• Obama Tweaks ‘Pay as You Earn’ Program

    On November 1, President Barack Obama put the final touches on the Pay As You Earn program for the repayment of student loans. It is an Income-Based Repayment (IBR) that is applicable for federal student loans and those who are struggling to make monthly payments in a sluggish economy.

    The program actually began in 2007, but student loan debt has continued to rise. Historically, the program has not been popular with students-only slightly over 1 million borrowers were enrolled this year. The Obama administration is hoping the recent tweaks will make the program more popular. The cap on loan payments was reduced from 15 percent of the borrower’s total income to 10 percent. Loan forgiveness is accelerated from 25 years to 20 years.

    If a borrower implements all of these changes, they can capitalize on a 33 percent reduction in their monthly payments. These changes could be valuable in reducing the number of persons filing bankruptcy due to student loan debt. This will allow young professionals to establish their careers and pay off their loans in full. Getting rid of other debt through a bankruptcy can also help individuals pay back student loans faster.

    Please visit our site for more information on student loan debt and bankruptcy , and contact our firm for a free consultation.

    Benjamin Brand Services- Chicago bankruptcy lawyers .

  • Four Things to Remember About FTC Rules on Debt Relief

    According to an October 23, 2012 WVTM-TV article, it has been two years since the Federal Trade Commission (FTC) implemented new rules regulating the debt relief industry. WVTM noted that consumers are carrying $864.2 billion in revolving debt, and the average American with credit card debt owes more than $15,500. The Federal Reserve says the total household debt in the United States is $11.4 trillion.

    While the FTC changes were good for the many consumers who need help with debt, WVTM pointed out four things to know when seeking debt relief:

    1. Know what debt settlement is – Debt settlement plans can sometimes reduce total principals owed by about half, and the programs generally take two to four years to resolve a consumer’s debt. While WVTM wrote that debt settlement “can be helpful for individuals who are unable to make minimum payments on credit card debt ,” consumers must remember that debt settlement companies often engage in abusive practices. These abuses led Illinois lawmakers to pass legislation in 2010 that banned charging upfront fees for helping consumers negotiate relief from creditors. In July, one Chicago based firm agreed to refund $2.1 million after Illinois Attorney General Lisa Madigan said the lawyers were a “front” to collect hefty fees from desperate consumers.
    2. Understand the FTC rules – The FTC rules “require debt relief companies to renegotiate, settle or reduce the terms of at least one debt, with the consumer’s agreement, before collecting fees from the consumer.” (WVTM.) The FTC rules also define the advertising claims these companies can make. WVTM pointed out that debt settlement companies need to disclose how long it should take to see results, program costs and any negative consequences that may result.
    3. Know where to finding a debt settlement provider – WVTM noted that it remains legal for debt settlement companies and law firms that do not participate in telemarketing to charge up-front fees. The article recommended looking for a firm that is a member of the American Fair Credit Council (AFCC), which “enforces the strictest code of conduct in the industry,” according to WVTM.
    4. Proceed with caution – “Consumers should look for a firm that has an established, long-term record of successfully getting results for customers,” WVTM said. The article cautioned that impatient debt counselors, high-pressure sales tactics and claims that sound too good to be true are all “warning signs of firms that should be avoided.”

    If you are among the many households carrying thousands of dollars in revolving debt, you should know that filing Chapter 7 bankruptcy may allow you to discharge all of your unsecured debt in a matter of months. You can also catch up on late mortgage payments or reduce your mortgage principle by filing Chapter 13 bankruptcy . Both chapters can be safer alternatives to debt settlement programs, and our Chicago bankruptcy lawyers can tell you which plan would work best for you when you contact our firm at (866) 930-7482 or fill out the form on this page.

    Benjamin Brand Services – Chicago bankruptcy attorneys