Bankruptcy Wasn’t For The Shrouts

A recent post on NPR (“Crushed Under Credit Card Debt: A Tale Of Survival”) casts one family’s saga of surviving a personal debt crisis as one in which you get cancer, rack up nearly $50,000 in debt, and yet pull yourself up by your bootstraps and pay it back rather than file for bankruptcy. “Shrout says they briefly considered filing for bankruptcy, but ultimately decided it wasn’t the right choice. She says they felt they understood where their hardships came from and that they had gotten themselves into this debt, so they could also get out.” That’s an interesting perspective. …

Three Cheers For The Medical Bankruptcy Fairness Act

It’s not likely to pass, but in the spirit of “hope” and because we just plain think it’s a great idea, we’re writing about the Medical Bankruptcy Fairness Act, which promises a few radical changes to current bankruptcy law: 1. Discharge student loans: Let people with more than $10,000 in medical bills in the prior three years before filing bankruptcy also discharge their student loans. 2. …

Happy Birthday, Consumer Financial Protection Bureau

Three years of standing up for consumers, wrote Chris Vaeth, who explained on Monday that the Consumer Financial Protection Bureau, or CFPB, opened for business three years ago. “Since then,” Vaeth wrote, “we’ve used a range of tools in our toolbox to protect consumers: writing rules of the road, supervising and enforcing those rules, responding to consumer complaints, and much more.” According to the infographic on Vaeth’s post, over the past three years the CFPB has gotten back over $4.6 billion to consumers who were harmed by wrongdoers and unethical businesses, including those that perpetrate unfair and abusive debt collection practices. All this done by a federal agency that faced considerable political opposition when it first formed, including trouble getting a leader appointed and ongoing effort to block would-be interim director Elizabeth Warren from taking up the leadership mantle, in an effort to prevent the CFPB from starting its work in writing rules to regulate the financial industry. …

Illinois AG Sues Debt Settlement Firms Over Student Loan Scams

As Rachel Abrams and Jessica Silver-Greenberg write for the New York Times Dealbook blog (“Companies That Offer Help With Student Loans Are Often Predatory, Officials Say”), Illinois became, on Monday, the first state to sue debt settlement firms over student loan scams. Two suits brought by Illinois Attorney General Lisa Madigan against the debt settlement firms Broadsword Student Advantage and First American Tax Defense allege that these firms targeted and “duped” debtors into paying upfront for help with student loans – help that didn’t come. Abrams and Silver-Greenberg quote Madigan: “It’s just the latest scam on the largest group of people who are struggling with the most debt,” referring to those who owe thousands on student loans. …

Payday Lender To Pay $10M In Settlement Over Abusive Debt Collection

The payday loan industry is “under siege,” as Lauren Gensler writes for Forbes (“CFPB Moves Against Payday Loan Industry”). To say the payday loan industry is “under siege” is an expression a Forbes writer would use. ACE Cash Express will probably continue to do just fine, despite the $10 million the Consumer Financial Protection Bureau wrangled out of ACE over the firm’s abusive debt collection practices. …

Fairness In Debt Collection Applies To Social Media

Deborah M. Todd with the Associated Press reports that debt collectors are increasingly turning to social media to track down debtors, but some of these collectors don’t seem to think that the Fair Debt Collection Practices Act (the federal law outlawing abusive and deceitful behavior on the part of debt collectors), applies to the social media world. It does. …

Senate Bill Would Expand Bankruptcy Relief To Private Student Loans

Doing the nearly impossible-discharging student loan debt in bankruptcy-seems to be remotely possible, thanks to Sen. Tom Harkin of Iowa, whose bill would allow a “small portion” of student loan debt to be discharged. As Josh Mitchell reports for the Wall Street Journal, Harkin’s legislation would allow some private loans to be discharged, but not federal government-backed loans. …

Even The President’s Doing It (Got Into Massive Student Loan Debt)

President Obama had his own law school student loan debt, according to Debra Cassens Weiss with the ABA Journal (“Citing his own law school debt, Obama expands repayment caps on student loans”), which has apparently made him sympathetic to the plight of young borrowers going into debt to get an education. As Weiss reports, Obama has capped repayment terms to 10 percent of a borrower’s income, meaning that the monthly payment would not exceed that amount, although the cap is only for “newer government-backed loans.” Weiss gives us an Obama quote: “Here’s the problem. At a time when higher education has never been more important, it’s also never been more expensive. …

The Default Judgment Strategy Among Debt Collectors

The HuffPo headline certainly is a bit misleading – “Debt Collectors Have Figured Out a Way to Seize Your Wages and Savings” – if only because it isn’t news. Debt collectors have been doing this, more or less, practically since the day of modern debt collection, which is to say a very long time. Hunter Stuart, writing for HuffPo, is simply talking about default judgments. …