long run.

Our experienced Oak Park consumer protection lawyers want to discuss a recent action taken by the Consumer Financial Protection Bureau (CFPB) against operators of an unlawful student loan debt relief company, and to tell you more about your options for managing student loan debt through bankruptcy and otherwise. It is a common misconception that there are no options to discharge student loan debt in a bankruptcy case, and our firm can speak with you about your ability to discharge student loan debt in a Chapter 7 bankruptcy case.

CFPB Sues Student Loan Debt Relief Company

According to a recent press release from the CFPB, the Bureau “sued a student loan debt relief company, its owner, and manager for allegedly charging thousands of consumers more than $3.5 million in illegal upfront fees.” As the press release explains, the company known as Student Loan Pro is accused of violating the Telemarketing Sales Rule (TSR), and was in business from 2015 until 2019. The company “provided federal student loan debt relief services to consumers nationwide,” according to the CFPB, yet Student Loan Pro required those student loan borrowers to pay fees associated with paperwork filings for student loan debt relief programs that are actually free.

In suing Student Loan Pro and its owner and manager, the CFPB is seeking monetary relief for affected consumers. David Uejio, the Acting Director of the CFPB, emphasizes how “Student Loan Pro preyed on thousands of borrowers, charging illegal upfront fees in clear violation of the Telemarketing Sales Rule.” The court filing says that the student loan debt relief company charged consumers as much as $795 for filing paperwork for free debt relief services. Why is this illegal? As the press release clarifies, “the TSR prohibits sellers or telemarketers from requesting or receiving advance fees for any debt-relief service before renegotiating, settling, reducing, or otherwise altering the terms of at least one of a consumer’s debts, and before a consumer has made at least one payment on such altered debt.”

You May be Able to Discharge Student Loan Debt in Bankruptcy

If you have avoided contemplating personal bankruptcy because you have heard that it is difficult or even impossible to discharge student loans, it is important to recognize that these are common misconceptions. While it can be more difficult to discharge student loans in bankruptcy than other types of unsecured debt like credit card debt or medical bills, it is not impossible.

An experienced Oak Park bankruptcy lawyer can assess your case for you today.

Contact Our Oak Park Consumer Protection Lawyers

If you have questions about your consumer rights or handling student loan debt, an Oak Park consumer protection lawyer as our firm can help. Contact the Emerson Law Firm for more information.


See Related Blog Posts:
What is Chapter 11 Bankruptcy for Consumers?
Pause on Veteran Debt Collection

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