CFPB- busy for 2015

Posted by kevin on January 13, 2015 under Foreclosure Blog | Comments are off for this article

I have seen a plethora of articles which say that the Consumer Financial Protection Bureau (CFPB) looks to be pro-active in 2015. That is a good sign especially when you consider that the DOJ has done little in way going after the bailed out banks, and the Republicans have taken over the House and Senate.

On the agenda for 2015 are a review of debt collection practices by first parties (the owner of the debt) as opposed to third party collectors. Third party collectors are usually subject to the FDCPA and consumers have a private right of action to go after illegal activity by third parties. However, the FDCPA hardly ever applies to the owner of the debt. Employees of those organizations can engage in the same type of outrageous acts which could land a third party collector in court- but they skate. According to the articles that I have read, the CFPB wants to look into how debts are being reported by first parties to consumer reporting agencies. Moreover, the CFPB wants to review first party dispute resolution policies.

Other areas of concern are payday loans, arbitration clauses in credit agreements, student loans especially in cases dealing with for profit schools, and continued review of mortgage servicers.

I am especially interested in seeing what comes out of the student loan investigations. At this time, private lenders get all the benefits associated with the discharge exception in bankruptcy, but are not required (as with federal loans) to offer income based repayment plans. I do not know if that was an intended consequence of limiting the bankruptcy discharge or just something that fell between the slats. However, that law does present to private lenders a windfall. They get to go after the student and pound them for judgment and interest with little or no downside risk that the loan will be discharged in bankruptcy. While at the same time, the student loan creditor does not have to deal fairly with a student strapped with debt and just starting out.

The sense of urgency at CFPB seems to be fueled in part, however, by the reality that the Republicans have taken over the House and Senate. Senator Shelby, Chair of the Senate Appropriations Committee, and Congressman Hensarling, now Chair of the House Financial Services Committee, are no big fans of Dodd-Frank and the CFPB. They have promised to clip the CFPB’s wings. In fact, Hensarling has just attacked the CFPB for upgrading its offices. So, maybe the flurry of activity at CFPB is just trying to make themselves harder to hit moving targets.

Student Loan Debt and Senior Citizens

Posted by kevin on September 30, 2014 under Foreclosure Blog | Comments are off for this article

A little change of pace. The amount of student debt in the United States is exceeding the amount of credit card debt. So, from time to time, I will write about student debt either in this blog or my bankruptcy blog.

I attended a seminar a few months back on student loans. I was aware that since 1999, you could discharge student loans in a bankruptcy only by showing hardship. However, the test is so difficult that (and my older readers will probably get this), the only people who get hardship discharges are the one’s that can win on Queen for A Day (a somewhat popular daytime show from the late 50″s early 60’s where three women told their hard luck stories and the audiences voted on who had the toughest lot. That woman became queen for a day and won food and a clothes washer.) I’ve always thought that the test used for hardship in bankruptcy has been too stringent.

At the seminar, the presented pointed out that there were only 3 offenses under federal law that did not have a statute of limitations: murder, treason, and failure to pay your student loan. About a week ago, the Bergen Record ran an article about senior citizens saddled with student loan debt. It claimed that in 2010 4% of seniors carried $18.2 billion of student debt. Some were for Parent Plus loans for their kids, but the vast majority was on their own loans.

The problem is that these loans do not go away. The bigger problem is that if you are in default, a collection fee (in the range of 18-25%) is added on to the amount due. The biggest problem is that the federal government can garnish a portion of your wages and social security to recoup the loan.

It is tragic to think that unsuspecting Americans take out loans to get an education to get a better life, and millions are stuck with these debts even into retirement.

In this blog, I have written on numerous occasions about mortgage modifications. They are hard to get even when you qualify. It takes months of being jerked around. Sometimes you must question the good faith of the mortgage servicers who control this game.

Well, you can get modifications of federal student loans. That is the good news. The better news is that you eventually deal with the Department of Education as opposed to servicers and collection agents (but that takes a little effort). The best news is that you can substantially reduce or eliminate your monthly payments on student loans depending on your income.

It is worth looking into. Our offices are available for consultation on these matters. Email us at or call at 201-248-2204.